Asia must adopt yen as 'trading currency'

Asia must adopt yen as 'trading currency'

MANILA (Reuters): Asian countries should adopt the yen as a
common unit for trading purposes but a single currency for ASEAN
was unjustified, incoming World Trade Organization (WTO) chief
Supachai Panitchpakdi said on Wednesday.

Speaking to reporters in Manila after attending a business
forum, Supachai, Thailand's former deputy prime minister, said
there were clear benefits from a common trading currency for the
region.

"I think it would help reduce the cost of trade and would help
the stability of the currency for trading in Asia."

However, he conceded its adoption would take time.

"I think the process cannot be forced because at the moment
with the financial crisis and reform in Japan it might take some
more time but I think we are moving in the right direction with
the (recent) bilateral swap agreements."

Supachai ruled out the notion of a single currency for ASEAN,
the 10-member Association of Southeast Asian nations.

"The size of the region does not justify it," he said.

Earlier he told delegates at the business luncheon that
China's impending inclusion in the WTO should give urgency to
economic restructuring efforts in East Asia.

He said the move should be viewed as an opportunity rather
than as a threat to trade.

"China's entry into the WTO is a blessing...it will give
advancement to trade liberalization, advancement of the
multilateral trading system.

"But it does give us a sort of wake-up call that we cannot
delay the process of injecting more technology into our
industries, delay human resource development or export promotion
activities."

He said when China joined the global trading body it would
probably get around 80 percent of all foreign direct investments
into the region and ASEAN's current share of 16 percent was
likely to be halved.

To ensure the area continued to get its slice of the
investment pie, countries in the ASEAN Free Trade Area (AFTA)
would have to become more integrated and "engage with China as
soon as possible in a closer economic arrangement".

In addition, AFTA should consider the inclusion of India in
its economic zone.

On Asia's economic prospects for this year, Supachai said the
slowing global economy meant "we have to brace ourselves for a
little more indigestion and for more (trade) differences on the
horizon".

With most East Asian countries adjusting their full-year
growth forecasts downward, the region "would be lucky to grow one
to two percent" this year.

He also said the current cyclical downturn in the information
technology sector would "remain with us until at least the middle
of next year".

The slow growth for the region meant trade disputes, such as
those between Japan and China, became harder to resolve, Supachai
said.

Countries pursuing bilateral trade deals, such as Singapore,
and others like Malaysia, which has sought a tariff reduction
exemption for its auto industry, "gives some doubt to AFTA's
prospects".

However, he said ASEAN should be active in launching a new
round of the WTO.

"I want regionalism to be the building block of a multilateral
trading regime," he said.

Going into the next WTO round, Supachai said he hoped to
address a range of issues including access for labor intensive
products, implementation questions, and the world pharmaceutical
patenting system among others.