ASEAN denies trade meeting dealt blow to progress

ASEAN denies trade meeting dealt blow to progress

CHIANG MAI, Thailand (Agencies): Asian trade ministers wrapped
up a meeting in Thailand on Saturday insisting they had made real
progress despite criticism their free trade pact was at risk from
protectionist pressure and political mistrust.

The three-day meeting of Association of South East Asian
Nations (ASEAN) ministers backed away from proposals to bring
Australia and New Zealand into a united free trade zone, agreeing
only to study closer economic links with the two countries.

The meeting also endorsed a protocol to deal with countries
which renege on trade pledges, after Malaysia earlier this year
withdrew its auto industry from sectors slated for tariff cuts.

The protocol says countries must pay compensation for such
moves or face retaliatory tariffs, raising the specter of
tit-for-tat protectionist measures if other members of the ASEAN
Free Trade Area (AFTA) backtrack on the agreement.

But ministers denied the creation of a protocol for
backsliding on trade commitments and the failure to agree a wider
free trade zone represented setbacks for ASEAN.

"You talk about two setbacks," Thai Deputy Prime Minister
Supachai Panitchpakdi told journalists at a news conference. "I
think we were talking about two progresses being made."

ASEAN's critics say the group's insistence on consensus and
lack of a strong decision-making mechanism meant protectionist
countries like Malaysia, Indonesia and the Philippines were able
to scupper progress on free trade.

But Malaysian Trade and Industry Minister Rafidah Aziz said
the meeting was a success and denied she had blocked progress.

"If people want to say it was a setback and we are spoiling
the party, go ahead," she told a news conference. "We choose not
to listen to that."

Analysts say Malaysia was one of the winners from the meeting
-- the protocol for going back on trade pledges was drawn up
largely on Malaysia's terms, and the country also made sure a
free trade zone with Australia and New Zealand was off the table.

But difficult trade talks with Thailand loom -- Malaysia will
have to negotiate compensation for its protection of its auto
industry after the protocol is officially signed next month.

Oil prices

ASEAN and their Japanese, Chinese and South Korean
counterparts also agreed at a meeting here on Saturday that oil
prices had to be stabilized at sustainable levels to avoid
harming Asia's recovery and the whole global economy.

"They called for appropriate increase in supplies and other
necessary measures to promote long-term price stability in the
mutual interests of consumers and producers," said a joint press
statement.

"Stability is more important that the actual price," the
Malaysian minister told a news conference, adding that the recent
volatility had been harmful.

Takeo Hiranuma, Japan's Minister of International Trade and
Industry, said global crude oil prices needed to remain in a
"reasonable" price range of $22-$25 dollars per barrel.

He added he believed from exchanges at earlier meetings that
some Middle-East producing countries shared that understanding.
"Such level would enable both sides (producers and consumers) to
enjoy economic prosperity," Hiranuma said.

However, Indonesia's Minister of Industry and Trade Luhut
Pandjaitan said his country saw the $22-$28 range as the right
one.

Korea's Minister of Trade Han Duck-Soo said his Government's
had forecast that a surge of crude oil prices to $35 per barrel
could reduce his country's current 6 percent economic growth
forecast by two percentage points.

The ministers were talking to reporters after talks between
ASEAN economic ministers and China, Korea and Japan, which they
agreed to establish as an annual forum to promote cooperation in
East Asia.

They agreed to accelerate trade, investment and technology
transfers, technological cooperation and human resource
development in the area of information technology and e-commerce
and strengthening supporting industries, Thai deputy prime
minister Supachai Panitchpakdi said.

Supachai added that the countries had also agreed "to align
their positions" in major meetings such as the Asia Pacific
Economic Cooperation forum, or APEC, and the Asia Europe Meeting,
or ASEM.

They also agreed on the need for the early start of a new
round of talks of the World Trade Organization and will try to
"reconcile" their agenda for such talks, Supachai said.