PM calls for ASEAN trade focus on E Asia

21 January 2010
by May Kunmakara

PRIME Minister Hun Sen has called for ASEAN to strengthen its economic alliances with East Asia before focusing on expansion into the Pacific.

Speaking during the opening of the 6th Asia Economic Forum in Phnom Penh on Wednesday, the premier called for ASEAN to prioritise moves which “enhance the establishment of the East Asia community”.

He also stressed that he did not oppose the long-term goal of creating an ASEAN-Pacific relationship as proposed by Australian leader Kevin Rudd.

“I don’t mean that I oppose the idea of the Australian prime minister for the establishment of an Asia-Pacific community. I just want ASEAN to become an integrated core first and then, secondly, push into East Asia,” he added.

Hun Sen’s remarks come just weeks after the China-ASEAN Free Trade Area came into force on 1 January. This reduced or eliminated 90 percent of trade tariffs between the world’s third-largest economy and the founding ASEAN nations of Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand. By 2015, Cambodia must reduce or eliminate the majority of its trade tariffs with China, along with newer ASEAN members Laos, Vietnam and Myanmar.

1 January also saw ASEAN bring down tariffs within its own community, as part of a pre-existing free trade pact. In addition, ASEAN implemented free trade areas with Australia and New Zealand.

However, the introduction of such far-reaching free trade areas has not been smooth. Some nations are concerned about the fall-out from reducing trade tariffs with China, one of the world’s biggest manufacturers.

On Wednesday, Indonesian economic ministers appeared split over the impact of a regional free trade deal with China, as lawmakers sought answers over possible layoffs and factory shut-downs.

Industry Minister M S Hidayat told the Indonesian parliament he feared the FTA could lead to job losses, according to reports on AFP.

He said the “most serious impact” would fall on the steel, textile, inorganic chemical, furniture and energy-saving lamp industries, and called for the pact to be renegotiated to shield such sectors from Chinese competition.

“If there aren’t any protective steps taken for these industries we’re afraid that there will be layoffs and even closures,” he said.

Meanwhile trade minister Mari Pangestu defended the deal, saying it was good news for exporters to China and would bring badly needed foreign direct investment from Chinese firms.

According to data from the ASEAN secretariat released in August last year, intra-ASEAN exports accounted for 27.6 percent of total exports, or US$242 million in 2008. Intra-ASEAN trade formed around a quarter of all imports, at $214 million.

In total, trade within ASEAN was recorded at $458 million, while trade with outside nations totalled $1.3billion.

ADDITIONAL REPORTING BY AFP