ASEAN set to ratify new free trade pacts
ASEAN set to ratify new free trade pacts
MANILA (Dow Jones): Trade ministers from the Association of
Southeast Asian Nations, or ASEAN, are expected this week to
ratify a regional agreement aimed at removing further barriers to
trade and investment in the nine-nation bloc.
The two day of ministerial meetings that begin on Wednesday
will seek to address longer-term trade and investment issues
rather than come up with new measures to tackle the region's
present economic crisis.
Plans for a mutual economic surveillance system, seen as one
of the few measures ASEAN has taken as a group to deal with the
region's emergency, isn't on the trade ministers' agenda. The
responsibility for the long-delayed system to warn of future
crises, which was expected to be running by mid-year, belongs to
finance ministers.
But with most ASEAN members either mired in recession or
grappling with sharply lower growth, the 15-month-old crisis will
clearly cast a long shadow over the meeting.
ASEAN groups Brunei, Indonesia, Laos, Malaysia, Myanmar, the
Philippines, Singapore, Thailand and Vietnam.
With the emphasis on trade, the meeting is unlikely to attract
the sort of attention from the markets of a gathering of their
finance and central bank counterparts.
But the bloc's likely affirmation that it won't backslide on
commitments to further liberalize trade and investment is an
still an important signal to emerging-market investors.
The recent capital controls in Malaysia has raised the specter
of some ASEAN's crisis-hit countries resorting to protectionist
policies to shield their economies.
Philippine Trade Undersecretary Melito Salazar said that while
ASEAN cannot prevent individual countries in the bloc from
adopting such measures, he made clear that the association
wouldn't endorse protectionist policies.
Despite a more robust approach being urged by Thailand and the
Philippines, ASEAN continues to make decisions by consensus. This
non-contentious approach hasn't served ASEAN well as it tries to
meet the challenges of the financial crisis and the inclusion of
politically-sensitive countries, such as Myanmar, Vietnam and
Cambodia.
At the meeting, Asean's trade ministers are scheduled to sign
agreements to further bring down barriers to trade and
investments within the bloc as early as the year 2000.
Edsel Custodio, Philippine assistant trade secretary and head
of the Asean senior officials meeting said the ministers are
scheduled to sign an agreement creating an Asean Investment Area,
or AIA. This aims to remove barriers to investment from Asean
countries by the year 2010 and for non-Asean countries by 2020 in
the region.
On paper, businessmen from Vietnam or Indonesia would be
granted the same privileges in areas such as land ownership and
investment rights as their counterparts in the Asean country in
which they are investing.
The AIA aims to increase cross-border capital flows within
Asean and promote the free movement of skilled labor and
professionals within the region. "We want to create more trade
and more investments within Asean," said Custodio.
In related measure, Asean ministers will also table a list of
some 3,000 products, comprising around 90 percent of inter-Asean
trade, whose tariffs will be brought down to between zero and a
maximum of 5 percent by the year 2000.
The original target for uniform tariffs was 2008, but this was
earlier revised to 2003. The bloc now hopes it will be able to
achieve this by the year 2000. In 1997, inter-Asean trade was
valued at $148.9 billion.
All Asean countries except Laos and Myanmar are members of the
18-nation Asia-Pacific Economic Cooperation Forum, which plans to
become tariff-free by the year 2010 for developed economies and
2020 for the developing ones. Custodio said the tariff reduction
will be done on a "best effort and voluntary basis."
Custodio said that even if some Asean countries don't cut
tariffs as quickly as others, the pace of the reductions would
still be quicker than under the auspices of the World Trade
Organization.