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.