In addition to the China-India Free Trade Agreement, ASEAN also has a combined free trade agreement with Australia and New Zealand, known as AANZFTA. The agreement, which will also be phased in, has eliminated tariffs on 67% of all products traded between regions and will be extended to 96% of all products by 2020. This is the first time that ASEAN has begun negotiations for a free trade agreement covering all sectors, including goods, services, investment and intellectual property rights, making it the most comprehensive trade agreement ever negotiated by ASEAN. For more details on this agreement, click here. Introduction to tax treaties across Asia In this issue of Asia Briefing Magazine, we see the different types of trade and tax treaties that exist between Asian nations. These include bilateral investment agreements, double taxation treaties and free trade agreements that have a direct impact on companies operating in Asia. The ASEAN bloc has largely eliminated all import and export tariffs on intermediate items, with the exception of Cambodia, Laos, Myanmar and Vietnam, which continue to impose nominal tariffs on certain items. But these will also be completely eliminated by 31 December 2015, so that the entire region will be exempt from customs duties from that date. Other ASEAN treaties are being negotiated, including with Japan, which already has a series of far-reaching economic partnerships, while South Korea already has a free trade agreement. Both are similar to the above – the more than 90% reduction in all goods traded between ASEAN and these countries. These two agreements have the collective influence of making ASEAN a strategic centre for global sourcing and manufacturing. With the middle class of 150 million ASEAN consumers, this market, then associated with China and India, alone represents a global consumer market of the middle class, with a total free trade of about 650 million people – today.
By 2030, given Asia`s growing prosperity and dynamism, about 64% of the global middle class will be based in Asia, representing 40% of the overall consumption of global small and medium-sized enterprises. ASEAN has a similar free trade agreement with India, which is being phased in and is in the process of reducing tariffs to 90% of all products traded between ASEAN and India. . . .