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.