Asean moves to seal deal on trade pact

from The International Herald Tribune

MANILA: Economic ministers from Southeast Asian countries met Friday to finalize a blueprint to transform their region into a booming free-trade zone by 2015, but one warned that the agreement was not a magic wand to turn the bloc into "a Cinderella story."

While foreign investment flowed to a record high last year and the region has taken steps toward freer trade, Southeast Asia still grapples with poverty, pockets of protectionism and daunting competition from two economic powerhouses: China and India.

The 10 members of the Association of Southeast Asian Nations, or Asean, were finalizing a blueprint that aims to turn the sprawling region of 500 million people, roughly the European Union's market size, into an economic community where goods, production assets, people and capital can move across borders freely.

Trade Secretary Peter Favila of the Philippines said there was no room for complacency as the region strives to erect that community by 2015, five years ahead of the original 2020 schedule.

The "blueprint is not a magic wand that will transform us from ashes to ballroom elegance, as in the case of the Cinderella story," Favila told an annual meeting of fellow Asean ministers in Manila.

"The key is our own willingness to share in the work, rather than just sit back and expect that the world owes us a living," Favila said.

The blueprint seeks to strengthen the region enough to withstand financial and political shocks, he said.

José Concepción, chairman of a business advisory council working with Asean, said the region's efforts to liberalize trade and investment were long overdue.

"It took a long time, but they have begun to realize what it needed," Concepción said.

Aside from the blueprint, expected to be approved by Asean heads of state at a meeting in Singapore in November, trade negotiators in the region have been busy negotiating a flurry of free-trade deals with countries like China, Japan, South Korea and India.

Ong Keng Yong, secretary general of Asean, reported progress in talks with Japan and South Korea to create separate free-trade areas, but said that negotiations with India had run into a snag over the type of products, timeframe and levels of tariff reduction under a proposed deal.

This week, Japanese and Indian leaders and business executives met to foster trade between the two, partly as an effort to offset the burgeoning Chinese economy.

Asean ministers will consider a proposed moratorium on new free-trade talks because current negotiations with at least five countries, including an upcoming round with the European Union, have been a strain on resources and personnel, Favila said.

Efforts by the regional body, once a bastion of protectionism, to negotiate such deals and break down trade barriers have helped lure foreign investment, which hit a record high of $52.4 billion in 2006, Ong said. But he added that much work remained.

While Asean has forged many free-trade deals, their enforcement has been "very slow and patchy," Ong said in an interview Thursday. "We want to clear up this unsatisfactory state," Ong said.

Favila said he planned to informally discuss with Chinese trade officials the reported contamination of certain Chinese exports.

Asean economic ministers are to meet their dialogue partners from China, Japan, Australia, New Zealand, India and South Korea over the weekend to discuss the status of free-trade talks and other concerns.

Asean's more affluent members - Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand - have pledged to slash tariffs for most goods and services by 2010, with the rest, comprising Cambodia, Laos, Myanmar and Vietnam, following by 2015.