Asean steps up China free-trade talks as deal with India stalls
19 November 2007
Asean Steps Up China Free-Trade Talks as Deal With India Stalls
By Shamim Adam
Nov. 20 (Bloomberg) — The Association of Southeast Asian Nations is stepping up talks on free trade agreements with China after a similar accord with India was put on hold because of disagreements on tariff cuts.
The 10-nation bloc, which is forging an economic community modeled on the European Union, is expected to move closer to an agreement with Asia’s second-largest economy as China’s Premier Wen Jiabao meets Asean leaders this week in Singapore.
China’s trade with Asean is about seven times that of India, underscoring its importance to the export-dependent grouping. Southeast Asia’s developing economies are almost twice as reliant on exports as the rest of the world, with more than 60 percent of overseas sales ultimately destined for the U.S., Europe and Japan.
Asean's trade with China is growing much faster than with India, and there is a sense of urgency for them to move it along quickly or risk being left behind,'' said Song Seng-Wun, an economist at CIMB-GK Research in Singapore.Asean can afford to take a bit more time with India, because its market is still fairly closed.’’
Asean has put the talks with India on hold'' until Indian officials come back with better concessions, Indonesian Trade Minister Mari Pangestu said yesterday. Disagreements over tariff reductions on products such as palm oil and petroleum products led to a stalemate.We’re postponing the negotiations for now until we can find a way forward,’’ Pangestu told reporters yesterday in Singapore. Unless India can come up with a more progressive way forward, we'll just wait.''
`Playing Hardball'Everybody’s playing hardball,’’ Asean Secretary General Ong Keng Yong said on Nov. 18. The momentum of negotiations on the trade pact with China may hopefully push bureaucrats on both sides to settle on the issue of the Asean-India free trade agreement.''
Asean and India are scheduled to hold talks on the agreement today. India's Commerce and Industry Minister Kamal Nath will lead the Indian delegation, Pangestu said.
An accord between India, the world's second-most populous country, and Asean would boost annual trade between the two, which is already worth more than $23 billion. By comparison, trade between China and the group exceeds $160 billion annually.
China signed a limited free-trade zone agreement with Asean in July 2005. It will gradually eliminate levies on about 7,000 commodities from Asean by 2010, covering 93 percent of China's imports from the region.
China, IndiaBoth China and India are important markets and we’re equally keen on free-trade agreements with the two countries,’’ said Sunny Verghese, chief executive officer of Singapore-based Olam International Ltd., a supplier of ingredients to companies including Nestle SA. Any liberalization and deregulation in these markets will give a tailwind'' to Asean businesses.
The group is also pursuing agreements with Japan, Australia and New Zealand, to bring down barriers to trade as it moves to develop what it calls an Asean Economic Community.
Asean members are Indonesia, Thailand, Malaysia, Singapore, Brunei, the Philippines, Cambodia, Laos, Myanmar and Vietnam. Formed in 1967, it has a combined gross domestic product of over $1.03 trillion and a population of about 570 million.
Asean leaders will today sign an agreement mapping out plans to create a free-trade area by 2010. The agreement will call for European Union-style economic integration, without a common currency, by 2015.
TheAsean Economic Community Blueprint’’ sets out commitments, targets and timelines for a single market and production base with an unrestricted flow of goods, services, investments and skilled jobs.
Asean Community
The AEC Blueprint will transform Asean into a single market and production base, a highly competitive economic region, a region of equitable economic development, and a region fully integrated into the world economy,'' the leaders will say today in a final declaration obtained by Bloomberg News.Each member country shall abide by and implement the AEC by 2015.’’
Member nations say integration is essential for the grouping as the bloc competes with other larger economies for exports and investments.
We are still a fragmented market of 10 different, separate markets and Asean has seen its competitiveness eroded vis-a-vis countries like China and India,'' Cambodia's Commerce Minister Cham Prasidh said on Nov. 18.If we can’t start to integrate ourselves faster, we would see our competitiveness erode even more and our market share will shrink.’’
