Setback for free trade<\/p>\n
At a time when the currencies of several core members of the
\nAssociation of Southeast Nations are falling close to crisis
\nlevel, their stock markets plummeting and economic recovery
\nremaining fragile, one naturally would have expected that the
\n2000 ASEAN informal summit in Singapore last week would focus on
\nnew measures to confront the problems.<\/p>\n
Unfortunately though, their first major agreement virtually
\nformalized a procedure for allowing members to backtrack on their
\ntrade liberalization commitments. By giving Malaysia a two-year
\nreprieve before it has to cut car import tariffs, the door is now
\nopen to other members to take advantage of the exemption clause
\nto delay opening up their sensitive industrial sectors, thereby
\ndiluting the ASEAN Free Trade Area (AFTA), which is scheduled to
\nstart for ASEAN founding members in 2002.<\/p>\n
The deal with Malaysia did solve a row, but it is a big
\nsetback for the eight-year-old AFTA plan, so far seen as the most
\nimportant area of cooperation that can enhance economic linkages
\nbetween the 10 ASEAN countries and create a major regional common
\nmarket.<\/p>\n
Given members' different stages of economic development,
\ndifferent resource endowments that cause different economic
\ninterests and in view of the group's insistence on consensus and
\nlack of a strong decision-making mechanism, trade ties have been
\nconsidered the most feasible and relevant area of cooperation to
\nstart with in order to allow members to optimize their respective
\ncompetitive advantages.<\/p>\n
By developing founding members -- Brunei, Indonesia, Malaysia,
\nSingapore, the Philippines and Thailand -- into a free trade area
\nin 2002 and expanding it in 2010 to include the newer members --
\nVietnam, Myanmar, Cambodia and Laos -- the ASEAN region will
\nbecome more attractive to investors.<\/p>\n
But the backtracking will make that goal more uncertain at a
\ntime when many members are badly in need of foreign investors to
\nhelp fuel their recovery from the 1997 economic crisis.<\/p>\n
We fully share the concerns raised by Singapore's Senior
\nMinister Lee Kuan Yew that unless ASEAN gets its act together to
\nforge a common market, foreign investors which flew out of the
\nregion after the 1997 crisis might not be encouraged to
\nreconsider returning to this part of the world.<\/p>\n
Many multinational companies as well as Japanese investors may
\neven reconsider or shelve their plans to consolidate their
\nmanufacturing facilities in the region. Their plans were
\noriginally made so that they could benefit from Afta.<\/p>\n
Southeast Asia indeed needs new investments to restore the
\nprecrisis robust growth and a free trade area is now the most
\neffective means of wooing back investors to the region. Even
\npotential investors from neighboring countries in Northeast Asia
\n-- Japan, China, Taiwan and South Korea --, let alone those from
\nthe United States and Europe, see a common market (meaning a
\nbigger market) as the most influential factor to decisions on
\ninvestment location.<\/p>\n
A common market in the ASEAN region would also serve as a
\nconfidence-building exercise to prepare market players in the 10
\nmember countries for an East Asia free trade area or East Asian
\neconomic community, two broad ideas that were also mulled over at
\nthe meeting between ASEAN leaders and their counterparts from
\nJapan, China and South Korea in Singapore over the weekend.
\nFurther down the road, they will become more confident in facing
\nthe Pacific free trade area in 2020.<\/p>\n
Yet a more worrisome impact of a delay in the launching of a
\ncommon market is the danger of the 33-year regional grouping
\nbecoming less relevant to the interests of the people. Because
\ntrade, which is usually followed by investment, is the most
\neffective way of enhancing economic linkages between the ASEAN
\ncountries, and deep and broad economic ties can be the strongest
\nfortress against potential disputes.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/setback-for-free-trade-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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