Mega says AFTA needs 'escape clause'

Mega says AFTA needs 'escape clause'

Adianto P. Simamora, The Jakarta Post, Jakarta

President Megawati Soekarnoputri called for on Thursday the
creation of an "escape clause" in the implementation of the AFTA
regional trade pact to help member countries facing special
difficulties in the early stages of the trade liberalization to
iron out any possible kinks.

"It may not be surprising, that at a certain point in our
endeavors there will be one of us encountering difficulties. In
my point of view, we will need a clear and practical mechanism to
iron out these problems," Megawati said in her speech at the
opening ceremony of a one-day conference on the Association of
South East Asian Nations (ASEAN) Free Trade Area (AFTA), which
was mostly attended by ASEAN representatives.

"I think it will bring us some benefits to provide such an
escape clause," she said.

Megawati, who was accompanied by Trade and Industry Minister
Rini Soewandi, did not provide details about the proposed escape
clause idea.

But the statement could be a sign of backtracking from the
trade liberalization move amid economic hardships at home.

Some influential businesspeople as well as a business lobbying
group, the Indonesian Chamber of Commerce and Industry (KADIN)
had previously expressed opposition against the early
implementation of AFTA, citing that the 1997 economic crisis had
made them weak and they were in no position to compete head-on
with overseas players.

Under the AFTA agreement, which became effective on Jan. 1,
the import tariffs for almost all products traded within the six
founding members of ASEAN -- Indonesia, Malaysia, Singapore,
Thailand, Brunei and the Philippines - was set between zero to
five percent.

The average tariff on intra-ASEAN trade is now down to 3.2
percent.

But the four newer ASEAN members -- Vietnam, Laos, Cambodia
and Myanmar -- would be allowed to delay their tariff reductions
until between 2006 and 2010.

Elsewhere, Megawati said that the move by ASEAN countries in
the implementation of AFTA would not always go smoothly.

She said that AFTA required the ASEAN members to act together
in the interests of all.

"During this trying period, we need -- more than ever before
-- a mutually beneficial spirit of cooperation, rather than a
sense of competitiveness in which a given country regards others
as a threat and merely indulges in its drive to manipulate
other's weaknesses to take benefits at all times," she said.

Megawati also urged local business players to improve
efficiency in a bid to boost their competitiveness so as to
compete in the ASEAN market.

"Local business players must be courageous to compete in both
the ASEAN and global markets and not to confine themselves only
to the domestic market," she said.

Meanwhile, ASEAN secretary general Rodolfo Severino urged all
ASEAN member countries to minimize the use of non-tariff barriers
to smooth the implementation of AFTA.

"I am against imposing non-tariff barriers, I hope ASEAN
members will not resort to non-tariff barriers unless it is
absolutely necessary," Severino told reporters.

Separately, Singapore Trade Minister George Yeo urged the
ASEAN member countries to expedite economic integration in a bid
to compete with China.

"China presents a huge challenge to Southeast Asia. If we do
not move quickly to integrate ASEAN, we may be completely
overshadowed by Northeast Asia," Yeo said.

ASEAN and China earlier agreed to set up the world's largest
free trade agreement within ten years, covering two billion
consumers.