Southeast Asian plans huge free trade zone

Southeast Asian plans huge free trade zone

Cindy Sui, Agence France-Presse, Bandar Seri Begawan

Southeast Asian leaders and their major dialogue partners China, Japan and South Korea agreed Monday to work towards closer economic integration, including the prospect of a giant East Asian free trade area.

The zone, covering a market of more than two billion people, was "bold yet feasible", Brunei's Sultan Hassanal Bolkiah said at the end of a regional summit here involving the Association of Southeast Asian Nations (ASEAN) and its three dialogue partners.

An East Asia free trade bloc, which would swallow a China- ASEAN zone already under consideration, was contained in a list of proposals from the East Asia Vision Group, an initiative by South Korean President Kim Dae-Jung set up in 1999.

The proposal involves liberalizing trade "well ahead of APEC's goals", the sultan said.

The Asia-Pacific Economic Cooperation (APEC) forum has set a 2010 target to free up trade in developed nations and 2020 for developing economies.

A study group will report back to the next ASEAN summit in Cambodia in 2002 on the East Asia free trade zone, he said.

ASEAN secretary general Rudolfo Severino said no final decision had been made on China's plan, first mooted at last year's ASEAN summit, but the leaders of the 10-nation body found it "interesting and worth pursuing".

The annual ASEAN plus three meeting has been held as an adjunct to the Association of Southeast Asian Nations (ASEAN) summit since 1997.

China, whose separate free trade zone with ASEAN will be presented during an ASEAN-China summit Tuesday, gave tentative support for South Korea's plans.

"I think so. We are supportive," a Chinese official told AFP.

A Chinese foreign ministry spokesman, Lu Wenxiang, on Sunday said China was confident its own proposal would be adopted.

Chinese economist Shen Jiru said it would be more complicated for South Korea or Japan to set up free trade zones with ASEAN, because the two countries would face difficulties lifting restrictions on agricultural imports and cut tariffs due to pressure to protect domestic producers.

"China's tariffs on agricultural products are also high, but China and ASEAN do not trade much in agricultural products," said Shen, a political and economic analyst of the Chinese Academy of Social Sciences in Beijing.

Lu told AFP the "ASEAN plus three" leaders also discussed boosting regional cooperation in other areas, including in the financial and information technology fields as well as by jointly developing transportation and tourism along the Mekong River area.

"We all agreed we should increase cooperation," Lu said.

In the area of finance, China hopes to implement the Chiang Mai Initiative, which involves currency swap arrangements among the region's countries to counter negative impacts from any future Asian financial crisis.

Lu said Thailand and China have basically reached an agreement to conduct the swaps. China is currently holding discussions with other countries.

ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.