ASEAN summit begins with new commitment

ASEAN summit begins with new commitment

By Riyadi

BANGKOK (JP): The seven leaders of the Association of Southeast Asian Nations (ASEAN) began their fifth two-day summit here yesterday, committing themselves to broadening cooperation among members to maintain the competitiveness of the region.

They agreed to broaden the areas of economic cooperation to include services, intellectual property rights and a new industrial cooperation scheme, in addition to the technical arrangement on the implementation of the ASEAN Free Trade Area (AFTA) agreement.

In his opening statement, President Soeharto said Indonesia welcomes ASEAN's efforts to liberalize and enhance intra-ASEAN cooperation.

"This will further increase the competitiveness of companies and other economic units in the region," Soeharto said.

Thai Prime Minister Banharn Silpa-Archa said that the three- year period proposed by the ASEAN economic ministers for negotiations on free trade in services is too long.

"I propose that the negotiations be reduced to only one and a half years, particularly for those sectors in which ASEAN is ready, such as tourism, banking, finance and telecommunications," Banharn said.

All ASEAN leaders yesterday also welcomed the formal decision to put forward the implementation of AFTA to the year 2003 from the original target of 2008.

Thailand and Singapore even suggested further acceleration of AFTA to avoid it from becoming redundant.

Banharn noted that ASEAN must ensure that its economic cooperative endeavors proceed faster than those under the framework of the World Trade Organization (WTO) and the Asia Pacific Economic Cooperation (APEC) forum.

"If AFTA is to truly become a free trade area, I proposed that we aim to reduce tariffs to zero percent by the year 2003," Banharn said at his opening statement.

Sultan Hassanal Bolkiah of Brunei, at the ASEAN foreign ministers meeting last July, suggested that the target date of the AFTA implementation be brought forward to the year 2000, instead of 2003.

In his speech here yesterday, however, Bolkiah did not mention anything about the fast-tracking of AFTA implementation.

Singaporean Prime Minister Goh Chok Tong supported the idea of the earlier implementation of AFTA.

"Symbolically, this is good if it can be done. Then ASEAN enters the new century with an important task completed," Goh said. "But while this is desirable, it is not critical. The key issue is to find ways to increase intra-ASEAN trade."

Goh said ASEAN is clearly no longer at the head of the trade liberalization process. In terms of economic integration, ASEAN is actually behind other regions.

The European Union (EU) common market, for instance, is embracing Eastern and Central Europe and goods are traded within the Union tariff free.

Under the North Atlantic Free Trade Agreement (NAFTA), tariffs for most Mexican goods entering the U.S. markets are either eliminated immediately or will be removed within the next eight years.

The Mercusor Customs Union in Latin America, established early this year, has zero tariff levels for about 90 percent of its internal trade. It will free tariffs for the remaining 10 percent by the year 2000.

Under the principles of the World Trade Organization (WTO), countries have agreed to bind their tariffs for both industrial and agriculture goods and to reduce them over the next five to 10 years.

Goh noted that the proposed earlier implementation of AFTA will eventually increase foreign direct investment in ASEAN as the region faces stronger competition for foreign investment, especially from China, Latin America and the Caribbean.

ASEAN's share of annual global foreign direct investment almost doubled from five percent in 1982 to nine percent in 1992.

However, foreign direct investments in other areas also increased significantly. China, for instance, tripled its share of foreign direct investment from two percent in 1982 to seven percent in 1992, while Latin America and the Caribbean's share increased from nine to 11 percent over the same period.

"If we in ASEAN do not maintain our attractiveness for investors, we risk being overlooked by them," Goh warned.

Sharing Goh's argument, President Fidel V. Ramos of the Philippines noted that his country places particular importance on cooperative schemes that will enhance ASEAN's attractiveness as an investment region.

"To make trade easier for our businessmen and to attract investment more effectively into ASEAN, the Philippines will support measures that facilitate trade, including the harmonization and standardization of customs procedures," Ramos said.

Meanwhile, Malaysian Prime Minister Mahathir Mohamad noted that ASEAN would need to create continuing opportunities for trade and investment to sustain its current dynamism.

"Where else can we best to do this than in our own ASEAN region? That is why we should not deviate from our commitment to put AFTA in place by the agreed target dates," Mahathir said.

He noted that ASEAN, with the inclusion of Vietnam, now has a total market of some 410 million people. This will increase to nearly 500 million when Cambodia, Laos and Myanmar join ASEAN.

Cambodia and Laos have set a two year time to become full members of ASEAN, while Myanmar still serves as an observer.

The ASEAN share of global trade is currently over US$498 billion, comparing very favorably with the respective shares of China, Japan and South Korea. The combined gross domestic products of ASEAN countries reach almost $450 billion.

During the last five years, ASEAN grew at an average of seven percent per annum, outperforming the world's average growth rate of 1.6 percent.

ASEAN is the world's fourth largest trader, after the United States, the European Union and Japan.

According to the ASEAN Secretariat, intra-ASEAN trade reached $31.1 billion during the first half of this year, which was 22.7 percent higher than the $25.3 billion level during the same period of last year.

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