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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