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World woos ASEAN in Phnom Penh

World woos ASEAN in Phnom Penh


Only five years ago many observers wrote off ASEAN as an irrelevance, Malaysian

Prime Minister Mahathir Mohamad told a press conference on November


ASEAN's leaders line up for a rare display of unity at the 8th ASEAN Summit. It was held at Phnom Penh's Inter-Continental Hotel on November 4 and 5. The leaders of China, Japan, India, South Korea and South Africa also attended. At the top of the agenda were trade, regional security and tourism.

"But now it is an entity that is wooed by many people," he


The most substantial suitor was China, a fact that did not go

unnoticed by other economic heavyweights including Japan and India. Their

respective prime ministers both came to Phnom Penh for the summit looking to cut

their own trade deals.

Mahathir was speaking after one of the busiest

ASEAN meetings to date, a summit at which Cambodia managed to bask briefly in

the glory of the world stage.

Some 5,000 military and police were

deployed for the 8th ASEAN Summit. Streets were barricaded around the

Inter-Continental Hotel to protect the 1,000 delegates and keep protesters at


Prime Minister Hun Sen's government attracted both the sizable

benefit of a debt write-off from China, and the prestige of hosting a

smoothly-run event.

Hun Sen closed the meeting, of which he was also the

chair, by reaffirming ASEAN's commitment to speeding up the Initiative for ASEAN

Integration (IAI). It is a scheme designed to benefit the poorer members -

Cambodia, Myanmar, Laos and Vietnam - and is a top priority for the


The IAI work plan includes 51 projects in infrastructure,

human resource development, information and communications technology, and

regional economic integration.

"We agreed to intensify actions to ensure

the integration of the broader Southeast Asian market, allowing Cambodia, Laos,

Myan-mar and Vietnam to gain tariff-free access to the more developed ASEAN

markets by 2003, seven years ahead of the agreed target of 2010," Hun Sen


Dominating the agenda were the weighty topics of free trade

agreements, regional security, and tourism. ASEAN and China agreed to work

toward a Free Trade Area by 2010, which pundits reckoned would have a combined

Gross Domestic Product of $2 trillion.

India, Japan, and Australia also

made overtures to the regional grouping and paved the way for a potentially

gigantic trading bloc. The United States had earlier offered a trade deal dubbed

the 'Enterprise for ASEAN initiative (EAI)', during the Asia Pacific Economic

Cooperation (APEC) forum, which was held in Mexico late last month.


the US the stated goal of the series of bilateral trade deals it was offering

was regional "stability", but leaders at the ASEAN summit faced a barrage of

questions on China's growing influence in the region.

A study of ASEAN

integration released during the summit acknowledged the China


"Small, fragmented markets are not attractive to investors

compared to the large Chinese market and more integrated regions elsewhere in

the world," the study noted.

It prompted ASEAN's outgoing

Secretary-General Rodolfo Severino to call for "more commitment and direction"

on regional integration.

"Regional economic integration seems to have

become stuck in framework agreements, work programs and master plans," he said.

He also called on the group to move faster towards closer economic


China's aggressive move on free trade with ASEAN appears to

have galvanized the rest of the world into seeking closer ties with the regional

bloc - not that any of the leaders would say so publicly.


people tend to be pessimistic these days," said Japanese PM Junichiro Koizumi in

response to repeated questioning from the Japanese media. "People tend to think

of trying to catch up with China, or that China is going ahead."

For its

part, Japan began its free trade assault on ASEAN nations by entering talks with

Singapore, a mere two months after China and ASEAN agreed to work for an FTA

within ten years. The Singapore deal has been signed and the Philippines, South

Korea, and Thailand have all expressed interest in similar deals.


China, Japan favors a "building block" approach whereby it will pursue stronger

trade agreements with individual ASEAN nations.

On the second day of the

summit, ASEAN and Japan signed a pledge to move ahead with free trade agreements

as soon as possible.

Under that pledge, trade concessions would be

available to Cambodia and the three other poorest ASEAN members - Laos, Vietnam

and Myanmar. A statement from ASEAN noted the deal could lift the bloc's exports

to Japan by 44 percent.

And at his press briefing on November 5, India's

Foreign Minister Yashwant Sinha faced a line of questioning similar to that

brushed off by Koizumi. His response was that India was "not in competition with

ASEAN or any countries within ASEAN".

India's trade with ASEAN has grown

to nearly $10 billion in recent years, but that is still only one quarter of the

bloc's trade with China. Sinha said current economic linkages between India and

Southeast Asia were inadequate, and outlined an agreement signed at the meeting

to study a free trade pact with ASEAN that would put it on an equal footing with

China in 2013.

Sinha recounted a labored metaphor used by Singaporean

Prime Minister Goh Chok Tong during the ASEAN plus India meeting. ASEAN was like

a jumbo jet in which China, Japan and South Korea form one wing. India, he said,

was now the second wing that would "allow ASEAN to fly in all


Malaysia's Mahathir said the agreement with ASEAN's newest

dialogue partner was "not an attempt to counter-balance China with India". He

also indicated that a giant free trade area taking in ASEAN, China, Japan and

India was unlikely for some time.

Mahathir said the agreement with India

was still in its infancy and, under the China agreement, there would be scope

for protection of some goods. In the past Malaysia had wrought concessions out

of ASEAN in other liberalization talks, and would maintain high tariffs on its

car industry.

"China is capable of producing high quality goods at very

low prices, [so] it was accepted that we may have exclusivity to take care of

sensitive products," he said.

Australia's bid to become a permanent

dialogue partner with ASEAN was reportedly shot down by Mahathir, a perennial

antagonist of Australia. And although Singapore and Cambodia backed the

proposal, Indonesian President Megawati Sukarnoputri also expressed reservations

about the deal.

"Some of the leaders of ASEAN feel that the ASEAN plus

Australian proposal should be studied more closely," Mahathir told journalists,

"so we will not make any decisions nor will we comment at this moment until we

have studied."

And he was not alone in taking a swipe at Western nations

for issuing travel warnings against Southeast Asian nations in the wake of the

Bali bombing.

"In fact at the moment, Australia is particularly unsafe

for Muslims, because they are likely to have their houses raided," he said. "And

I see pictures of doors being broken which I don't think is essential, so people

are today exposed to danger wherever they may be."

In a show of support

for Indonesia's President Megawati the summit agreed to convene in Bali for its

summit in 2003.

Other agreements:


  • The Spratlys: China and ASEAN reached a non-binding agreement on conduct in

    the Spratly Islands, claimed in whole or in part by China, Taiwan and ASEAN

    members Malaysia, the Philippines, Brunei and Vietnam.

  • ASEAN tourism: leaders of the ten countries signed an agreement to simplify

    visa procedures for international travelers, and phase out travel levies for

    ASEAN nationals.

  • Terrorism declaration: ASEAN adopted the Declaration on Terrorism at the

    pre-summit working dinner. "We resolve to intensify our efforts, collectively

    and individually, to prevent, counter and suppress the activities of terrorist

    groups in the region," the statement said.

  • North Korea: ASEAN called for a non-nuclear Korean peninsula and peaceful

    resolution of the issue.


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