Bridges Weekly Trade News Digest • Volume 8 • Number 29 • 8th September 2004
ASEAN Looks To Deepen Integration, Forge New Trade Ties
The ten-member Association of Southeast Asian Nations (ASEAN) finance ministers concluded their four-day annual meeting on 7 September in Jakarta, Indonesia. The meeting sought to lay the foundation for greater integration and marked several pivotal trade agreements and negotiations between ASEAN and key countries, such as New Zealand, Australia, Japan, Korea, China and India. In concrete terms, the six original members — Brunei, Indonesia, Malaysia, the Philippines, Singapore, and Thailand –decided to abolish tariffs in 11 sectors (rubber, electronics, autos, textiles, air travel, tourism, agriculture, e-commerce, fisheries, wood, and healthcare) by 2007. The newer members, Cambodia, Myanmar, Laos, and Vietnam, will phase out tariffs by 2012. ”Equipped with a clear road map and schedule, those sectors of priority will certainly encourage the growth and integration of the other sectors,” commented Indonesian President Megawati Sukarnoputri.
The meeting in Jakarta also endorsed the establishment of a fund to strengthen the group’s dispute settlement mechanism and to revise the "rules of origin" agreement, which in the past has required that products manufactured in an ASEAN country have a minimum 40 percent local or ASEAN content to be able to enjoy low tariffs. The revision would cut the local content requirement to 20 percent, thus boosting regional trade. Officials expressed the hope greater economic integration would enable ASEAN to better compete in the global economy as the region recovers from the repercussions of the Asian financial crisis and the recent uncertainties associated with SARS and the Iraq conflict.
ASEAN agrees to FTA talks with New Zealand and Australia
ASEAN agreed to begin free trade negotiations with Australia and New Zealand next year. Negotiations are expected to start in January and conclude within two years with full implementation by 2015. Leaders from Australia, New Zealand, and the ten ASEAN countries will discuss the talks at an ASEAN summit in Laos in November. Trade officials noted that agriculture is likely to become a challenge in these talks, with Australia and New Zealand both being major exporters. Indonesia and several other ASEAN countries are seeking to protect their poor farmers from import surges and secure rural development and livelihoods.
Meanwhile, regional powerhouses Japan, Korea, and China also agreed to strengthen trade ties with ASEAN. Free trade agreements between ASEAN and Japan should be in place by 2012, and with South Korea by 2009. Japan is expecting tough talks on opening up its protected farm market to imports, as well as opening its labour market. ASEAN economic ministers also held free trade talks with Indian Trade Minister Kamal Nath and agreed to establish a free trade area with India in January 2005 and steadily reduce tariffs on 105 items with the hopes of reaching zero tariffs by 2007.
ASEAN recognises China as market economy
Another outcome of the meeting in Jakarta was that the ASEAN recognised China as a full market economy, according to the Chinese state press. Although Singapore, Malaysia, and Thailand had already recognised China as a market economy, the remaining ASEAN members finally made their recognition this past weekend. Achieving regional acknowledgment as a market economy, China will now have greater power in trade disputes and will likely increase trade within the region. Already, "the two-way trade volume between ASEAN nations and China accounts for 11 percent of China’s overall external trade," said China’s Minister of Commerce Bo Zilai. ASEAN’s recognition was seen as especially significant after the EU refused China full market economy status this past June due to problems such as China’s state interference, weak rule of law, and poor corporate governance.
"Australia, New Zealand, ASEAN Agree To FTA Talks Next Year," MEDIA CORP NEWS, 6 September 2004; "ASEAN Recognizes China As Market Economy," AGENCE FRANCE PRESSE, 6 September 2004; "ASEAN Moves Closer To Single Market With Road Map, Global Trade Deals," AGENCE FRANCE PRESSE, 5 September 2004; "Pascal Lamy Returns To South-East Asia To Strengthen Regional Trade Links," EUROPA PRESS RELEASE, 03 September 2004; "ASEAN Ministers To Urge Leaders To Speed Up Integration," KYODO NEWS, 3 September 2004; "ASEAN-India FTA Set To Kick Off In January," XINHUA NEWS, 6 September 2004; "EU Yet To Set Timetable For FTA With ASEAN," ASIA PULSE, 6 September 2004; "ASEAN Trade Body Endorses Enhanced Rules Of Origin," THE JAKARTA POST, 3 September 2004.