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’Vision group’ says Asean and EU regions would benefit from pact

Bangkok Post | 6 September 2006


’Vision group’ says Asean and EU regions would benefit from pact


Asean and the European Union are considering negotiations to establish a free trade agreement next year, according to Thai Commerce Ministry officials.

A ’’vision group’’, made up of officials from each member country of both Asean and the EU, has recommended that the two regions enter negotiations.

The group has said a trade pact would benefit both parties, stimulating the economy of Asean members by around two percentage points of gross domestic product by 2020.The Asean and EU regions have a combined population of around 1.1 billion, and the EU represents the world’s largest single market.

The 25 EU members are expected to seek a mandate for Asean-EU talks from its council next month.

However, military-ruled Burma could be a serious concern for the EU once negotiations get under way.

Chutima Bunyapraphasara, a Commerce Ministry inspector-general, said Asean was unlikely to exclude Burma from negotiations. Asean, with 10 nation members, has formed FTAs with several partners and has so far not experienced any problems.

’’It is the EU that has to sort out how to prevent politics from hindering [free trade] negotiations,’’ Miss Chutima said.

Another official at the ministry said that Burma would likely be a major concern because the EU had already issued trade sanctions against it.

Also, individual Asean countries could meet difficulties in terms of diplomacy.

’’Any [individual Asean] country showing willingness to protect Burma would be acting as its friend, but this would be a problem in terms of international relations with the EU,’’ the official said.

Additionally, an EU official based in Bangkok said that although the EU was eager to launch into talks with Asean, it depended on timing.

If the Republican party of President George W. Bush government won a majority vote in the November election in the US, it would be a significant factor in resuming the suspended Doha Round of negotiations under the World Trade Organisation. In this case, the EU would be more likely to concentrate on multilateral trade talks.

’’Hopefully, we will be able to start [Asean-EU negotiations] next year and conclude within two years,’’ the European envoy stressed.

Asean officials plan further discussions between the 10 Asean leaders and the EU Trade Commissioner Peter Mandelson in a sideline meeting of the Asean Summit to be held in the Philippines in December.

The envoy pointed out that a bloc-to-bloc free trade pact between the two regions would draw foreign direct investment back to Southeast Asian countries that had lost FDI to rapidly growing China and India in recent years.

As for Thailand, the envoy said it needed to change its policies on protecting local industries. Collecting import tariffs on raw materials, for example, added costs to assembly and production. This meant that importing auto parts to assemble in Thailand would be more expensive than importing a wholly built car from Japan under the Thai-Japanese free trade agreement.

Thai officials said it was uncertain whether Thailand would have a new government by December, but if this was the case, Thailand would enter negotiations with the EU as a member of Asean, not as an individual country.

 source: Bangkok Post