Industries not ready for faster free-trade

Industries not ready for faster free-trade

BANDAR SERI BEGAWAN (Reuter): A call at the recent Association of Southeast Asian Nations (ASEAN) meeting to speed up introduction of its free-trade area has received a mixed response with some industries saying they are not ready for fast-track trade liberalization.

Sultan Sir Hassanal Bolkiah of Brunei opened the ASEAN foreign ministers meeting in Brunei early this month with a call to accelerate the creation of the ASEAN Free-Trade Area (AFTA) by three years from 2003 to 2000.

He proposed shortening the deadline for cutting tariffs to five percent under the Common Effective Preferential Tariff (CEPT) scheme from 2003 to 2000, saying the region has to take some risks if it is not to be left behind.

"Other regions are overtaking ASEAN in economic cooperation," he told the meeting.

The inclusion of Vietnam's 72 million people into ASEAN, which also groups Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand, increases its combined population to 420 million, larger than Europe or North America.

But Vietnam's admission was nearly derailed by a last-minute wrangle over the terms of its participation in AFTA. It was eventually granted a three-year grace period and will have to implement required tariff cuts by 2006.

The Sultan said the MERCOSUR group of South American countries -- Argentina, Brazil, Paraguay and Uruguay -- started to implement zero tariffs from Jan. 1 this year.

"AFTA's goal to achieve this by 2003 is way behind MERCOSUR," he said.

Announcement

He said he hoped ASEAN will be able to announce the completion of AFTA by 2000 at a summit in Bangkok in December.

"We have to take some risk with our overprotected domestic industries if we are not to be left behind," he said.

The CEPT scheme was originally aimed at establishing a free- trade zone by 2008 but ASEAN economic ministers agreed last year to speed up implementation of the CEPT by five years.

Indonesian Industry Minister Tunky Ariwibowo said the proposal had to be studied very carefully while pointing out the idea came from Brunei, which has only a small industrial sector compared with Indonesia.

"We must be very cautious because Indonesia is the biggest market among ASEAN members. Whether the idea will give benefit to Indonesian industries, it needs to be discussed among our ministers," Tunky told reporters.

Jose Concepcion, a former Philippine trade and industry minister, said cutting tariffs on agricultural products would be disastrous for the Philippine agricultural sector.

"Some countries may be ready, some countries may not be ready. If we bring it (agricultural barriers) down to three percent, our agriculture sector is dead," he said.

Thai businessman Narongchai Akrasanee, who led a Thai delegation to a meeting of ASEAN Chambers of Commerce and Industry in Manila last week, said an accelerated program to implement AFTA would quickly run into objections from the petrochemical industry of many countries in the region.

"Many of the countries who have just established their petrochem industries cannot immediately (open them)," he said.

ASEAN hopes its ambitious AFTA scheme will not only facilitate intra-ASEAN trade but also attract more investment from abroad.