ASEAN aims for a free-trade zone

Kuala Lumpur -- Leaders of the ten member association of Southeast Asian nations (ASEAN) met recently at its 38th meeting to discuss the proposal for an East-Asia free-trade zone, in response to Tokyo’s push for regional economic integration.

In a pitch to ward off the loss of foreign investment to China and India the Southeast-Asian economic ministers have decided to accelerate the establishment of the ambitious European-style ASEAN economic community. For this they plan to speed-up the services liberalization and provide new incentives.

The host Malaysia insisted that ASEAN should be the focal point and must play a central role in such an arrangement. The ASEAN began liberalizing trade in 1993, but policies pertaining to protection have inhibited its progress.

Malaysian Prime Minister Abdullah Ahmad Badawi said, “If we do not hasten the creation of that regional single market, the ASEAN may run the risk of losing its position as an important investment destination.” He added, “As the ASEAN community becomes increasingly integrated with the global economy, we need to monitor developments in other regional groupings and initiatives by ASEAN’s major trading partners entering into various forms of trading arrangements with others.”

In order to set up a wide-ranging economic partnership with East Asia, Tokyo last week announced that it would provide up to $100 million to fund the efforts which could be the basis of East Asia free trade area. They called it the ‘Nikai initiative.’

Toshihiro Nikai, Japan’s economy, trade and industry minister said that he has called for experts to begin a study next year on a pan-Asian free trade area that would include Australia, China, India, Japan, South Korea, New Zealand and the 10 ASEAN members.

Half of the world’s population and one-fifth of the global trade is expected to be covered in the free trade area. The goal is to allow the free-flow of goods, services and investment across the 10-nation region.

In spite of doubts about whether the four less-developed ASEAN members — Cambodia, Laos, Burma and Vietnam — can attain the goal, the bloc’s secretary-general, Ong Keng Yong, said, “The ASEAN way is that we all come together, we agree, we go together. We will help the less developed economies, and will develop their capacity.”

The plan which needs to be approved by the leaders later this year does not call for a single currency system. The allied nations are ready to move in the called direction to meet the competition and to make their respective economies more efficient.