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ASEAN Framework for Integration of Priority Sectors Signed
May 22, 2007

Ministers responsible for commerce and trade for the ten ASEAN nations have signed a Framework agreement outlining the next stage of economic integration within the region. ASEAN states customarily focus on economic issues rather than political or social; the organisation was established on the basis that state governments would not interfere in the internal affairs of each other state and this limits what can be achieved. However, some progress is being made in such areas as internal travel, in which governments will work towards creating an ASEAN Travel Card, to facilitate movement for citizens of the region.

Priority sectors have been identified for the trades in both goods and services and tariffs and other barriers will be reduced or eliminated in these areas in an agreed timescale. Customs, standards and conformance and promotion of trade and investment will all be improved and new targets have been set. These are positive but not ground-breaking improvements. There is still plenty of scope within the diplomatic language for individual states, if they wish, to wriggle out of at least some of their commitments for a period of years. This is probably inevitable given the scope of the discussions and the different types of concerns that each country has. Additionally, a number of states have only limited technical capacity to conduct negotiations on this scale. ASEAN provides a forum at which subjects which would otherwise be out of bounds may be discussed and the need for these backstage chats also has a negative impact upon what can be achieved in terms of formal agreements.

It is not surprising, under these circumstances, that external partners prefer to pursue bilateral relationships and agreements when they can. Japan, for example, has recently been busy cementing relations with the three Mekong River countries of Viet Nam, Laos and Cambodia. With Viet Nam, Japan plans a Strategic Partnership on top of its newly negotiated Economic Partnership Agreement. Bilateral trade between the two countries now amounts to some two billion dollars annually and is set to increase substantially. Japanese companies see a generally stable government in Hanoi willing to make swift, investor-friendly decisions and a substantial labour market characterized by diligence. The Viet Namese government, on the other hand, sees a powerful means of obtaining enhanced Overseas Development Assistance from Japanese state agencies, in addition to the benefits to be obtained from long-term investment. Companies from Viet Nam are to be subsidized to participate in this year’s Tokyo Expo by virtue of the ASEAN-Japan Centre for Promotion of Trade, Investment and Tourism. Many commentators anticipate that Viet Nam will take over from Thailand as Japan’s main production base in Southeast Asia within a decade.

Agreements have also recently been concluded with Microsoft and with India’s Tata Steel. These agreements are likely to overshadow what will be derived from ASEAN, important as that organisation will continue to be.

The full text of the agreement is available online at: http://www.aseansec.org/19200.htm.

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