Manila Bulletin | 3 May 2006
ASEAN to discuss free trade framework with Japan, EU
By BERNIE CAHILES-MAGKILAT
ASEAN economic ministers will tackle issues and modalities on the proposed free trade negotiations with Japan and the European Union but not with the US, another dialogue partner, as US officials prioritize a congressional hearing on President Bush’s fast track authority, which is expiring this July 1.
Trade and Industry Secretary Peter B. Favila said that ASEAN will talk about modalities and issues of the planned FTA with Japan’s Ministry of Economy, Trade and Industry and EU officials at the two-day 13th ASEAN Economic Ministers retreat in Brunei starting today.
Conspicuously absent though among ASEAN’s three dialogue partners is the US because American economic officials would be attending hearings in Congress on the President’s fast track authority.
Extension of the President’s fast track authority is crucial because the US cannot continue engaging in trade negotiation without it.
"I got a word that Ambassador Susan Schwab of the US Trade Representative Office will have to be in the Capitol because of the hearings on the fast track authority of the President," Favila said.
But EU Trade Commissioner Peter Mandelson is expected to attend the meeting with the hope of launching the EU-ASEAN FTA negotiations.
There will be no bilateral meetings during the two-day retreat, Favila said.
On the ASEAN-Japan proposed FTA, it could be recalled that the Framework for the ASEAN-Japan Comprehensive Economic Partnership (AJCEP) was signed by Japan and ASEAN leaders in 2003 as basis for FTA negotiations.
Based on a presentation to the Tariff Commission on the initial modalities in trade in goods, ASEAN wants the inclusion of 95 percent of its tariffs under the normal track in tariff liberalization but tariff elimination must be in completed within 10 years.
On the other hand, Japan offered 88 percent of its tariff line under the normal track and the same 10-year tariff elimination period.
The AJCEP is expected to deepen economic relations of both parties, encourage investments inflow and strengthen ASEAN industries in the global market. Japan has already forged bilateral FTAs with some ASEAN countries including the Philippines, Singapore and Malaysia. It has yet to conclude one with Thailand.
It is believed that Japan wants to forge bilateral FTAs with each of the ASEAN countries and later string them together as one regional FTA.
Meantime, the EUASEAN Vision Group study has called for a need to bring to higher level the economic cooperation of both regions.
The Vision Group also said that an FTA can boost growth of foreign direct investments in both direction. Such economic partnership is expected to contribute 2 percent of the ASEAN GDP by 2020. Gabriel Munuera Vinals, head of political, economic, trade and public affairs section of the Delegation of the European Commission to the Philippines, said that EU is optimistic of launching a free trade area negotiation with ASEAN by the second quarter this year with the idea of concluding the negotiations in two years time to reach an FTA deal by 2009.
"Prospects seem good now because of a clear political commitment to move towards FTA negotiation," Vinals said. The idea, he said, is to conclude the negotiations in two years or by 2009 from the start of negotiations.
Vinals stressed that an ASEAN-EU FTA would expand the market for each region, which has a population of 500 million consumers each.
"For ASEAN, one of the basic interest is enhancing access to the huge EU market of over 500 million people from the 27-member EU states. You could also attract investors from the EU aside from the transfer of technical know how and eventually bring the local industries to the international level," he said.
"I could even see a facilitating impact from the EUASEAN negotiations on the local (ASEAN) integration process," he said. ASEAN is pushing for an accelerated economic integration timetable by 2013.
On the part of EU, Vinals said, it is also looking at ASEAN as an equally big market and there are still manufacturing industries in the region that EU could benefit from.
EU is interested in sourcing oil, gas, palm and raw materials from the mining operations in ASEAN.
EU can also contribute to the existing state of the banking, financial and insurance services in the ASEAN region.
At present, EU is also engaged in FTA negotiations with Mercusor (Brazil, Argentina, Uruguay and Paraguay) and with the six AfricanCaribbean Countries.
EU started the negotiation process with the ACP countries in 2002 and expects to finalize the process for enforcement this year.(BCM)