ASEAN urged to stay firm on free trade goal

ASEAN urged to stay firm on free trade goal

SINGAPORE (AFP): ASEAN members were warned yesterday not to waver on the course of liberalizing trade within the regional bloc or risk losing their competitive edge to other Asian locations.

The warning was sounded by Singapore at the start of a two-day meeting where representatives of the region's parliaments will discuss how to fine-tune business laws to put in place an ASEAN Free Trade Area (AFTA) by 2003 or even earlier.

Tan Soo Khoon, speaker of the Singapore parliament, said countries in the rest of Asia would forge ahead with their own trade liberalization efforts as the Association of Southeast Asian Nations grappled with the task of AFTA.

"They will not wait for ASEAN," Tan told the ad hoc committee of the ASEAN Inter-Parliamentary Organization (AIPO).

"If AFTA is fully implemented, ASEAN would collectively be a more attractive location for world investors," he said.

"If AFTA's implementation is slow and tentative, investors may opt to bypass ASEAN and invest in other locations in Asia such as China and India."

Tan said it was important to ensure that ASEAN's progress towards AFTA was not impeded for the grouping to stay relevant in an economic environment that was seeing dramatic progress in liberalization among other regional blocs.

He urged ASEAN lawmakers to ensure their legal frameworks encouraged progress towards AFTA, calling for laws that were "available, transparent and understood by our respective business communities."

The six-member ASEAN comprises Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand, with Vietnam due to join the grouping soon.

The fourth ASEAN summit in 1992 decided to establish the AFTA to enhance the grouping's global competitiveness.

The summit saw the signing of an agreement on a Common Effective Preferential Tariff scheme for AFTA with the objective of liberalizing trade within the ASEAN through the reduction of tariffs over a 15-year period starting January 1993.

In 1994, ASEAN economic ministers agreed to reduce the timeframe to 10 years, saying that an earlier achievement of a more liberal trading regime would bring greater benefits through increased foreign trade and investments.

Trade growth

Intra-ASEAN trade has grown 33 percent from US$82 billion in 1993 to $110 billion in 1994. ASEAN ranks fourth after the United States, the European Union and Japan in world trade.

Tan said Singapore would commit to "further efforts to bring about a quicker regional liberalization of trade and investment regimes."

A simultaneous liberalization of trade and investment regimes would contribute to the development of cross-border transactions of goods and services, he said.

The AIPO ad hoc committee meeting here yesterday and today is charged with the job of putting together business laws applied by ASEAN members to facilitate a smooth flow of trade and investments.

Singaporean Trade and Industry Minister Yeo Cheow Tong said on the sidelines of the meeting that the deadline for AFTA to come into place could be advanced.

"It is moving along. But of course, it should not be a static situation," Yeo said. "We have to keep a close watch on what our competitors are doing ... we have to meet them head-on. If external pressures make us move, we must be prepared to move even faster."

"At the end of the day, it will be a win-win situation for all of us," Yeo said, adding that a removal of tariff and non-tariff barriers would make the region's industries more competitive and enable them to sharpen their global edge.

Yeo said ASEAN members were working out definite tariff- reduction schedules expected to be ready by September when the group's economic ministers meet.