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Leaders discuss Asian trade pact

A month after the collapse of the Cancun global trade talks, Asian countries are laying the groundwork for a massive regional free trade network covering close to half the world's population.

It is not a deliberate attempt by the region to gang up against the US or Europe following the doomed WTO talks.

Nor is it an initiative of only the developing Asian countries, which form the backbone of the 22-nation bloc in the WTO that opposed farm subsidies given out by wealthy nations and pushed for greater market access for their own products.

The plan is to set up a free trade market between the 10 Southeast Asian nations and China, Japan, South Korea and India.

Leaders of the 14 countries unveiled the "building blocks" for the giant free trade area (FTA) during their summit in Indonesia's Bali resort last week.

"It sends a strong signal that Asia is seriously seeking alternatives to the multilateral agenda while wanting to revive the WTO talks," Sundram Pushpanathan, the external relations head of ASEAN, said.

ASEAN, which will have its own FTA beginning 2010 and a European-style single market 10 years later, is pitching itself as a hub for the larger FTA, he said.

"The trade links are only one part of the equation and they will be backed by partnerships in the political, security, monetary, financial and technical fields," Pushpanathan said.

Ramon Vicente Kabigting, a senior Philippine trade official, said the planned free trade network spans nearly the entire western Pacific and comprises both developing and developed nations.

"It shows that Asia is capable of establishing its own trading rules and offers a fallback position for largely developing nations against protectionist tendencies after the Cancun debacle, said Kabinting, director of the Philippine Bureau of International Trade Relations.

In Bali, ASEAN launched the first phase of an FTA to be fully developed with China by 2010 and signed a pact with India to set up a similar arrangement by 2016.

Japan also signed an agreement with provisions for an FTA with ASEAN by 2012 and South Korea said it was keen to begin talks with the Southeast Asian group to explore such an initiative.

"With the failure of Cancun and the delay of the Doha Round, ASEAN should quickly shift its gear into offensive mode for economic integration, which is now inevitable," Thailand's Prime Minister Thaksin Shinawatra said.

"Defensiveness, now, offers little or no chance to win," he said at the Bali meeting.

After the conclusion of the Uruguay Round of multilateral trade talks in 1993, it took eight years before economies could agree to launch another round of discussions -- the Doha Round.

But the Doha talks failed in the Mexican city of Cancun last month.

Giants China and India as well as ASEAN's key members Indonesia, Malaysia, the Philippines and Thailand were among the leading players of the bloc of developing countries which rallied around the campaign to roll back farm subsidies of rich countries that harm their exports.

Chinese Premier Wen Jiabao (溫家寶) cautioned that even though ASEAN's free trade deals with China, Japan and South Korea would ultimately lead to an East Asian Free Trade Area, it should not be an exclusive bloc.

"Instead, we must strengthen cooperation with other countries and regions while deepening our own intra-regional [cooperation}," Wen said.

Indian Prime Minister Atal Behari Vajpayee emphasised that a rule-based and fair multilateral trading system should remain everyone's goal.

"But while we search for this ideal, regional trading arrangements offer immediate advantages, particularly for geographically contiguous regions," he said.
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