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.