Ministers to discuss tariff-free market
Ministers to discuss tariff-free market
SINGAPORE (AFP): Economic ministers from the Association of Southeast Asian Nations (ASEAN) gather in Brunei this week to discuss how to drive regional trade faster towards a tariff-free common market.
Some analysts see the task as the most ambitious yet set out by ASEAN, which agreed last year to create an ASEAN Free Trade Area (AFTA) by 2003, five years ahead of schedule.
At their annual conclave in Bandar Seri Begawan starting tomorrow, ministers from Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand and new member Vietnam will grapple with a proposal to advance the date to 2000.
Greater and freer trade in sectors such as financial services, tourism and transport, and cooperation in intellectual property protection to back AFTA's creation are also expected to be discussed, officials said.
The proposal to speed up AFTA came last month from Sultan Hassanal Bolkiah of Brunei, who warned that other regions were already overtaking ASEAN in economic cooperation and were freeing their markets to attract investments.
ASEAN must take "some risks with our overprotected domestic industries if we are not to be left behind," the Sultan said.
The rationale for protecting domestic industries has weakened in the liberalizing multilateral trading regime, said Singapore's trade and industry minister, Yeo Cheow Tong.
"Protecting so-called infant industries will merely enable their competitors to strengthen their capabilities and pull further ahead," Yeo said.
He noted that the European Union's common market was expanding further to include more of eastern and central Europe, and the Asia-Pacific Economic Cooperation forum had targeted freer trade and investments by 2020.
Customs
He also cited the creation of a customs union in Latin America with zero tariffs and the emergence of liberalizing big markets such as China and India.
"Unless we take steps to stay ahead, ASEAN risks being bypassed by international investors," he warned.
Julius Caesar Parrenas of the Manila private think-tank Center for Research and Communications said the faster implementation of a free trade zone would make ASEAN members "more prepared, more confident" to face competition.
But AFTA faces challenges from a wide divergence in member economies and their strong domestic lobbies.
Oil-rich Brunei and trade-driven Singapore -- the smallest but wealthiest members -- already have the most open markets and fast-growing Malaysia and Thailand would face an easier time adjusting to an accelerated AFTA.
The Philippines and Indonesia -- which between them have about 250 million people -- would, however, have a harder time phasing out tariffs, analysts say. Socialist Vietnam has already been given three years' leeway after 2003.
ASEAN is the world's fourth largest trader, after the United States, the European Union and Japan. ASEAN's trade with the world increased by 21 percent from 1993 to US$543 billion in 1994.
Trade within the region is also growing rapidly. It expanded 24 percent from 1993 to $110 billion in 1994.
How much ASEAN will gain from a free trade zone lies in how quickly it can be established and the differential between ASEAN's internal barriers to trade and elsewhere, supporters of AFTA 2000 say.
The Brunei meeting will discuss a list of "sensitive" farm products for which tariffs could be liberalized in line with AFTA, but which if opened up too quickly could hurt commodity- exporting countries.
The "sensitive" products include rice, cocoa, palm oil, coffee, tobacco, coconut and sugar, primary commodities of the resource-rich countries of Malaysia, Indonesia, Thailand, the Philippines and Vietnam.