The ASEAN Free Trade Area (AFTA) was initiated in January 1992 to create ASEAN as a single production base and market of more than 500 million people. The primary goals of the AFTA are to increase ASEAN’s competitive edge and ensure the creation of economies of scale through the elimination of tariff and non-tariff barriers and free flow of goods, services, investment, capital and skilled labor within the 10 countries.

The main implementing mechanism of the AFTA is the Common Effective Preferential Tariff (CEPT) scheme, which requires that tariffs levied on goods traded within the ASEAN region that meet a 40% ASEAN content requirement be reduced to 0-5% by 1 January 2010 for ASEAN-6 (Brunei Darussalam, Indonesia, Malaysia, The Philippines, Singapore, Thailand) and 2015 for the CLMV countries (Cambodia, Laos, Myanmar, Vietnam). The CEPT encompasses manufactured and semi-manufactured products, including capital goods and processed agricultural products.

Since implementation, ASEAN-6 countries have 99.77% of their products in the CEPT Inclusion List (IL) with tariffs in the range of 0-5 % tariffs. The CLMV countries have 90.96% of the products they trade in the region moved into the IL and tariffs on 76.86% of these items have been reduced to the 0-5 % tariff band. In addition, the average tariff in the ASEAN-6 under the CEPT has continued to decline from 12.8% in 1993 to 0.97% in 2008.