KL tells ASEAN 'think twice' on trade pacts

KL tells ASEAN 'think twice' on trade pacts

KUALA LUMPUR (Reuters): Malaysia on Tuesday told fellow members of ASEAN to think twice before striking bilateral trade agreements which could undermine the grouping.

Singapore, one of the 10 members of the Association of Southeast Asian Nations (ASEAN), agreed to open negotiations to form bilateral free trade agreements (FTAs) with Australia and New Zealand on the sidelines of a Pacific Rim summit in Brunei last week.

It said it will hold talks with the United States, India and Mexico for similar pacts. Prime Minister Goh Chok Tong said in Brunei talks with Canada, Chile and Northeast Asian countries like Korea could follow.

"Whenever we do something out of the context of ASEAN which can weaken the grouping, we must think twice," Malaysian Foreign Minister Syed Hamid Syed Albar was quoted as saying by the official Bernama news agency.

The minister was responding to questions on bilateral FTAs forged by Singapore at the Asia Pacific Economic Cooperation summit last week, Bernama said.

"As an individual nation, we are weak but as a group we are strong," it quoted Syed Hamid as saying. "People regard us as part of ASEAN and have ties with us, but if we break this up, it may bring negative effects."

ASEAN groups Malaysia and Singapore with Cambodia, Brunei, Indonesia, Laos, Myanmar, the Philippines, Thailand and Vietnam. Its proposed free trade area is known as AFTA.

Thailand, Malaysia and four other founding members of ASEAN have pledged to cut tariffs on 95 percent of their trade to five percent from January 1, 2003, under AFTA. But Malaysia has been given more time to lower tariffs on cars.

Some Malaysian economists reckon Singapore's bilateral trade pacts could weaken AFTA.

"ASEAN countries will have to watch Singapore more closely for rules of origin to ensure that the republic is not used as a gateway for products from elsewhere to be marketed and riding on the AFTA vehicle," said Mohd Ariff Kareem, head of the Malaysian Institute of Economic Research.

ASEAN leaders are to meet in Singapore on Friday for a summit, attended also by Chinese Premier Zhu Rongji, Japanese Prime Minister Yoshiro Mori and South Korean President Kim Dae Jung.