Is ASEM a new trade group?

Is ASEM a new trade group?

By Philip McClellan

BANGKOK (AFP): A landmark summit here this week bringing together leaders from 25 Asian and European countries could be the first step toward a new era in liberalized trade to challenge U.S. influence in the region.

The Thai hosts of the Asia-Europe meeting (ASEM) have said that freeing up economic contacts between the continents will be the goal of the two-day meeting, and that formal trade and investment agreements may not be far off.

Thailand has even hinted that the summit could set the stage for a trade liberalization arrangement -- possibly by 2010 -- between Asia and Europe similar to the Asia-Pacific Economic Cooperation (APEC) forum.

"APEC is operating on an MFN (most favored nation) basis, on non-discriminatory principles," Thai Deputy Prime Minister Amnuay Virawan said. "We would like to see Europe promote economic regionalism in the same manner."

Such an arrangement would be welcomed by European countries anxious to harness Asian economies moving ever closer to the United States as a result of their joint membership in APEC.

"It's normal that we should be impatient to try to pry open those (Asian) markets because we are ready in the starting blocks," said Daniel Descoutures, charge d'affairs at the EU Commission in Bangkok.

Financial services and telecommunications were two key sectors the Europeans were eager to penetrate in Asia, he said. Both sectors have been closely guarded by most Asian countries behind a regulatory thicket.

However, despite European enthusiasm, many Asian countries are wary about adding ASEM to the many acronyms already cluttering the region -- as well as having to cope with sticky issues such as human rights that invariably crop up in their contacts with the West.

"We don't want anything to be institutionalized, with the EU or anybody else," Malaysian International Trade and Industry Minister Rafidah Aziz said recently. "There is a proliferation of structures already."

Japan has indicated interest in setting up a formal trading relationship with the European Union, but -- along with Indonesia and Malaysia -- has rejected the notion of a timetable to achieve that aim.

Although trade between East Asia and the European Union has been increasing at a higher rate than that between East Asia and the United States, the Europeans are still lagging behind in the booming region.

Two-way trade between East Asia and the European Union was worth US$225 billion in 1994, against the $326 billion recorded in trade between East Asia and the United States, the Japanese foreign ministry said Tuesday.

Liberalized trade would help Asian firms scale Europe's huge single market for manufactured goods. The Europeans, meanwhile, have been eager to move investment to Asia's rapidly growing economies and tap into its fast-growing markets for sectors such as financial services and high technology.

However, long-running allegations by both sides of unfair trading practices mean that neither side is optimistic that the 25 leaders will emerge triumphantly from their huddle with an economic alliance.

The European side maintains that many Asian countries have dumped cut-rate products in Europe, ignored widespread intellectual property violations in Asia and have coddled their agricultural sectors behind various trade barriers.

China and Vietnam, in particular, have also been the targets of repeated EU calls to dismantle their formidable tariff structures.

The Asians, on the other hand, have accused the Europeans of erecting trade barriers of their own through quotas and unclear regulations.

Chinese Foreign Trade Minister Wu Yi earlier this month called on the European Union to abolish "discriminatory and unreasonable trade policies," citing quotas imposed in 1994 on Chinese imports ranging from shoes to radios.

The Bangkok summit will bring together leaders and senior ministers from Brunei, China, Indonesia, Japan, Malaysia, the Philippines, Singapore, South Korea, Thailand and Vietnam -- as well as from the 15 EU countries.

The EU groups Austria, Belgium, Britain, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain and Sweden.

Window: Liberalized trade would help Asian firms scale Europe's huge single market for manufactured goods.