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A pan-Asian free trade deal in the making?

Updated On: Aug 15, 2006

The ASEAN Secretary-General Ong Keng Yong has said that a FTA between ASEAN and its partners in the East Asia Summit (EAS) is on track to be signed within 10 years.

He explained that, “The target for the ASEAN Community is 2020 so we hope that East Asia (ASEAN+6) FTA can be concluded by then.”  He added, “It can be done. All you need is to get all the governments to sign on a piece of paper .” 

While the Chinese have been more keen to see a FTA only within the ASEAN+3 members, Australia, Japan and India have all been keen to promote this idea of a  pan-Asian FTA involving all 16 members of the EAS). An EAFTA would increase Australia’s substantive role in the EAS. Australian Trade Minister Mark Vaile said, on 8 August, “Many ideas are now beginning to emerge about how to develop the EAS. The most interesting proposal to date is the idea of an EAS free trade agreement to cover the 16 participants in the summit- ASEAN plus ChinaJapan and Korea, plus IndiaAustralia and New Zealand.”  

The Japanese Economy, Trade and Industry Minister Toshiro Nikai has earlier said in a speech in China in April that regional FTA talks should be launched in 2008. Japanese government officials have also said that Japan will officially present the proposal during a meeting of the ASEAN Economic Ministers later this year in August in Kuala Lumpur.

India has consistently reiterated that an EAFTA would be an important part of its Look East Policy. However, its FTA talks with ASEAN have been bogged down by its reluctance to liberalise. Although both ASEAN and India have earlier agreed that a free trade deal would be formed by 1 January 2007, talks have stalled.  Ong pointed out that it is now up to India to get the talk back on track. He said that, “We like to believe the ball is in their court but they said that the ball is in our court. So we said, ‘Why? Now we are requesting you to reduce the number of items to be excluded from 800 something to maybe 400. ….’” It seems that India had originally placed 1,414 products on the exclusion list, accounting for 44% of ASEAN’s total exports to India, though the list was narrowed down to 854 items.

Earlier at the sidelines of the ASEAN Regional Forum, the Malaysian International Trade and Industry Minister, Datuk Seri Rafidah Aziz said that the ASEAN-India talks were suspended. (Malaysia is the country coordinator for the ASEAN-India FTA negotiations). India insisted that talks were still ongoing and that Malaysia was not speaking for ASEAN.

This proposal of a FTA for East Asia is increasingly contested on the issue of membership- whether it should primarily consist of members of the EAS or the ASEAN+3.  This FTA is also becoming a proxy indicator of whether EAS or the ASEAN+3 should be the main vehicle for pushing East Asian regionalism.

To complicate the picture further, it seems that the number of FTAs involving ASEAN would increase. Ong suggested, “In the long run, ASEAN can probably include more countries in its FTA.” He has also referred to Russia as a future possibility. FTA talks with the EU are also likely to be agreed upon later this year. How ASEAN will juggle so many FTA talks at the same time remains to be seen.

Sources:

ASEAN and East Asia Group on Track For Free-Trade Deal by 2016 (Channelnewsasia, 8 August 2006)

FTA Between ASEAN, Six Other Nations Possible in 10 Years (The Press Trust of India, 9 August 2006)

East Asia FTA Can be Done in 10 Years, Says Ong, Malaysia Economic News, 8 August 2006

Southern Asian Countries Hold Talks to Bolster Trade Ties, Deutsche Presse-Agentur, 8 August 2006

ASEAN Upset Over Russia’s Flip-Flop Policy (Malaysia Economic News, 8 August 2006)

Australia Signals Support for Pan-Asia Free Trade Deal (Japan Economic Newswire, 8 August 2006)

Free Trade Agreement with India Still On: ASEAN (The Press Trust of India, 8 August 2006)

ASEAN No Longer Amused (The Statesman [India], 3 August 2006)