ASEAN asked to advabnce FTA deadline

ASEAN asked to advabnce FTA deadline

P. Parameswaran, Agence France-Presse, Manila

Southeast Asian nations should advance their 2010 deadline for dismantling all tariff barriers to cope with rising competition for investments, ASEAN secretary-general Rodolfo Severino proposed Wednesday.

"To wait for 2010 when the rest of the world is marching on might be too long," he told a media forum in Manila.

He declined to suggest a fresh deadline, saying this should be worked out by the member states but pointed out that "benchmarks" could be set to speed up a free trade area covering 500 million people in the region.

The Association of Southeast Asian Nations (ASEAN) launched a tariff cutting exercise in 1993 to forge the ASEAN Free Trade Area (AFTA).

The AFTA plan reached a milestone in January 2002 when the six older members of the group and the original signatories of AFTA -- Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand -- dropped their tariffs on trade with one another to zero to five percent.

The six countries account for more than 96 percent of trade in the region. The other members of ASEAN are Cambodia, Laos, Myanmar and Vietnam.

The target of a minimum of zero to five percent tariffs was accelerated twice partly in reaction to a financial crisis in 1997 that dragged the region to its worst recession in history.

ASEAN leaders had decided on a 2010 deadline for total abolition of tariffs on inter-ASEAN trade by the senior members.

The target for the newer members is 2015.

The current average tariff on goods traded among ASEAN members is estimated at about 3.5 percent -- down from 12.76 percent when AFTA took off in 1993.

The ASEAN free trade pact gives duty free privileges to products traded among member countries and which have at least 40 percent local content.

Severino said ASEAN member states should impose more "benchmarks" among themselves to attain zero tariffs at a faster pace.

Aside from the 2010-2015 deadlines to totally dismantle tariffs, the only other "benchmark" now for the AFTA plan is that 60 percent of tariff lines should attain zero tariffs by 2003, he said.

Severino said ASEAN would have to speed up efforts towards regional integration because other regions were making themselves cheaper and more attractive to lure investments.

"The others are moving quickly. Even the Gulf Cooperation Council is working on a customs union. In the face of this, ASEAN countries cannot afford to go each their own way," he said.

Severino said Southeast Asia should also do more to dismantle non-tariff barriers of inter-regional trade, among which are exclusive distributorships and health quarantine regulations.

Inter-ASEAN trade accounts for about 20 percent of the region's annual total trade of more than US$700 billion, officials say.

Southeast Asian leaders are planning to establish a mega East Asia free trade zone, covering ASEAN and China, Japan and South Korea with a total market of more than two billion people.

Severino also said a recent move by the United States, a key ASEAN trading partner, to impose high tariffs on imported steel products would dampen the free trade environment.

It "not only directly damages the international trading system but undermines the position of those people in ASEAN who advocate a more liberal trading regime," he said. "This is what is most worrying.

"I think in the face of these protectionist tendencies outside, the more reason for ASEAN to integrate itself," he said.