'EAEC phobia' affects some countries, KL says

'EAEC phobia' affects some countries, KL says

KUALA LUMPUR (Reuter): Malaysian Trade and Industry Minister Rafidah Aziz said yesterday some countries have "unfathomable" fears of an Asian economic caucus and are trying to block its formation.

"Some countries seem to have developed an EAEC (East Asian Economic Caucus)-phobia, for reasons quite unfathomable, and have tried very hard to stall the realization of the proposal, although it has now received ASEAN (Association of Southeast Asian Nations) consensus," Rafidah said in Kuala Lumpur. ASEAN groups Malaysia, Singapore, Indonesia, Thailand, Brunei and the Philippines.

Rafidah, repeating Malaysia's defense of an idea it first proposed, said the EAEC was not meant to be a trade bloc and its formation would enhance regional and international trade.

"Malaysia believes in open regionalism and the proposal to establish an EAEC is with the objective of synergizing the collective strengths of the East Asian economies," she said at a tax conference.

Malaysian Prime Minister Mahathir Mohamad proposed the caucus in 1990 as a regional trade grouping to rival the existing Asia- Pacific Economic Cooperation (APEC) forum that links countries in the Pacific Rim and the United States and to counterweight trade blocs in Europe and North America.

The EAEC idea, which excludes the United States, Australia and New Zealand, has been slow getting off the ground due largely to Japan's reluctance to be part of the grouping for fear of offending the United States, which opposes the plan.

Rafidah said regional groupings "constitute building blocks to multilateralism" and create trade.

The World Trade Organization (WTO) said yesterday that the growing number of regional trading groups would not turn into isolationist blocs undermining progress to world-wide free trade. A report by analysts in the WTO secretariat said there was no sign any of the 108 customs unions and free-trade areas set up since World War Two posed a threat to the multilateral system of trade rules the new body was created to administer.

Rafidah said developing countries had to be given "due recognition" in the formulating of rules for international trade. She said according to General Agreement on Trade and Tariffs statistics, developing countries' share of total world merchandise exports amounted to $1.85 trillion, representing about 45.6 percent of total global exports, and they absorbed $1.79 trillion, or 42.7 percent of total global imports.