EU, ASEAN view FTA to boost trade

EU, ASEAN view FTA to boost trade

Riyadi Suparno, The Jakarta Post, Kuala Lumpur

Owing to slow multilateral trade negotiations, the European Union
and the Association of Southeast Asian Nations (ASEAN) -- two of
the world's most important trading blocs -- are moving toward a
free trade agreement as a means of boosting two-way trade.

According to Thierry Rommel, head of the EU Commission
delegation to Malaysia, work is underway within the framework of
the Trans-Regional EU-ASEAN Trade Initiative, which is seen by
many as a precursor to the establishment of a free trade
agreement (FTA).

To that end, senior officials from both regions will meet for
the first time in Hanoi next week to study alternative means to
boost trade, one of which would be through an FTA.

"An FTA would be an interesting option for both parties. If
the result of that preliminary discussion says, 'Yes, we go for
an FTA', then, we will start the process (of negotiations), but
that would happen only in 2006," Rommel told The Jakarta Post on
the sidelines of the Euro Conference here on Thursday.

The conference is sponsored by the European Commission and
Bank Negara Malaysia, the central bank.

Speaking at the opening of the conference, Bank Negara
Malaysia governor Zeti Akhtar Aziz noted that the two regions
needed to focus on what she called "the areas of
complementarities" to make their cooperation effective and
sustainable.

"New areas in specific sectors of mutual interest that would
complement the path to greater growth for both regions need to be
explored," she said.

"This would contribute toward reinforcing the sustainability
and effectiveness of the ASEAN-EU partnership and, thereby,
increase the potential to contribute to global economic
stability," she added.

Europe has been traditionally important for ASEAN in trade and
investment as it has become ASEAN's third-largest trading
partner.

Of the total, the trade of ASEAN's five core members --
Indonesia, Malaysia, Singapore, the Philippines and Thailand --
with EU accounted for 12.4 percent in 2004.

Meanwhile, the EU's trade with the five ASEAN members accounts
for 4.5 percent of the EU's total trade.

In addition to ASEAN, Rommel said, the EU is now in the
process of negotiating an FTA with MERCURSOR -- a Latin American
trading bloc grouping Argentina, Brazil, Uruguay and Paraguay.

He noted the EU was now pursing bilateral FTAs that paralleled
multilateral trade negotiations under the World Trade
Organization, because the latter were proceeding quite slowly.

"The EU surely strengthens the multilateral trading system,
but at the same time, we will not put all our eggs in the same
basket," he said.

In addition, Rommel said, the EU did not want to be left in
the cold by other developed countries, particularly the United
States and Japan, which have actively been pursuing bilateral
FTAs with a number of countries, including those in ASEAN.

"It has not escaped our attention that in ASEAN, there has
been a flurry of activity in relation to bilateral trade
negotiations. Therefore, the EU cannot just sit on the sidelines
and let all these things happen and go by," he said.

Unlike the prevailing FTAs signed by Japan and the United
States with individual ASEAN countries, Rommel said the EU would
like to have "deeper" FTAs, which would cover not only the
reduction of tariffs but also the removal of non-tariff barriers
such as standards and norms. If possible, he said, the EU would
also expand the FTAs to include investment.