ASEAN's free trade plan suffers setback
ASEAN's free trade plan suffers setback
SINGAPORE (AFP): An ambitious plan to turn Southeast Asia into a free trade and investment area received a setback Tuesday when Malaysia said it cannot meet a 2000 deadline to slash tariffs on motor vehicle parts.
Malaysia dropped the bombshell at a closed-door preparatory meeting of senior officials of the Association of Southeast Asian Nations (ASEAN) ahead of talks this week among the grouping's trade ministers, sources told AFP.
Automotive parts are among a list of industrial products that can be excluded from a tariff liberalization scheme under the ASEAN Free Trade Area (AFTA).
ASEAN had planned to do away with such an exclusion list for key economies from 2000.
But with Malaysia's request for more time to cut tariffs on motor vehicle parts, the plans could now go awry because other ASEAN member states also wanted to "backtrack" on other products, meeting sources said.
Malaysia reportedly had no problems reducing tariffs on car parts and components by 2000 but was not ready for easing import duties on completely-knocked-down and completely-built-up units. Malaysia slaps heavy duties on some automotive parts largely to protect its national car Proton.
It is not known how Indonesia, which has its own Timor national car project, featured in the motor parts tariff reduction plans of ASEAN.
"We are trying to achieve consensus by accommodating each economy's problems to make sure that our free trade goals remain on track," a source said. "Going by ASEAN's track record, we can do it," the source added.
The talks among senior officials Tuesday was to lay the framework for the meeting of trade ministers as well as review the progress on both the tariff and investment-barrier reduction fronts.
The ASEAN ministers will iron out the technical details of the agreement to achieve the AFTA as well as an ASEAN Investment Area.
The original members of the grouping, Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand, have all agreed to lower their tariffs on industrial products to between zero and five percent by 2002.
The other members Cambodia, Laos, Myanmar and Vietnam have flexible deadlines in their effort to remove the tariffs.
The 10 states are also aiming for an ASEAN Investment Area which requires their commitment to opening their manufacturing sectors to investors within the region beginning 2003.
A statement from the Singapore Trade and Industry Ministry said the ministerial policy-making mechanisms for the free trade and investment plans would meet on Wednesday.
The ministers were scheduled to sign a pact Thursday on arrangements for "sensitive" products to be included in the plans.
Details of the so-called "protocol on the special arrangement for sensitive and highly sensitive products" were not immediately available.