U.S. supports FTA deal with ASEAN
U.S. supports FTA deal with ASEAN
JP/ASEAN U.S. business leaders offer support for free trade deal with ASEAN U.S. business leaders on Wednesday offered support for a free trade agreement (FTA) with ASEAN to keep their country engaged with Southeast Asia as China's influence grows in the region.
During a dialogue with economic ministers from the Association of Southeast Asian Nations, they also urged the 10-member alliance to ensure member states did not delay their commitments to the ASEAN Free Trade Area.
ASEAN-U.S. Business Council president Ernest Bower said that strategically, a U.S.-ASEAN free trade deal "is a damn good bet".
The free-trade pact, first mooted in April, is the latest in a series of proposed free trade accords for ASEAN.
Leaders of ASEAN and China in 2000 agreed to work out an FTA covering nearly two billion people within 10 years, and talks are under way for a framework agreement to be finalized.
Japan earlier this year suggested a broader economic partnership with ASEAN, which could also include a free trade pact.
Singapore, a member of ASEAN, has signed free trade deals with New Zealand and Japan and may finalize one with the U.S. later this year.
Bower told reporters after the U.S. business leaders met the economic ministers that free trade talks were at an exploratory stage and he did not see an FTA emerging in the next two years.
A U.S.-ASEAN deal would have strategic importance, given China appears to have taken an increasing leadership role in the region which has traditionally focussed on Japan and the United States.
"Bear in mind that to us, ASEAN is a very significant market," he said, citing the region's combined population of over 500 million.
U.S. investments in ASEAN are about the same level as Japan and "we have five times as much invested in ASEAN currently as we do in China," he said.
"Strategically, we want to be engaged in helping to define the future environment for trade and investment in this region. And what we've seen happening is China has taken... a leadership role in terms of reforming its image in the region," he said.
Bower acknowledged the closure of the U.S. embassies in Indonesia and Malaysia because of security threats on the Sept.11 anniversary could dent investor sentiment towards Southeast Asia, where pockets of Muslim extremists operate.
But he said that he and a large group of business leaders from the U.S.-ASEAN Business Council would go ahead with a trip to three Indonesian cities next week.
2. Duit 3 X 20 Asian currencies down late on yen, risk aversion
Asian currencies down Late On Yen, Risk Aversion
Dow Jones Singapore
A softer yen drove Asian currencies broadly lower Wednesday, with the New Taiwan dollar falling to its weakest level since late May.
However, regional currencies managed to claw out of their intraday troughs as profit-taking on the dollar helped trim losses.
Volumes were thin as market players opted to wait out the first anniversary of the Sept. 11 terrorist attacks in the U.S.
Risk aversion was the main theme amid growing prospects of a U.S.-led war on Iraq and the attendant spike in oil prices, with market players unwilling to be caught short of dollars.
"There has been some risk aversion that has favored a strong dollar. The headline risks are quite high on the fundamental side. The biggest headline risk is the potential conflict in Iraq," said Vincent Low, Singapore-based head of foreign exchange/bond strategy for Asia at Merrill Lynch.
Economic concerns remained a key concern as higher oil prices, if sustained, will dent economic recovery in an export-dependent region, which is already trying to deal with the prospects of slower growth in the U.S.
A UBS Warburg report rated the Philippine peso, the Korean won and the Thai baht as the most vulnerable among Asian currencies to a sustained rise in oil prices
With uncertainties both on the geopolitical and economic front, market players were unwilling to take strong positions, traders said.
Against the New Taiwan dollar, the U.S. currency ended at NT$34.395 - its highest since May 24 - from NT$34.303 Tuesday, but off an intraday high of NT$34.403.
A dealer said central bank intervention helped support the local dollar, which took its cue from the yen; the central bank sold between US$150 million and $200 million to help support the local unit.
The New Taiwan dollar often tracks the yen because Taiwan and Japan compete in some export categories. Taiwan also imports large amounts of goods from Japan.
Talk of central bank intervention also helped pull the dollar back from intraday highs against the Indonesian rupiah, traders said.
