ASEAN may go slow on free trade goals<\/p>\n
SINGAPORE (Reuters): Leaders of the Association of Southeast
\nAsian Nations (ASEAN) are expected to talk loudly about the need
\nto meet trade liberalization goals when they meet in Hanoi next
\nweek but quietly agree to allow the process to slow.<\/p>\n
Analysts say the region's 18-month-old financial crisis will
\nnot derail ASEAN's commitment to achieve tariffs of no more than
\n5 percent within the nine-country grouping by the year 2003.
\nHowever, liberalization schedules towards this date may be
\nallowed to slide.<\/p>\n
\"It's going to be tough for many of the (ASEAN) economies to
\nbe aggressive in terms of the lifting of restrictions and
\nreducing trade barriers,\" said Andrew Fung, regional Treasury
\neconomist at Standard Chartered Bank in Singapore.<\/p>\n
\"But it is not going to be a fatal blow to liberalization,\"
\nFung said.<\/p>\n
Under the current plan for the ASEAN Free Trade Area (AFTA),
\ntariffs are to be cut to between zero and 5 percent by the year
\n2003. More than 46,000 tariff lines have already been cut,
\nrepresenting some 83 percent of intra-ASEAN trade.<\/p>\n
\"Currently the way the program works is they've been phasing
\nall these different tariff lines into the scheme at a ceiling
\ntariff rate of 20 percent per year,\" said Peter Baldwin, director
\nof consultancy group Intercedent Asia.<\/p>\n
\"They've done three years now and of course they've left all
\nthe hard stuff until the end,\" he said.<\/p>\n
Some analysts believe that with the spotlight on ASEAN to show
\nits commitment to the goal of free trade, the leaders will
\nendorse a goal to drop tariffs to a flat rate of zero percent by
\n2003 instead of a zero to 5 percent range.<\/p>\n
But to avoid any dispute within the region, the schedule to
\nimplement this measure will be made \"voluntary\".<\/p>\n
\"I think they are going to underline their commitment to the
\nlifting of trade restrictions, but we are going to see very few
\ndetails in terms of timing,\" said Standard Chartered's Fung.<\/p>\n
Aside from the overall free trade goal, the ASEAN meeting will
\nbe scrutinized by Asian business for any changes to the details
\nof the AFTA scheme.<\/p>\n
\"The big thing people are looking for is to bring forward the
\nswitch of products from the temporary exclusion list onto the
\ninclusion list,\" said Baldwin.<\/p>\n
\"As soon as products are off the exclusion list, they don't
\nhave any common effective preferential tariff. When they come
\ninto the scheme, the maximum ceiling rate is 20 percent, which is
\na big drop for some products, like auto parts,\" he said.<\/p>\n
Another issue is the World Trade Organization's (WTO) Trade
\nRelated Investment Measures, or TRIMS, which cover local content
\nquotas. Under WTO plans, most local content requirements are due
\nto be abolished by January 1, 2000.<\/p>\n
\"All the ASEAN countries in trouble on this one. The WTO does
\ncarry a big stick. As most Asian countries are export oriented,
\ntheir export partners are going to make a fuss,\" Baldwin said.<\/p>\n
In the discussions over the tariff rate targets, the products
\nto be included and excluded and the local content levels, one key
\nissue is likely to be raised most and that is the impact of any
\nnew measures on employment.<\/p>\n
Since the regional financial crisis began in July 1997, most
\nASEAN nations have plunged into recession and unemployment levels
\nhave soared, particularly in places like Indonesia.<\/p>\n
\"If your sewing machine industry is going to be wiped out
\nbecause of AFTA, then the industry lobby against AFTA becomes
\nstronger and stronger,\" said Intercedent's Baldwin.<\/p>\n
\"It is pretty reasonable to assume that they (ASEAN) would
\nlike to protect, if possible, their own domestic economies,\" said
\nFong Cheng Hong, a senior vice president at Nomura Singapore.<\/p>\n
But Fong did not believe that economic nationalist pressures
\nwould derail the trade liberalization process<\/p>\n
\"One of the things about Asia, especially now with economies
\nin bad shape, is we need a lot of money for refinancing of the
\nbanking and corporate sector, so continued liberalization of
\ntrade is going to bring back the international investor and
\nthat's crucial for ASEAN's recovery,\" she said.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/asean-may-go-slow-on-free-trade-goals-1447893297",
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