Asia faces pressure on rapid trade reforms

Asia faces pressure on rapid trade reforms

SINGAPORE (AFP): Many Asian developing economies emerging from crisis are facing domestic pressure against faster trade liberalization at the upcoming WTO ministerial talks in Seattle, Washington, analysts in the region say.

Sheltered domestic industries are worried they would be overwhelmed by competition if their markets were thrown open while still recovering from a recession caused by the financial turmoil which erupted in mid-1997.

They want to wait for their economies to be firmly on their feet before having to face further liberalization from the launch of a new round of global trade talks in Seattle, the analysts said.

"There has been quite a lot of resistance to tariff liberalization, particularly from manufacturers producing for domestic markets," said Mohamed Ariff, executive director of the Malaysian Institute for Economic Research (MIER), a Kuala Lumpur- based think tank.

He said although some of their fears were warranted, these manufacturers could not turn their backs on liberalization "because one of the lessons of the crisis is excess protection of industries makes them totally inefficient.

"In fact, the solution to the problem of openness is more openness, not less openness," Mohamed said.

In Southeast Asia, the region worst hit by financial turmoil, Malaysia and Indonesia have expressed difficulty adjusting to a regional free trade plan.

They are unlikely to include cars, as originally planned, in an Association of Southeast Asian Nations (ASEAN) tariff reduction scheme to become operational on January 1, 2000.

Malaysia slaps heavy duties on some imported cars largely to protect its national car Proton, whose sales slumped during the crisis, while Indonesia's Timor car project has also been heavily protected.

Liberalization is also being challenged in other Asian nations, some of which want to hit back after failing to earn market access in rich nations.

Political coalitions of developing countries, among them the Group of 77 and the Group of 15, have strongly attacked developed nations for using anti-dumping measures and countervailing duties to shield their markets.

They accused industrial nations of going against the spirit of the last Uruguay Round global trade talks.

Another commitment which is increasingly being questioned is the agreement on textile exports.

ASEAN Secretary-General Rodolfo Severino pointed to the commitment of the developed countries to dismantle their quota- based system of limiting the import of clothing and textiles, and to integrate trade in clothing and textiles into WTO rules and disciplines.

He said the developed nations had "shortchanged" the clothing and textile exporters, mostly developing countries, as they "sought to circumvent this commitment by integrating in low-value items first and pushing the bulk of their imports to the final stages of the liberalization process."

Analysts warn that a Seattle battle for greater market access between the developing nations and industrialized economies could reopen old wounds sustained during the marathon talks under the General Agreement on Tariffs and Trade (GATT) forum, WTO's predecessor.

"But even if it opens up old wounds, it is a healthy sign," said Mignon Chan Man-Jung, director-general of the influential Pacific Economic Cooperation Council (PECC).

"Otherwise we might as well not have a WTO forum whose very essence is bringing together countries from different areas together and trying to find a middle way to settle problems incrementally, if not in one go," she said.

Chan said crisis-hit Asian nations should be given assurances by the international community that markets, particularly financial markets, would be supervised efficiently while liberalization was underway.

"You can't just advocate domestic restructuring and other reforms without having an effective international financial architecture," she said.