Bank Indonesia has a policy of intervening in the market but never comments on specific actions.
The dollar ended at Rp 8,890, up from Rp 8,865 the previous day, but off the day's high of Rp 8,905.
The rupiah didn't react to a statement from Bank Indonesia's board of governors that it hopes to keep cutting rates due to benign inflation, and a stronger rupiah, as market sentiment is barely affected by rate policy.
Indonesian authorities are hoping lower rates will spur growth. Finance Minister Boediono said the country was likely to meet its near 4 percent economic growth target this year. But experts, including the World Bank, warn Indonesia needs at least 6 percent growth to create enough work for new job seekers each year.
In South Korea, the dollar closed at 1,202.5 won, down from 1,198.4 won Tuesday but off an intraday high of 1,204.0 won.
Like recent sessions, importers and exporters were the main market participants. Importers were buying dollars on dips and exporters were selling them on upticks, dealers said.
The dollar climbed against the Thai baht, but failed to break through the day's high of 42.50 bath due to substantial exporter selling orders around that level.
The dollar finished at 42.465 baht at the Asian close, up from 42.41 bath Tuesday.
The U.S. unit was also up against the Singapore dollar, but off earlier highs as market participants took profits.
Late in Asia, the dollar was quoted around S$1.7551 from S$1.7527 in the previous session. The pair traded between S$1.7555 and S$1.7580 in Asia.
The dollar closed at 51.910 pesos on the Philippine Dealing System from 51.960 pesos Tuesday, after moving between 51.900 pesos and 52.080 pesos intraday.
3. Sugar 2 X 28 Indonesia and Philippines agree to buy Thai sugar
Thailand's Deputy Minister of Finance Suchart Jaovisidha said Wednesday Indonesia and the Philippines have agreed to enter into long-term contracts to buy Thai sugar, relieving the need for Thailand to push for tariff reductions for Thai sugar imported by the two countries.
Thailand has been concerned about plans by Indonesia and the Philippines to delay cutting tariffs on sugar imports from the Association of South East Asian Nations countries under the Asean Free Trade Agreement.
Thailand Commerce Minister Adisai Bodharamik said Monday that Thailand would ask the two countries to reduce their tariffs on sugar from Thailand to below the level of tariffs on imports from nations outside of Asean during the Asean Free Trade Area Council meeting Wednesday.
However, Suchart told Dow Jones Newswires in an interview soon after the meeting that there is no need for the tariff reductions as the two countries agreed Wednesday to enter into long-term contracts.
"Indonesia has agreed to enter into a long-term contract," he said.
"As long as Indonesia are buying sugar from Thailand, that would be satisfactory to me."
The Philippines had also agreed to enter into a long-term contract, relieving the need for their tariffs to be reduced, he said.
The details haven't been decided but he said the term of the contracts would likely be five to 10 years, he said.
Thailand is sensitive to the fact that the two countries would face revenue implications if they cut the tariffs, he said.
"They need the income from tax. We understand their problem," he said.
Thailand is Asia's largest sugar exporter and was concerned it would lose export opportunities to the Philippines and Indonesia if any reduction in sugar import tariffs is delayed.
In response to requests from the Philippines and Indonesia, the Asean Free Trade Agreement Council in September 2001 allowed the Philippines to delay lowering import tariffs on sugar to 0 percent-5 percent in 2010 from the original schedule of 2003.
Indonesia was also allowed to delay cutting sugar import tariffs and the final rate, which hasn't yet been decided, will be allowed to exceed 5 percent.
Indonesia imposes a tariff on sugar of 27 percent-32 percent while the Philippines sets the sugar import tariff at 50 percent- 55 percent
Thai government officials said early in the week that a lower import tariff on sugar from Asean countries would maintain the competitiveness of Thai sugar exports to these two countries.
Indonesia is Asia's largest sugar importer, importing around 1 million-1.5 million metric tons of sugar annually. The Philippines' sugar needs are mostly fulfilled by local production. The Philippines has imported around 107,000 tons of sugar so far this year.