ASEAN in race with China for economic survival: Arroyo

Agence France-Presse, Manila

Association of South East Asian Nations (ASEAN) must resist the urge to stall closer regional integration, Philippines President Gloria Arroyo said.

"For our diverse countries to survive and prosper, we need closer integration. We need to think regionally and deepen regional ties. Our national and economic interests lie in the destiny of the region and our linkage with the rest of the world," she wrote in the Asian Wall Street Journal's Tuesday edition.

Arroyo said the ASEAN Free Trade Area (AFTA) which has slashed import tariffs on almost all goods traded among the Philippines and five of the nine other members "has some way to go before it will become an effective means of strengthening the region's competitive economic position."

The accord brought down tariff levels on intra-ASEAN trade from this year to between zero and five percent.

"Underlying AFTA is the realization that small, protected markets will no longer work in the face of the competitive challenge confronting us," she said.

"China embodies that challenge most starkly in terms of its power and its proximity. ASEAN views the rise of China and other regional groups as both a competitive spur and a market opportunity."

However, ASEAN boasts that its combined gross domestic product is now equal to that of China with only half the latter's population would "remain an empty boast if the integration of the ASEAN economy lags behind China's integration with the global economy."

"ASEAN nations must think hard about their national economies and ASEAN's regional economic framework to determine how best to position themselves to ensure their continued competitiveness and to capitalize on the opportunities presented by a more open China."

Arroyo said a proposed ASEAN-China free trade area would expand ASEAN exports to the rapidly growing Chinese market as well as "strengthen ASEAN as a platform for investors to sell to China."

"It is projected that the deal would boost ASEAN's sales to China by 48 percent," she added.