Thaksin says AFTA only way out of economic crisis in Asia

Thaksin says AFTA only way out of economic crisis in Asia

Jasbant Singh, Associated Press, Kuala Lumpur

Thai Prime Minister Thaksin Shinawatra said Friday that a
Southeast Asian free-trade zone is the only way out of the
economic decline that has set in since the 1997-98 Asian crisis.

A U.S. business group echoed the Thai leader's concerns,
warning the Association of Southeast Asian Nations against
shelving its commitment to a free-trade area or risk seeing
foreign investments dry up further.

Thaksin, speaking in a video-recorded address to a conference
on Asia's economic future, said that the launch of the ASEAN Free
Trade Area would fail if countries tried too hard to defend
national interests.

The free trade area can only succeed, Thaksin said, if ASEAN
members accept that they all face the same problem in
overproducing goods.

"We should therefore join together in ... pooling our
resources to produce quality, world-class products for the rest
of the world rather than in competing with each other," Thaksin
said.

ASEAN needs to integrate its markets with Northeast Asia,
noting that trade between Southeast Asia and China, Japan and
South Korea grew from US$158 billion in 1999 to $202 billion in
2000.

Thailand will host a first Asian Foreign Ministers Meeting
this year to boost economic cooperation, Thaksin said.

Under the trade pact, most tariffs between the 10 member
nations have been lowered to almost nothing, but several
countries have sought delays or exemptions for favored
industries.

Malaysia, for example, wrested protection for its car industry
until 2005, upsetting big automakers - including U.S. firms - who
located plants in Thailand to export within ASEAN.

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

Ernest Bower, president of the U.S.-ASEAN Business Council,
said that the commitment of ASEAN to making the free-trade area a
reality is crucial to drawing back U.S. investors back to
Southeast Asia.

"I understand the Malaysian issues on autos, for instance,"
Bower told reporters. "But what it does, is that it pulls the
whole region back."

Bower said that a country exempting one sector may not seem to
hurt sentiment, since more than 85 percent of tariff categories
under AFTA have been reduced. But investors notice the
exceptions, he said.

"The signal to board rooms is that ASEAN may not be fully
committed to AFTA, and they will not put world-class capital and
technology at risk," Bower said.

U.S. imports from ASEAN fell 13 percent last year and U.S.
exports to the region fell seven percent, Bower said.

Thaksin said that ASEAN was no longer "the preferred
investment darling" that it was before the Asian crisis struck in
1997, blowing away economies that had been the world's fastest-
growing.

Foreign direct investment in ASEAN has dropped from $30
billion in 1996 to $10 billion last year, Thaksin said.

Newer and more attractive markets for international investment
are springing up in Eastern Europe and China, which attracts
about $50 billion in foreign direct investment annually, Thaksin
said.