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.