Thailand to propose ASEAN Customs Union

Thailand to propose ASEAN Customs Union

BANGKOK (DPA): Thailand will propose the establishment of an
ASEAN Customs Union at the upcoming summit of Southeast Asian
leaders being hosted by Singapore later this week, Thailand's
deputy prime minister said on Tuesday.

"We have to start thinking about the possibility of a Customs
Union," said Thai Deputy Prime Minister Supachai Panichpakdi, who
is also Thailand's commerce minister.

Supachai said he had advised Thai Prime Minister Chuan Leekpai
to raise the proposal at the upcoming informal summit of leaders
from the Association of Southeast Asian Nations (ASEAN) to be
held in Singapore on November 24-25.

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

The European Union took 17 years to go from being a free trade
area to a Customs Union, which establishes a uniform tariff
system for the E.U.'s trade with all countries outside the union.

Supachai, who will become the head of the World Trade
Organization (WTO) in two years time, said ASEAN should push a
similar customs union as a means of strengthening the grouping's
appeal to foreign investors as a free trade area with a single
tariff structure with the world.

"One thing that will make it compulsory to think along these
lines will be the entry of China into the WTO," Supachai told a
roundtable discussion in Bangkok organized by the Konrad Adenauer
Foundation of Germany.

China is likely to enter the WTO in mid-2001, a development
which is likely to undermine ASEAN's competitiveness in certain
export industries and as a draw for foreign direct investment
(FDI) from multinational companies.

"We must realize that with China in the WTO a lot of FDI that
used to be directed to ASEAN has been redirected to China,"
warned Supachai.

Supachai argued that ASEAN would need to speed up its ASEAN
Free Trade Area (AFTA) scheme and consider upgrading it to a
Customs Union as a means of making the region more attractive for
foreign investment.

"We need to make ourselves more attractive," the deputy prime
minister told a small gathering of reporters and ASEAN officials.

The ASEAN Secretariat is expected to release a study it has
compiled on the impact of China's pending entry into the WTO on
the region at the upcoming summit in Singapore.

"In certain sectors there may be more intense competition for
countries whose exports directly compete in areas where China is
strong," acknowledged ASEAN Secretary-General Rodolfo Severino.

He added, "And there could be some investment diversion. ASEAN
is already concerned about the drop in FDI which has happened
before China's entry into the WTO."

Severino expressed some surprise at Supachai's suggestion that
ASEAN set up a customs union, a system which has only been
discussed by academics in the past.

"This was the first time I've heard it backed by such a senior
official," said Severino.