ASEAN review free-trade progress
ASEAN review free-trade progress
KUALA LUMPUR (AFP): Faced with new challenges posed by an unprecedented financial crisis, Southeast Asian ministers meet this week to review progress towards realizing a free-trade area early next century.
Amid fears in some quarters that financial turmoil might derail the 10-year timetable, economic ministers from the Association of Southeast Asian Nations (ASEAN) will also meet their counterparts from Australia, China, Japan, South Korea, New Zealand and the Southern Africa Development Community (SADC).
The annual meeting of ASEAN ministers starting Thursday will be the first to include Myanmar and Laos, both admitted to the regional grouping in July.
Under an agreement reached in 1993, the six most developed members -- Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand -- agreed to work toward an ASEAN Free Trade Area (AFTA) by implementing common effective preferential tariffs of five percent or less by 2003.
Vietnam, which joined ASEAN in 1995, has until 2006 while the deadline for newcomers Myanmar and Laos is 2008.
Malaysia's International Trade and Industry Minister Rafidah Aziz said last month that 93 percent of the tariff lines of the original six members had already been included in the scheme, up from almost 91 percent in July.
She said this week's meeting would be "significant" as members would reaffirm their commitment to move towards tariffs of 20 percent by next year for items where prevailing rates were still above 20 percent.
But some analysts reckon the group's free-trade plans might be upset by the crisis which has battered regional currencies and stock markets since early July when Thailand floated the baht.
With some currencies losing more than a third of their value, trade flow projections are being redrawn across Asia.
"The possibility that AFTA will end in failure is getting bigger," says Shunta Yamato, regional analyst at Daiwa Institute of Research in Tokyo.
While Thailand will suffer a slump in the short term, he believes it could eventually join the ranks of the more developed ASEAN members Singapore and Malaysia, exposing weaknesses in Indonesia, the Philippines and the others.
Yamato also doubts whether Japan can play the same role with ASEAN as the United States did with Mexico three years ago when the peso collapsed, helping to bring about a recovery by sucking in cheap imports.
Japan's International Trade and Industry Minister Mitsuo Horiuchi is nevertheless expected to announce measures to raise imports of Southeast Asian products when he meets with the ASEAN ministers here Friday.
The measures are expected to cover trade insurance and plans to help Japanese importers make payments in advance along with technical cooperation and human resource development to support industries such as auto parts makers.
Malaysia, for its part, plans to raise the issue of currency depreciation at the annual meeting in a bid to minimize the impact on trade and investment.
Rafidah says the proposed "strategies" will include focussing on the most competitive industries in the region and taking measures to boost intra-ASEAN trade which stood at 155 billion dollars last year.
Strategies adopted are expected to be put to an ASEAN summit in December, to which Japanese, Chinese and South Korean leaders have been invited.
The ministerial meeting starting Thursday will be preceded by a meeting of the AFTA Council on Wednesday and followed by consultations between the nine ministers and an ASEAN Central Committee on Investment.
On Friday and Saturday, the ministers meet their counterparts from Japan followed by Australia and New Zealand and finally the Southern Africa Development Community before a separate meeting with ministers from Japan, China and South Korea and a final session will all ministers attending.
During the meetings, three agreements will be signed including a protocol of accession by Myanmar and Laos along with a protocol on notification procedures for modifying AFTA commitments and obligations.
ASEAN ministers will also sign a protocol on the first package of offers under a framework agreement on services.
Under a 1995 initiative, ASEAN has identified tourism, telecommunications, air services, shipping, construction, business services and financial services as ripe for liberalization.