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Wednesday, October 08, 2003

Asean States Create Free Trade Zone

Two points of note her. Firstly, following Cancun, we are likely to see more of these regional agreements. Secondly, the China factor is obviously having an effect in Asia as well as in the United States.

Ten south-east Asian nations yesterday signed a landmark accord to turn their vastly disparate states into an integrated, tariff-free trading and economic community by 2020 that would resemble the early embodiment of the European Union. At a summit on the Indonesian resort island of Bali, the Association of South-East Asian Nations also agreed to complete deals with China, India and Japan by 2012. The pact with Beijing would create by far the world's largest free trade zone.

The Asean vision, dubbed the Bali Concord II, would eliminate tariff and non-tariff barriers, standardise customs procedures, gradually reduce capital controls and abolish visas in a region that is home to 500 million people. "We have just witnessed a watershed in the history of Asean," said the host, Indonesian president Megawati Sukarnoputri. "It will make it possible for our children and their children to live in enduring peace, stability and shared prosperity."

The leaders acknowledged that the diversity of the grouping's economies has and will continue to hamper integration. Asean's members range from the oil-rich autocratic monarchy Brunei, through relatively democratic nations such as Indonesia, Thailand, the Philippines, Malaysia, Singapore and Cambodia to the military dictatorship of Burma and the communist states Laos and Vietnam. Eleven sectors, including electronics, tourism and air travel will be on a fast-track integration by 2010 and some nations, particularly Singapore and Thailand, are keen to liberalise everything as quickly as possible.

"We will take to the dancefloor first to tango," said the Singaporean prime minister, Goh Chok Tong, after meeting his Thai counterpart Thaksin Shinawatra. "When other Asean members join us, we will have a livelier party." Analysts say the sense of urgency is driven by the very real fear that the region will lose out even more to China. Asean attracts only a fifth of the foreign investment going into China while data from the US-Asean business council states that, of all the American investment into east Asia, only 10% is going to Asean, compared with 75% a decade ago.
Source: The Guardian

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