Asian woes may influence WTO financial pact

Asian woes may influence WTO financial pact

GENEVA (AFP): Bilateral talks aimed at sewing up a December global accord to free up financial services resumed here yesterday as diplomats warned that Southeast Asia's jittery markets could impede progress towards a pact.

"The vibes are certainly not that good. (Southeast Asian) countries are a bit preoccupied with their domestic situation right now. But we haven't reached the end of the line," said Stuart Harbinson, permanent representative of the Hong Kong Economic and Trade office here.

Asian support is seen as vital for securing a deal liberalizing a good part of the world's domestic banking and insurance markets under the aegis of the World Trade Organization.

The United States refused in 1995 to jump on board a full WTO agreement supported by 96 other countries, blaming the lack of clear commitment to the liberalizing cause from Asian and Latin American nations.

An interim agreement, in which the U.S. veered away from granting foreigners automatic access to its financial markets, was signed instead. That agreement expires at the end of November.

Negotiators were more optimistic over chances of success this time around, expectant that Asian countries -- ASEAN members did submit packages two years ago -- would put forward beefier offers.

But that was before Thailand hurtled into an economic crisis, causing currency and stock markets in the region to reel and sparking an outflow of capital.

"From our contact, our feeling is that at the government official level, all ASEAN countries are working hard on tabling a (better) offer," said a Japanese trade source.

"(Whether or not they do) is more a question of the political climate at home," the source said. "If the climate improves, there's a fair chance of coming up with something."

The Association of Southeast Asian nations groups Thailand, Singapore, Malaysia, Brunei, the Philippines, Vietnam, Myanmar, Laos and Indonesia.

Since July, three improved offers have come through, bringing the number of countries that have made bolder liberalization bids in the last two years to 29, including 15 within Europe. The most recent initiatives come from South Korea, New Zealand and Macau.

A Thai trade source said Monday Bangkok would not be in a position to submit a juicier financial services offer in September.

A period of adjustment was needed, the source said, adding, though, that Thailand would try to "do something."

The International Monetary Fund has put together a 17-billion- dollar package to help bail out Thailand's economy, which came unstuck largely from a mountain of bad bank loans and the baht's link with the dollar, which Thailand tried to defend with dwindling foreign exchange reserves.