’Too many FTAs could hurt Asean’
Bangkok Post, 30 May 2005
`Too many FTAs could hurt Asean’
WORANUJ MANEERUNGSEE
Too many bilateral free trade area (FTA) agreements between individual Asian countries and more powerful economies will erode Asean’s drive to create free trade among its 10 members, according to Dr Somkiat Tangkitvanich, research director of the Thailand Development Research Institute (TDRI).
He said artificial barriers within the 10-member bloc would result if single nations signed a lot of FTA pacts with the likes of China, Japan or the United States.
Each Asean country has its own approach to dealing with non-Asean nations, which may not fit the existing framework of the Asean Free Trade Area (Afta), an agreement to remove tariff barriers that aims to not only boost trade in the region but attract foreign investment.
He made the comments in the wake of the announcement that Japan and Malaysia had settled last week on a framework for an FTA. A formal agreement is expected to be signed by December.
Thailand expects to conclude its own negotiations on a pact with Japan by July.
Dr Somkiat said the substance of the Malaysia-Japan pact would be different from the one between Thailand and Japan.
Kuala Lumpur has proposed to open up its market for Japanese automakers by lifting heavy tariffs on Japanese cars within 10 years while Bangkok has been reluctant to do so, he said, adding that the contrasts in the pacts could affect the overall production network in Asean.
The removal of tariff barriers within Asean under Afta over the past decade has enabled member nations to build up a valuable supply chain. Automotive and electronic industries have expanded rapidly as a result, he said, adding that Japanese investors had also reaped benefits.
Dr Somkiat said negotiations of individual trade pacts between Asean members and large economies would weaken Asean’s bargaining power and make it less attractive for foreign direct investment.
Asean is moving toward the AEC (Asean Economic Community) to integrate its economy and the best way to do this is through integration,'' he said.
He also said that the speeding up of the Malaysia-Japan pact should not significantly affect the negotiation process between Thailand and Japan.The fact that Malaysia finished its talks with Japan a couple months earlier should not make a difference. I don’t think this is a slap in the face for Thailand,’’ he said.
An official close to the Thai-Japanese talks agreed, saying Thailand did not want to rush and instead preferred to negotiate the best conditions, such as opening up the Japanese market for farm products.
``Anyway, I would say that the conclusion of talks between Malaysia and Japan may have a psychological impact on Thai politicians,’’ he said.
