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May 10, 2008

Flexible approach to drive FTA negotiations

EU Trade Commissioner Peter Mandelson

A flexible approach within the regional framework of the European Union (EU)-Asean free trade agreement (FTA) will help drive the negotiations forward, according to EU Trade Commissioner Peter Mandelson.

Mandelson said while maintaining the regional framework, the EU would be willing to go faster in talks with those Asean countries ambitious to conclude an agreement quickly, reported Malaysian national news agency Bernama.

Other Asean countries could participate in the process and then join the pact in their own time, he said after the tabling of a report on the proposed EU-Asean FTA at the European Parliament early this week in Brussels.

"We should not give up the regional approach. But we are in the process of introducing some flexibility in this regional framework, a dose of 'variable geometry' that takes into account the different levels of development within
Asean and that could allow us to go faster with individual Asean members," Mandelson said

"This would be economically sound and could pave the way for others to join later," he told Bernama.

The fourth meeting of the EU-Asean joint committee, which is the regional framework for the FTA negotiations, was held in Bangkok last month. The fifth round will be held in Manila next month.

Asean, comprising Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam, is the fifth largest export market of the EU and also its fifth largest trading partner.

The EU is the second largest trading partner for most countries in Asean after the United States.

Asean exports to the EU accounted for about 13 percent of its total exports while EU exports to Asean amounted to around 4.0 percent of its total exports.

The EU and Asean have focused on promoting region-to-region economic relations.

In 2003, the EU and Asean launched the Trans-Regional EU-Asean Trade Initiative (Treati) as a framework for dialogue and regulatory cooperation between the two regions.

The priority areas for cooperation under Treati are closely linked to Asean's own moves towards closer economic integration, covering sanitary standards, agriculture and fisheries, industrial product standards and technical barriers to trade. It also covers closer cooperation in investment.

The positive experience with the Treati encouraged both sides to consider deeper economic integration through an FTA.

In April 2007, the European Commission (EC) was given a mandate by the European member states to negotiate an FTA with Asean as part of the commission's Global Europe strategy. The negotiations started in May 2007.

Independent research commissioned by the EC suggested that the likely economic benefits for both Asean and the EU from an EU-Asean FTA were considerable.

Asean could see its exports to the EU rise by 18.5 percent and expect economic gains equivalent to 2.0 percent of its gross domestic product (GDP) by 2020, according to the studies.

The EU could see its exports to Asean countries up by almost 2.0 percent, the studies said.

One of the biggest areas of gain for both sides will be in the area of business services, a key reason for the EU-Asean FTA to tackle services trade.

More on Asean

More on Asean's Trade Partners


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