ASEAN takes another baby step towards economic integration
ASEAN takes another baby step towards economic integration
Dow Jones, Yangon
Southeast Asia's finance ministers on Saturday signed an accord to liberalize trade and investment in financial services, taking another small step towards their goal of closer regional economic integration.
Many observers say the 10 members of the Association of Southeast Asian Nations (ASEAN), need to break down trade barriers and increase cooperation if they are to maintain strong economic growth. But the very location of the ministers' meeting - poor, isolated and military-ruled Myanmar - highlights the difficulty of that project.
"Our overall message is: regional integration as fast as you can possibly handle it," said Ernest Bower, president of the U.S.-ASEAN Business Council, a business lobby group that met with ASEAN finance ministers this week in Yangon.
The deal signed Saturday formalizes the results of negotiations that ended in December 2001, when ASEAN members agreed to extend each other slightly more favorable treatment in financial services than they do to other countries in the World Trade Organization.
But the concessions granted so far are fairly minor, ASEAN officials said, and they will have to be built on in another round of negotiations, whose launch was also announced Saturday. "It's very difficult, it's kind of sensitive," ASEAN Secretary- General Rodolfo Severino said of the financial services talks.
Aside from financial services, ASEAN's economic integration is proceeding on a number of different fronts, including trade in goods, due to be discussed at an upcoming meeting of ASEAN economic ministers.
Along with the recent signs of a regional economic recovery, that's feeding a sense among ASEAN members that they can be successful economically by relying more on themselves and less on the U.S., historically their largest export market.
"I think right now ASEAN countries can stand on their own strength," Thailand's Finance Minister Somkid Jatusripitak said, while acknowledging that a U.S. recovery would provide a much- needed boost to his country's economic growth.
Indonesia's Finance Minister Boediono told reporters that ASEAN's recovery could be maintained "by doing our homework, each of us, and working to cooperate together as much as possible."
ASEAN has also tried to bolster ties between its members and the strongest economies in the region: Japan, South Korea and China. Japan has signed a bilateral free-trade agreement with ASEAN member Singapore, and talks will start next month on a China-ASEAN free trade area.
ASEAN finance ministers also said Saturday they would continue to expand a program of bilateral currency swap agreements among ASEAN member countries and Japan, South Korea and China. Six deals involving total commitments of US$14 billion have been signed over the past year, and another eight are now under negotiation, they said.
Such deals allow the central bank of one nation to borrow foreign currency from another, but repay the loan in its own domestic currency. The added short-term liquidity the swaps provide is intended to deter speculation in the foreign exchange market.
ASEAN officials have said the swap agreements could eventually be expanded to form an Asian Monetary Fund, a local counterpart to the International Monetary Fund that would support regional economies in the event of a crisis like the one in 1997-98.
But Philippine Secretary of Finance Jose Isidro Camacho, who had said earlier this week that he would try to revive interest among his colleagues in an Asian Monetary Fund, said Saturday the ministers' hadn't discussed the idea in Yangon.
Nonetheless, expanding financial and monetary cooperation among ASEAN members, and the larger grouping including Japan, South Korea and China, is very much on people's minds.
Secretary-General Severino said the idea of an Asian Monetary Fund is still being considered, and some researchers are working on even more ambitious schemes to coordinate policy in the region.
"Some kind of regional collaboration on exchange-rate policy is the future," said Pradumna Rana, the manager of the Asian Development Bank's regional economic monitoring unit. He said the ADB is researching such arrangements and would eventually present its findings to ASEAN.
The Yangon meetings included finance ministers or deputy finance ministers from the 10 ASEAN member countries of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.