On 27-28 January 1992, Heads of State of the Association of Southeast Asian Nations (ASEAN) met in Singapore for the Fourth ASEAN Summit Meeting, at which they agreed to the establishment of an ASEAN Free Trade Area (AFTA) by the year 2008. This deadline has subsequently been moved forward to the year 2005. The backbone of AFTA is the Common Effective Preferential Tariff (CEPT) Scheme, which aims to reduce tariffs to 0-5 per cent for 15 product groups (fast track) within 5 to 7 years, and the remainder (normal track) within 10 to 15 years. Although much has been said about “open regionalism”, an important objective of AFTA is to promote intra-regional trade. This objective is evinced by the fact that the tariff reductions within AFTA are strictly preferential in nature. The importance of intra-ASEAN trade has been heightened following the establishment of the North American Free Trade Area (NAFTA) in 1993, and the European Economic Community (EEC) in 1992. With markets external to the region becoming more trade- restricting, and given East Asia's preoccupation with its accessibility to the North American market, the region will have to increase intra-ASEAN trade if it is to offset some of these losses (Kumar 1992, p. 74). In light of these developments, it is not surprising that the initial response to the creation of AFTA was nothing short of euphoric.

The initial enthusiasm has begun to wane in recent months, however. Fearing a flood of imports, producers in Thailand and, more recently, in Malaysia have called for greater protection at least in the short term (see Kumar 1992, p. 72). This response is particularly concerning since these two countries have been promoted “to play a leading role in ensuring relatively exclusion-free implementation of AFTA” (Chirathivat 1993, p. 8). As recently as April 1994 for instance, Malaysia implemented the Approved Permit System (APS) which places new import restrictions on petrochemical products.