SE Asian free trade plan just talk for time being: Analysts

SE Asian free trade plan just talk for time being: Analysts

Dirk Beveridge, Associated Press, Phnom Penh

Southeast Asian nations have pledged to establish a free trade zone with China and they're talking about something similar with Japan and South Korea, but analysts cautioned Tuesday their interests are so divergent that any deals won't come easily.

The 10 members of the Association of Southeast Asian Nations (ASEAN), ranging from highly developed Singapore to tiny, poor Laos, remain so fragmented that any meaningful package within the region seems elusive, experts say.

Their giant or wealthy neighbors to the north further complicates the picture.

"The bottom line here is there's too much overlap," said Song Seng Wun, regional economist with GK Goh Research Pte. Ltd. in Singapore. "Though the pressure is on ASEAN to integrate, they probably won't be able to do it as much as has been played up."

Song predicted efforts to liberalize trade will enable business travelers and tourists to move more freely throughout the region.

But he thinks it will be hard to chip away at traditional rivalries and the protectionism for some industries within ASEAN members who compete with one another in a number of industries.

"I'm not sure exactly what they can come up with on free trade," Song said.

China's speedy ascendance as a regional power may have virtually forced ASEAN to agree on a framework for a free trade area, envisioned in the next decade, during a summit here on Monday.

Philippine Foreign Minister Blas Ople, in Tuesday's edition of The Manila Bulletin, wrote that Chinese Premier Zhu Rongji's "charm and logic" swayed the naysayers.

ASEAN members say they are also trying to move forward with Japan and South Korea, and some envision an eventual East Asia free trade area comprising all 13 nations.

But Cambodia's deputy information minister, Khieu Kanharith, acknowledged many sharp divides would have to be bridged.

"In fact, in many ways we all compete with each other, so how can we cooperate?" Khieu Kanharith said Tuesday. "If we want to become a real bargaining power, we have to unite. We have to take a serious look at the future to plan how to deal with superpowers like the United States, and future superpowers like China."

Analysts agree any breakthroughs will be hard, even though the Asian nations are acknowledging they must integrate their economies more closely to stand a better chance at catching up with other groupings around the world. Two examples of closer ties most cited by the Asians are the European Union, which now has free trade and a common currency used by most members, and the free trade agreement between the United States, Canada and Mexico.

Things are nowhere near that close in Southeast Asia.

"There is a lot of competition between the countries - Singapore and Malaysia can't even get their water deal settled," said Nizam Idris, senior regional economist with the research firm IDEAglobal in Singapore.

He was referring to an ongoing feud about how much money Singapore, with few natural resources, pays its developing neighbor Malaysia for water.

An ASEAN-China free trade area would have a combined market of 1.8 billion people and a gross domestic product of at least US$2 trillion. Theoretically it would help all economies advance in a region where hundreds of millions of citizens still live on less than $1 per day.

"ASEAN hasn't managed to come up with an agreement and they have been talking about this since the early 1990s," Idris said. "They have different needs, they are at a different level of development and so on. It's making a multilateral agreement difficult."

A report being circulated among delegates to the ASEAN summit calls for closer ties among ASEAN, China, Japan and South Korea but acknowledges they must proceed slowly "build up comfort levels" and overcome worries in the ASEAN countries that they would be marginalized.

Otherwise, nations of East Asia will continue to lag far behind their rivals in the European Union and North America, the report said.