Peak U.S. business group calls for ASEAN to integrate markets

Peak U.S. business group calls for ASEAN to integrate markets

Agence France-Presse, Bangkok

Southeast Asian nations should work quickly to integrate their economies in order to compete successfully against their giant neighbor China, a peak U.S.-based business group said Friday.

"The fear that ASEAN (the Association of Southeast Asian Nations) countries may have about foreign direct investment going to China is well-founded," Ernest Bower, president of the U.S.- based U.S.-ASEAN Business Council, warned during a visit here.

"Our recommendation to the ASEAN countries is to integrate your economies, to implement the ASEAN Free Trade Agreement (AFTA) totally, as soon as possible, and without derogation."

Under the AFTA, launched in 1993, most countries in the 10- member ASEAN must cut import tariffs to a maximum of five percent by 2003.

But countries may seek to temporarily opt out of their commitments in sectors that they feel are not prepared to face foreign competition.

"Areas such as the Malaysian derogation on autos, and planned rollbacks on tariffs by the Filipinos could really hurt investor perspective in terms of investors believing the ASEAN free trade agreement is going to be fully implemented," he said.

Bower said investors were keen to establish a presence in ASEAN in the hope of taking advantage of the proposed ASEAN-China free trade agreement (FTA).

But ASEAN nations should ensure investors "are strongly supported with good infrastructure, strong corporate governance and a strictly enforced rule of law," Bower said.

"If this is the case, we believe U.S. investors will build their investment positions in Thailand and ASEAN to take advantage of a combined ASEAN-China market."

Under a landmark agreement signed at the ASEAN summit in Cambodia in November, the FTA would be completed in 2010 between China and the six original ASEAN members of Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand.

The least-developed ASEAN nations of Cambodia, Laos, Myanmar and Vietnam would join in the agreement by 2015.

The ASEAN-China market groups 1.7 billion consumers in countries with a combined gross domestic product of US$2 trillion.