ASEAN daunted by emerging trade issues

ASEAN daunted by emerging trade issues

JAKARTA (JP): Economic ministers from the seven members of the
Association of Southeast Asian Nations (ASEAN) expressed their
concerns here over the weekend regarding emerging international
trade issues that could adversely affect the group's position.

The new trade issues include a new set of rules of origin for
textiles and textile-related products imposed by the United
States and the abolishment of the generalized system of
privileges (GSP) trading facility for agricultural products by
the European Union (EU).

"The (ASEAN) ministers expressed concerns over the new EU-GSP
scheme for agricultural products, which places ASEAN's
agricultural fishery products at a disadvantage," Indonesian
Coordinating Minister for Production and Distribution Hartarto
said during a joint press conference last week.

Malaysian Minister of International Trade and Industry Rafidah
Aziz explained that the EU will eliminate GSP trading facilities
for exports of some ASEAN agricultural products to Europe by
January next year.

The EU considers that by January 1997, ASEAN countries --
Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand
and Vietnam -- will be considered strong in five agricultural
sectors, including fishery, animal husbandry and fruits and
cereals. Therefore, they will no longer be entitled to EU-GSP
facilities.

"It will have financial and economic impacts on our farmers
that produce those products, not to mention the psychological
repercussion," Rafidah said.

She noted that the EU should maintain its GSP facilities for
ASEAN countries as a reward, especially for its efforts in
combating drug trafficking in the region. Moreover, the EU still
maintains its GSP facilities to non-ASEAN developing countries.

"We regret that no special arrangement is granted to the ASEAN
member countries," Rafidah said.

The EU has reportedly cut aid to the world's least-developed
countries because it has redirected the funds to eastern Europe.
To replace the missing aid, the EU has facilitated entry of
imports from those countries through its GSP facilities.

ASEAN economic ministers also agreed to continue to pursue
discussion with the EU on the retention of the E407a ruling
because the number of processed eucheuma seaweed (carageenan) in
the list of allowable European food additives and the new EC
Directive 96/3/EC ruling in relation to the transport of bulk
liquid oils and fats places ASEAN's vegetable oils at a
disadvantage.

Protest

In addition to discussions with the EU, ASEAN economic
ministers also made a strong protest to the United States over
its new set of rules of origin for imports of textiles and
textile-related products.

"The ministers were concerned over the implementation of the
U.S. rules of origin on textiles and apparels, which could
adversely affect ASEAN's textile and apparel trade," Hartarto
said.

Rules of origin determine which country's quota should be
charged for particular exports to quota-importing countries when
manufacturing of the products occurs in more than one country.

Since July 1, 1996, the United States has enforced a new set
of rules of origin for the imports of a wide range of textile and
textile-related products.

Earlier, the origin of a product was determined on the basis
of where substantial transformation of the products had taken
place (generally, where the cloth used in the product was cut).
From July 1, however, the new rules confer the origin to the
country where the product is wholly produced or assembled.

It is thought that the new rules will adversely affect the
trade of some textile exporting countries in ASEAN, especially
those which export yarns and fabrics, like Indonesia.

Some countries import gray fabrics from developing countries
for dyeing and printing and then export them. Under the new
rules, the origin for these exports will be the country where the
gray fabric was produced. Similarly, many countries import
fabrics from developing countries for conversion into household
linen, draperies or for embroidery. Once again, the country of
origin of these products will be the country from where the
fabrics were imported.

"In this respect, the (ASEAN) ministers urged the United
States to withdraw implementation of the new rules of origin on
textiles and apparels pending the conclusion of the World Trade
Organization's harmonized rules of origin," the statement said.

Rafidah said that the ASEAN economic ministers had mandated
the ASEAN Secretariat to study the U.S. rules of origin and then
lodge an official complaint to the United States over the matter.
(rid)