Brunei meet boost AFTA program

Brunei meet boost AFTA program

By Anil Penna

BANDAR SERI BEGAWAN (AFP): ASEAN's quest for closer economic integration into the next century has received a fresh boost although members fail to see eye to eye on hurrying down the road to regional free trade.

Economic ministers from the Association of Southeast Asian Nations agreed in Brunei's capital to start talking next year on opening up services and setting up mechanisms to settle economic disputes.

A commitment to include "sensitive" unprocessed farm products for tariff reduction notched up another plus at their annual meeting which ended last Friday.

"We are moving ahead in the most practical way possible, and we have started making new initiatives which will indeed be implemented," Malaysia's Minister for International Trade and Industry Rafidah Aziz said last Saturday.

She added that "the ASEAN economic entity is now committed to realizing the economic potential of the region" by looking beyond trade in products to encompass services as well.

Negotiations on services sectors -- including aviation and transport, banking and financial services, construction and communications -- will begin after ASEAN's December summit in Bangkok.

But there was some disappointment in the Brunei and Singapore camps that Indonesia, Malaysia, the Philippines, Thailand and Vietnam did not endorse the creation of an ASEAN Free Trade Area (AFTA) by 2000.

The two countries pushed hard for AFTA, the centerpiece of regional economic cooperation, to be put in place three years ahead of ASEAN's 2003 deadline.

ASEAN, with 420 million people, is now the world's fourth- largest trader after the United States, the European Union and Japan.

Its trade with the rest of the world grew 21 percent over 1993 to US$543 billion in 1994, when intra-ASEAN trade reached $110 billion.

Foreign direct investment (FDI) flows to the region rose by 131 percent from $17.1 billion in 1993 to $39.5 billion in 1994. ASEAN's FDI stock is approaching $200 billion -- three times that of China, the single largest recipient of investments in the developing world.

Sultan Hassanal Bolkiah of Brunei, reiterating a call for "AFTA 2000," warned the ministers that ASEAN risks being overtaken by competing regional groupings as well as China and India.

He said AFTA was a "visionary proposal" when it was first mooted in 1992 but free trade areas have become the global norm, so ASEAN must move faster.

Brunei and Singapore are the smallest and richest of ASEAN countries, have the most open markets, and virtually no agricultural interests to speak of. They have little to lose in quickening the tariff phase-out.

Socialist Vietnam, which joined ASEAN in July, has been given three years' leeway after the 2003 deadline to catch up with the rest.

The other countries have bigger populations and strong domestic industrial and agricultural lobbies averse to a quicker phase-out of tariffs, blocking a formal adoption of the 2000 deadline, ASEAN sources said.

ASEAN needed to take just a small step towards "AFTA 2000," which would have a tremendous political and psychological impact on efforts to tear down tariff barriers, said Singapore's Minister of Trade and Industry Yeo Cheow Tong.

"It will be a pity if we could not take that small step," he said.

But a compromise was found, even while maintaining the 2003 deadline.

The ministers agreed to revise their tariff-reduction schedules to expand the number of items with tariffs to be cut to zero-to-five percent by 2000, paving the way for a more liberal AFTA regime well before the 2003 deadline.

There are a total of 40,960 tariff lines, representing nearly 90 percent of all tariff lines in ASEAN, in a list of progressive reductions due to be implemented from next year. All are due to have their tariffs reduced to zero-to-five percent by 2003.