European, Asian ministers meet on trade

European, Asian ministers meet on trade

CHIBA, Japan (Reuter): Trade and economic ministers from Europe and Asia gathered near Tokyo yesterday for their first annual meeting, which host Japan said would set the basic standard for economic cooperation between the two regions.

The Asia-Europe Meeting (ASEM) of 26 ministers -- 10 Asian and 16 European -- were scheduled to discuss how to liberalize trade and investment flows between Europe and Asia, traditionally closer to the United States than to each other.

"This meeting will set the standards of the basic cooperation of Asia and Europe," Japanese trade minister Mitsuo Horiuchi, the host of the meeting, told ministers in a series of bilateral meetings ahead of today's official opening.

But setting standards may be easier said than done.

Asia, once the El Dorado of emerging markets, is grappling with a range of economic problems, including currency market turmoil, an economic slowdown, and spreading smog while Europe faces a new era of a single currency.

Asia's economic problems, thrown into the spotlight by the recent currency crisis ignited by Thailand's de facto devaluation of the baht on July 2, were brought on by a combination of factors, including a slowdown in exports and rapid capital inflows -- matters up for discussion in this seaside city on the outskirts of Tokyo.

German Economics Minister Guenter Rexrodt said European businesses were ready to support Asia through its struggle to get back on track.

"You have to stick with your investments, you have to enlarge your investments," Rexrodt told Reuters Financial Television.

"Everybody around the globe should be interested in solving these problems because Asia is a very important region."

Thai Minister of Commerce Narongchai Arkasanee set the tone for what Asia needs when he told Horiuchi in a bilateral meeting that export growth and infrastructure development were vital to Thailand's economic recovery.

"The Thai minister expressed his view that continued exports and infrastructure developments were important for the Thai economy," a Japanese trade ministry official told reporters.

But securing the flow of trade from Europe and its investment in infrastructure projects may hinge on Asia's willingness to join multilateral trade agreements, mostly being forged by the developed nations.

The hammering of Southeast Asian currencies has made Thailand and some Asian governments wary of joining further market liberalization pacts that could threaten their exports or put more competitive pressure on ailing businesses.

On the agenda for today's main discussions is a World Trade Organization (WTO) proposal for a pact to open up the global financial services industry which faces a Dec. 12 deadline for completion.

None of the four Asian nations worst hit by the currency crisis -- Thailand, Malaysia, Philippines and Indonesia -- has made any fresh liberalization offers to the proposed WTO pact, arguing that their hands are tied by domestic economic problems.

While Europe, anxious to make up ground lost to the United States in Asia, wants to press ahead swiftly with trade liberalization measures, Asian nations believe that in view of the present fragility of many of their economies, caution is needed.

The ASEM ministers are scheduled to endorse a finalization of a Trade Action Facilitation Plan, which aims at reducing non- tariff barriers and transaction costs, areas in which Asia still lags.

ASEM was founded last year in Bangkok when leaders of the member nations held a summit.

ASEM groups Japan, China, South Korea, Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand, Vietnam, Belgium, Denmark, Germany, Greece, Spain, France, Ireland, Italy, Luxembourg, Netherlands, Austria, Portugal, Finland, Sweden, Britain and the European Commission.