ASEAN to sign FTAs with Japan, India

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.