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.