Before we graduate to an even more complex environment — the China-Afta Free Trade Area (FTA) —, let us first iron out Asean Free Trade Area (Afta)'s incoherent trade arrangement which has potentially disastrous implications for local industries.

Singapore's new FTAs with developed nations such as the US, Australia, and New Zealand highlights this incoherence.

Afta requires that common tariff rates up to 5 percent be adopted among members. Among non-members, there are no provisions for Afta members to adopt common tariff rates. This non-uniformity could allow the republic to act as a gate for goods from its new FTAs to infiltrate Asean markets with the same tax exemptions as Afta goods.

Goods produced by nations at the helm of cutting-edge technology and offered at very competitive prices will greatly decrease the demand for Asean goods. Consequently, Asean industries requiring nurturing and protection will be threatened with extinction. Needless to say, this would be an economic debacle for the Asean region.

The certificate of origin is the supposed mechanism to ensure that only goods originating with at least 40 percent local content from the Asean nation of origin be tax exempted.

However, the readiness of Asean institutions regulating and monitoring the inflow of goods into the Asean markets is not established. There are reports that some exporters are still not aware of a form "D" for Afta tax exemption in spite of their government's concerted efforts to increase awareness. Even the capability of exporters to fill out the not-so-simple form is of concern.

A better strategy is consensus among Afta members to determine the goods that can and cannot enter Asean. Every nation, even Singapore, has industries that require protection. Through dialogue, third party gains at the expense of Asean's collective loss can be avoided.

Amid signs of the establishment of a gate to facilitate the inflow of goods from more developed countries to take advantage of Afta's tax exemptions, extreme caution is recommended as we proceed further with Afta and subsequently, the China-Afta FTA.