ASEAN to sign FTAs with Japan, India
The Jakarta Post, Nusa Dua, Bali
The Association of Southeast Asian Nations (ASEAN) will sign agreements with Japan and India on the establishment of Free Trade Areas (FTAs) during a two-day summit in Bali on Tuesday, an Indonesian senior trade official said.
"We expect that by 2012, an FTA between ASEAN and Japan will have already been established," the director general of international trade cooperation at the Ministry of Industry and Trade, Pos M. Hutabarat, said over the weekend.
He said, however, that officials from the regional grouping and Japan have yet to conclude talks on which products would be included in the FTA.
"It's still being negotiated. We expect the negotiations to be completed by 2005," he said.
According to a draft of the ASEAN-Japan Comprehensive Economic Partnership (CEP), which includes elements of the FTA deal, the two regions will start "consultations" on the CEP "from the beginning of 2004" and "will make maximum efforts to commence the negotiations on the CEP ... from the beginning of 2005".
Officials from the two regions negotiated the draft on Saturday.
The draft also says that efforts to realize the FTA by 2012 must take into account sensitive sectors in each ASEAN member states and Japan. The four newest members of ASEAN -- Cambodia, Laos, Myanmar and Vietnam -- will be given an additional five years to implement the FTA.
Analysts have said that there are a number of difficult issues to be resolved before the FTA can be realized, centered mainly in Japan's persistence in protecting its farmers against cheaper imported agricultural products.
"It's difficult for Japan to open its agricultural sector. It's too politically sensitive," said a Japanese source.
Leaders of the 10 ASEAN countries will gather in Bali for an annual summit to discuss various issues in the areas of security and the economy. The event will also be attended by leaders of Japan, China, India and South Korea.
Pos said that under the planned FTA with India, the six founding members of ASEAN would set up a free trade area with India by 2011, while the four newest member countries of ASEAN would be ready for a similar arrangement by 2016. The six founding members of ASEAN are Indonesia, Malaysia, Thailand, Singapore, the Philippines and Brunei.
He said the products to be included in the FTA had yet to be decided, but would exclude agricultural products and textiles. Negotiations on this point are expected to be completed by 2005.
The FTA deals are expected to boost trade and investment between ASEAN and Japan and India.
Japan traditionally has been one of ASEAN's largest export markets, although the region's exports to the country declined by 3.93 percent in 2002 to US$97.6 billion from the year before. The drop has been blamed on the global economic slowdown.
It is projected that ASEAN exports to Japan will jump by $20.63 billion over the next 17 years. Japan's export volume to ASEAN is expected to increase by $20.02 billion over the same period.
ASEAN countries are aiming to increase their exports to India from the current level of $10 billion to $15 billion in the next two years, and to $30 billion by 2007.
In 1998, ASEAN-India trade value reached $6.97 billion, increasing to $7.87 billion in 1999, $9.77 billion in 2000 and $9.88 billion in 2001.
In addition to the two FTA agreements, trade ministers from ASEAN also will approve an amendment to an earlier FTA deal between the region and China.
"The FTA plan with China has to be amended because there are certain things that do not fit," Pos said. The FTA deal was signed in Cambodia last year.
Under the plan, ASEAN and China agreed to establish an FTA by 2010. The first sector to be liberalized is the agricultural sector.
ASEAN and China aim to achieve the goal of $100 billion in two-way annual trade by 2005.