Proposed trade agreement with Japan will lift ASEAN's GDP

Proposed trade agreement with Japan will lift ASEAN's GDP

Agence France-Presse, Singapore

A proposed trade pact with Japan could lift ASEAN's economic
output by two percent and boost its exports to the Asian economic
giant by US$21 billion, a senior Singapore trade official said
Thursday.

ASEAN must enhance its business environment in order to
continue attracting Japanese foreign direct investment (FDI)
which has remained strong despite the rising attraction of China,
Minister of State for Trade and Industry Raymond Lim said.

"The gains from working together will be substantial," Lim
said in a speech at the annual ASEAN-Japan Business Meeting.

"The benefits of a FTA (free trade agreement) with Japan would
even surpass those from a FTA with China due to the complementary
nature of the Japanese and ASEAN economies," he said.

In a trip to the region earlier this year, Japanese Prime
Minister Junichiro Koizumi's call for a closer economic
partnership with the Association of Southeast Asian Nations
(ASEAN) received backing from the region's leaders.

If the vision of a proposed trade pact is realized, Lim said
the 10-member regional bloc's export volumes to Japan would grow
by $21 billion by 2020, while Japanese exports to the region
would also receive a similar boost.

"ASEAN's GDP (gross domestic product) growth will be boosted
by 2.0 percent," he added.

Trade between Japan and ASEAN between 1995 and 2001 was worth
$54 billion, higher than the $48 billion between China and Japan.

"The economic ties between Japan and ASEAN therefore remain
strong," Lim said.

Isao Kaneko, president and chief executive of Japan Airlines,
who co-chaired the meeting, said Japan has "consistently directed
approximately twice as much foreign investment" into the 10-
member regional bloc than it has to China.

He said the proposed ASEAN-Japan free trade pact should be
further expanded to cover all of East Asia, which would include
China and South Korea.

"There may be different ways to go about it: bilateral,
multilateral or comprehensive ways in forming regional
integration," he told the delegates.

"The important thing is, however, that we make steady progress
as an ultimate goal in the formation of an economic partnership
of all the countries of East Asia," he said.

During a meeting in Brunei last month, the trade ministers of
ASEAN and Japan said they should start considering a framework
that could lead to an FTA within 10 years.

ASEAN, which groups Cambodia, Laos, Myanmar, Vietnam,
Singapore, Brunei, Indonesia, Malaysia, the Philippines and
Thailand, is about the finalize a framework agreement on a
proposed free trade pact with China which they also hope to seal
within 10 years.

The framework -- which will guide negotiators -- is to be
signed by the leaders of ASEAN and China when they meet for a
summit in Cambodia next month.

South Korea has said it has directed a feasibility study on
the possibility of a free trade accord with ASEAN.

ASEAN however is not keen on an East Asian free trade area,
saying the regional bloc would be overshadowed by its bigger and
wealthier Northeast Asian neighbors.

This is why ASEAN prefers to negotiate separate free trade
pacts with China, Japan and South Korea.
+