'ASEAN must go beyond tariff cut'

'ASEAN must go beyond tariff cut'

Martin Abbugao, Agence France-Presse, Singapore

Southeast Asia must move beyond reducing tariffs to aligning investment rules with global standards if it is to compete for foreign investments, European Union (EU) Trade Commisioner Pascal Lamy said Friday.

Lamy said greater competition from China after its entry into the World Trade Organisation (WTO) should spur the Association of Southeast Asian Nations (ASEAN) to open up its markets further.

China has been getting the lion's share of foreign direct investments into Asia at the expense of the 10-nation ASEAN as investors take advantage of the regional giant's potential market of more than one billion people.

But Lamy, in an interview with AFP, said ASEAN nations could grab a greater piece of the action.

"The solution is that ASEAN as an economic zone becomes more relevant and more attractive, which means that integrating this region economy-wise and trade-wise is probably even more relevant with China in WTO," he said.

ASEAN, which groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam, offers a market of more than 500 million people.

"My personal view is that it (China's entry to the WTO) will increase pressure for trade integration and for investment regimes which are more welcoming than they are at present.

"If EU investors have a feeling that they can invest here, that there is no barrier to investments and that there is a potential market... they will come. No doubt about that," he said.

Lamy, however, stressed that integration went beyond just reducing tariffs.

Under the ASEAN Free Trade Area scheme, six of ASEAN's wealthier members have cut tariffs on most goods traded within the region to between zero and five percent. Newer members Cambodia, Laos, Myanmar and Vietnam have until 2005 to follow suit.

"Tariffs are fine. But trade integration and economic integration in today's world is about more than tariffs," said Lamy, who was in Singapore to deliver a lecture on Asia-Europe relations.

"It's about rules, it's about investment regimes, it's about transport agreements, it's about technical standards... it's about phytosanitary standards.

"It's no use having no tariffs, or having them reduced, if you don't have the same sanitary or phytosanitary rules. So there is a lot to do in this field also," said Lamy, who also mentioned standardised customs procedures.

Sanitary and phytosanitary standards cover measures to make sure that consumers are being supplied with food that is safe to eat.

Lamy's remarks echoed a speech by Singapore Trade Minister George Yeo in Jakarta on Jan.31. Yeo had said ASEAN must hasten economic integration if it wants to compete with China.

While countries in the grouping have taken steps to tear down non-tariff barriers, "much remains to be done", Yeo said.

Lamy said China itself will take some time to comply with its WTO commitments to open up its markets.

"We are very positive on that and we are helping them... to upgrade their own rules and systems," he said.