ASEAN AFTA Free Trade Meeting

Despite this week’s ASEAN summit being dominated by issues surrounding Burma and the domestic tensions in Thailand, the group’s finance ministers did get another opportunity to discuss the goal of an integrated free trade area within five years.

Critics say the likelihood of realising a South East Asian bloc with free movement of goods, labour and capital within the hoped for time frame doesn’t seem promising.

Presenter: Scott Alle
Speaker: Charles Adams, Lee Kuan Yew School of Public Policy and former regional director of the International Monetary Fund.

ALLE: On paper, an ASEAN trading bloc could be a major force in world trade. If it was a single economic entity, the grouping of South-east Asian nations would rank as the world’s 10th largest economy, and with a population of around 600 million, the third biggest global market. But ASEAN’s diverse membership from Laos, one of Asia’s poorest nations to Singapore with its180 billion dollar economy, has meant progress toward the stated goal of economic integration by 2015 has been, well, slow.

ADAMS: What’s been lacking up until now has been the translation into concrete action plans, steps and measures.

ALLE: Professor Charles Adams from the Lee Kuan Yew School of Public Policy is a former regional director of the International Monetary Fund, and has represented the organisation at ASEAN forums. He says while the focus remains on moving the process toward, the concept of an ASEAN free trade area remains loosely defined.

ADAMS: What they have done if you like is define the objective in terms of freer trade, freer movement of labour and capital etc. Now they’re going well they began with some of the at the border issues in manufacturing and yes we’re now looking at this range of behind the border issues and issues to do with services liberalisation and those are in the best of circumstances tough areas

ALLE: Behind the border refers to a country’s domestic policies, in particular the regulatory framework affecting importers and exporters, the degree of government red tape. The meeting of ASEAN finance ministers did agree to act on some trade matters. A internal free trade deal signed last year intended to boost trade by streamlining and simplifying procedures will come into effect next month, while investment agreement aimed freeing -up investment flows and reducing investment costs will come into force in August. The meeting which was also attended by representatives of the World Bank, the IMF, and the Asian Development Bank also put out an updated forecast for South-east Asia raising growth estimates to five-and-a-half per cent for this year. Professor Charles Adams from the National University of Singapore.

ADAMS: I think the overall message that came out that was number one the regional seems to be bouncing back quite strongly from the global slowdown but there’s are still some concerns. My understanding is that they discussed what we call exit strategies which basically has to do with the pace at which some of the stimulus measures introduced during the global crisis are unwound.

ALLE: Just how quickly those stimulus funds, 950 billion dollars across Asia, will be wound back continues to be a challenge for policy makers, but as economists have noted there’s increasing signs of overheating in China and India.