Oil, China to dominate ASEAN meeting

Oil, China to dominate ASEAN meeting

Luke Hunt, Agence France-Presse/Hong Kong

Historically high oil prices and China's booming exports will add a sense of urgency when Southeast Asian ministers meet in Laos this week to push for closer economic integration.

But analysts said the economic ministers -- charged with bridging the enormous wealth gaps within the 10-member Association of Southeast Asian Nations (ASEAN) -- must perform a delicate balancing act of weighing up the interests of the poor with fiscal realities.

"The ministers need to focus on restoring investor confidence and shoring up fiscal positions across the region," said Ernest Bower, a former president of the US-ASEAN Business Council.

Sky-rocketing oil prices and expensive fuel subsidies have punished regional government budgets and financial markets, especially in Indonesia and the Philippines.

A chief task for the delegates will be "hammering out what those countries, and others, will do in the wake of high oil prices and the fuel crisis," Bower told AFP.

Competition from Chinese exports, particularly textiles, has also served notice on regional leaders of the need to reduce trade barriers in order to achieve the goal of forming an ASEAN Economic Community by 2020.

Bower said this would mean an end to the special exemptions applied to sectors like Malaysian automobiles and Philippine petrochemicals.

"One of the most compelling issues is how to take advantage of a very proactive China, while continuing to engage and encourage other partners to sustain their focus on ASEAN," he said.

ASEAN has singled out 11 sectors, ranging from health care and cars to textiles, for full liberalisation by 2007 among the six most developed members -- Singapore, Malaysia, Thailand, Brunei, Indonesia and the Philippines.

A further seven sectors, including aviation and telecommunications, are slated for liberalisation by 2010.

The block has also entered talks with the European Union on a possible Free Trade Agreement (FTA) and struck an accord with China aimed at reducing tariffs to between 0 and 5 percent on certain types of goods.

ASEAN recently became China's fourth largest trading partner, and the accord will apply to the most advanced six by 2010 and become effective for the other members -- Laos, Vietnam, Cambodia and Myanmar -- by 2015.

Bower said trade with the United States would also be a focus of the meeting with a US-Singapore trade pact and a coming US- Thai deal being used as a springboard for ASEAN.

"But in terms of tone and tenor -- indeed, momentum -- China is dominating the airwaves in ASEAN," he said.

The three-day meeting starting on Wednesday will also lay the groundwork for the inaugural East Asia Summit to be held in Malaysia in December, when ASEAN will meet China, India, Japan, South Korea, Australia and New Zealand.

Singapore's Foreign Minister George Yeo has said ASEAN would form the centre of Asian economic integration.

However, the United States has opposed an East Asia-only summit amid concern that China would play the most prominent role, threatening Washington's influence in the region.