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.