East Asia working toward common market

East Asia working toward common market

MANILA (Reuters): East Asia is working on plans for a common market and later a regional currency to form what could become the most powerful economic grouping in the world, regional officials said on Thursday.

The first steps will be taken at the weekend summit in Manila of the 10-member Association of South East Asian Nations (ASEAN), where regional leaders will be joined by the heads of government of China, Japan and South Korea, they said.

ASEAN is already on track for a free trade area by 2002 and this could be expanded to the three northern neighbors, Philippine Foreign Secretary Domingo Siazon said.

"I think you will see this number expanding not only to China, South Korea and Japan but perhaps in the near future to North Korea. Maybe Mongolia might wish to join," Siazon told Reuters Television.

"I see we will be having first an ASEAN common market, (then) an East Asia free trade area, an East Asia common market, an East Asia currency, it is just inevitable."

Siazon however did not give a time-frame for the plans. "In ASEAN, we keep repeating the process until everyone gets used to it," he said. "We do not institutionalize it from the beginning."

The finance ministers of ASEAN, which includes Brunei, Cambodia, Laos, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam, were meeting on Thursday to thrash out the financial implications of a plan for more East Asia cooperation.

The leaders are likely to announce the program after Sunday's summit, officials have said.

For ASEAN, desperate to regain the high growth rates which were blighted by the 1997/98 financial crisis, regional cooperation has become essential, officials said.

"We have learned from the crisis that we need to stick together, work out our economic plans together, coordinate with each other in terms of our financial policies," Siazon said. Japan is the lynchpin of this plan, he added.

"Japan since 1997 has committed $82 billion to East Asia," Siazon said. "This is mind-boggling, especially if you look at it in terms of what the IMF has provided or the World Bank. It in effect is the major partner as far as East Asia is concerned."

Officials in Tokyo have said Japan would announce a fresh program at the summit to help Southeast Asian nations get more technological training, a key thrust in an effort to build regional competitiveness in information technology industries.

That is the other main aim of the summit -- to prepare a regional initiative to promote such industries, which are seen as the way forward to boosting growth.

On Sunday, the ASEAN leaders -- only nine of them since Malaysia's Mahathir Mohamad will not attend due to general elections in his country -- will meet executives from global software and telecommunications companies to further this aim.

The finance ministers meeting also discussed the second report of the Surveillance Commission, set up by ASEAN to give early warning of any potential economic crises in future.

However, efforts to agree on a code of conduct to govern overlapping claims in the South China Sea, a potential security flashpoint for the region, may not be possible at the summit.

ASEAN officials agreed late on Wednesday to include the Paracel group of islands in the code in addition to the Spratly islands but this may be opposed by China later, they said.

China, Taiwan, Brunei, Malaysia, Vietnam and the Philippines claim part or all of the islands in the South China Sea, which are believed to be located above vast oil and gas reserves.

"Right now, I am not too optimistic that there is enough time to have a code of conduct (in this summit)," Siazon said.

"Hopefully it could be settled in the next six months."