Asian Leaders Cautious on Forging New Regional Partnerships 
International Herald Tribune
November 27, 2000
Michael Richardson  

Most East Asian leaders welcome closer economic and political cohesion, but such ties are likely to take years to build because of competing interests and major differences in levels of development among countries in the region, analysts said Sunday.

In a summit meeting that ended Saturday, East Asian heads of state supported a proposal by Prime Minister Zhu Rongji of China to set up an expert group to look at how economic cooperation and free-trade relations between the Association of South East Asian Nations and China can be deepened, officials said.

They said that the leaders also supported a proposal by President Kim Dae Jung of South Korea for a study of the future integration of East Asia, with at least a progress report to be submitted to the leaders when they meet again in Brunei next year if the final recommendations cannot be completed by then.

Prime Minister Goh Chok Tong of Singapore, who was chairman of the meeting, told reporters that if either or both the East Asia free-trade zone and the China-ASEAN free-trade area were to be implemented, it would be over the long term.

"There is, of course, the risk that ASEAN may be eclipsed by the wider East Asia grouping," he said. "Economically, we pale by comparison."

The combined gross domestic product of the three Northeast Asian countries taking part in the talks — Japan, China and South Korea — exceeded $5.5 trillion in 1999, while the aggregate GDP of the 10 Southeast Asian nations in ASEAN amounted to only $675 billion

Mr. Goh said that the point was also made at the meeting that ASEAN members should liberalize their economies and get their own free-trade area in place "before we actually expand or consider free-trade area arrangements with countries outside ASEAN."

The six earliest members of ASEAN — Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand — say they will open the free-trade area in 2002, by which time tariffs on at least 85 percent of the goods traded among them will have been cut to between zero and 5 percent, officials said.

But the four other members of ASEAN — Burma, Cambodia, Laos and Vietnam — which joined in the past few years and have yet to develop free-market economies, have been given extra time to meet the tariff cutting target: until 2006 in the case of Vietnam, 2008 for Laos and Burma and 2010 for Cambodia.

Prime Minister Mahathir bin Mohamad said that Malaysia thought the idea of closer cooperation between ASEAN countries and the three Northeast Asian nations was very good, not only in the economic field but also politically.

"We think that there is a possibility of free trade and investment in that zone, but it is not going to happen any time soon," he said. "We need to identify the problems and concerns of the participants to make sure that such an arrangement would not be bad for some of the less-developed ASEAN countries."

Mr. Mahathir, who has long called for greater East Asian unity, said that a caucus, group or community was needed in East Asia to balance developments in other parts of the world.

Referring specifically to the 15-member European Union and the North American Free Trade Agreement formed by the United States, Canada and Mexico, he said that an East Asian group would also enable the region to argue its causes more effectively.

Mr. Zhu, of China, said that the existing mechanism for East Asian cooperation, known as ASEAN plus 3, could serve as a channel through which to "gradually establish a framework for regional financial, trade and investment cooperation, and furthermore to realize still greater regional economic integration in a step by step manner."

Chinese officials said that economic ties between China and ASEAN — including trade and investment — were expanding fast and would increase further, to be benefit of both sides, when Beijing becomes a member of the World Trade Organization, which is expected to take place by mid-2001.

Chinese data show that in the 10 months through October, two-way trade between China and ASEAN members amounted to almost $32 billion, higher than the total for 1999 and up by nearly 48 percent from the first 10 months of 1999.

"The ever-closer economic cooperation and trade between China and ASEAN make it necessary for both sides to further facilitate unfettered exchange of goods, technologies, capital and information," Mr. Zhu said, according to an English-language text of his speech at his private meeting with ASEAN leaders Saturday. "It might be advisable in the long run for China and ASEAN countries to explore the establishment of a free-trade relationship between them."

Mr. Zhu said that China was now encouraging "enterprises with a competitive edge" to invest and set up businesses abroad by helping them with credit and insurance. He said that ASEAN might become one of the priority areas for such foreign investment by Chinese companies.

Copyright © 2006 the International Herald Tribune