Bridges Weekly Trade News Digest • Volume 6 • Number 13 • 9th April 2002
News From The Regions: ASEAN-US
On 5 April, the Association of Southeast Asian Nations (ASEAN) and the US announced they would develop economic co-operation, but were not able to make progress on a free trade area. In a joint statement, ASEAN ministers "agreed to adopt an ambitious work programme designed to expand further the close trade and investment relationship between ASEAN and the US." The 10 member ASEAN group said that it hoped to develop a clearer trade mandate to boost economic relations with Washington.
Currently, the ASEAN region is Washington’s fourth largest trading partner and is seen as "extremely important to the US, in both strategic and economic terms," US Trade Representative Robert Zoellick said. Two-way trade between the US and ASEAN has tripled over the past decade to about $US120bn, with the US running a $US32bn trade deficit with the region, he said.
At a meeting with Southeast Asian trade ministers in Bangkok on 4 April, Zoellick discussed an overall ASEAN-US free trade agreement, but said that the countries of the region are in such varied economic stages that such a pact was a long way off. However, a free trade agreement between the US and Singapore is in the final stages of preparation and is expected to be signed by the end of this year. As part of the agreement, the US and Singapore announced on 6 April that more than 100 information technology items manufactured in industrial parks on the nearby islands of Batam and Bintan, Indonesia, would be granted the same free trade agreement status as if they came from Singapore.
Singapore Trade and Industry Minister George Yeo said the provision for Batam and Bintan would improve ASEAN’s competitiveness vis-à-vis China as an investment destination for US companies. "US companies will find ASEAN, as a whole, more attractive because the initiative will make it easier for them to locate production facilities in different Southeast Asian countries to exploit their competitive advantages," he said. He added that as Indonesia improves investment conditions, the country could become very competitive in many sectors.
ASEAN accelerates financial services
A deal to liberalise trade and investment in financial services was signed on 6 April by Southeast Asia’s finance ministers. Many observers, including Mr. Zoellick, say the ten members of ASEAN need to break down trade barriers and increase cooperation if they are to maintain strong economic growth and attract outside investment. The financial services deal formalises results of negotiations that ended in December 2001, when ASEAN members agreed to extend to each other slightly more favourable treatment in financial services than they do to other countries in the WTO, but thus far the concessions are fairly minor. Instead, ASEAN officials have said that such concessions will have to be built upon in another round of negotiations to take place in the future. Aside from financial services, ASEAN’s economic integration is proceeding on a number of different fronts, including trade in goods, which is on the agenda for an upcoming meeting of ASEAN economic ministers on 11-12 June in Laos.
In addition to strengthening ties with the US, the ASEAN group has also tried to bolster ties between its members and the strongest economies in the region: Japan, South Korea and China. Japan has signed a bilateral free-trade agreement with ASEAN member Singapore and senior officials from ASEAN and China will meet in Beijing next month to draw up a blueprint for a regional free trade agreement.
ASEAN comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
"US-Asian free trade zone no nearer," BBC, 5 April 2002. "ASEAN, China officials to hold 1st meeting on FTA in May," JAPAN ECONOMIC NEWSWIRE via DOW JONES, 8 April 2002. "First ASEAN-US trade talks held in 10 years," AFP. "US Envoy Campaigns for Trade Pacts on Asian Trip," 7 April 2002. "Asean Takes Another Small Step Towards Integration," DOW JONES INTERNATIONAL NEWS SERVICE via DOW JONES.