Hanoi, 14 Sep. - ASEAN Economic Ministers reaffirmed their commitment to press ahead with economic integration agenda to position the region in the increasingly competitive global economy. 

Meeting in Hanoi Friday, the ASEAN Free Trade Area Council and the ASEAN Investment Area Council agreed to tackle the challenges posed by the the global economic slowdown and the effects of the 1997-1998 financial crisis.

ASEAN advanced the completion of the free trade area from 2008 to 2002, when the six original signatories to the AFTA agreement are to bring down tariffs on goods traded among them to no more than five percent.

            At present, each of the original six members has reduced tariffs to less than five percent on at least 90 percent of its tariff lines.  The current average CEPT tariff rate for these countries is 3.21 percent. 

The Ministers discussed the elimination of duties on information and communication technology products beginning 1 January 2003, a commitment under the e-ASEAN Framework Agreement. They agreed on the indicative list of ICT products scheduled for the elimination of duties in three tranches in 2003, 2004 and 2005 for the original six members and in 2008, 2009 and 2010 for the new members.  A total of 1,464 ICT products have been identified for elimination of duties in the first tranche; 49 products in the second tranche; and 190 in the third tranche. 

The economic ministers agreed to implement the ASEAN Integration System of Preferences, in which the older members of ASEAN extend tariff preferences to the new members.  This decision forms part of the ASEAN leaders’ commitment under the Initiative for ASEAN Integration, which aims to establish an integrated ASEAN and bridge the development gap between countries in the region.  These unilateral concessions could benefit the newer members to the tune of up to US $ 400 million worth of exports a year.

The six original ASEAN members are Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore, Thailand, while the newer members are Cambodia, Laos, Myanmar and Vietnam.

            The Ministers agreed to accelerate the establishment of the ASEAN Investment Area, an investment regime where member countries have undertaken to grant national treatment to foreign investments from within or outside the ASEAN region.  In the case of investments from within ASEAN, they signed a protocol to advance the phasing out of the temporary exclusion list in the manufacturing sector to 2003 instead of 2010 for the first six member countries and Myanmar. Laos, Cambodia and Vietnam will have no later than 1 January 2010 to phase out their exclusion lists.  The protocol expands the agreement to include agriculture, fishery, forestry and mining sectors, and services related to these sectors as well as to manufacturing.  In the case of investments from outside ASEAN, the Ministers agreed to advance the end date to 2010 for the six older members and to 2015 for the newer members.

            The Ministers agreed to commission a comprehensive study on the competitiveness of the ASEAN region with a view to identify the comparative and competitive advantages of the region in relation to other regions and to identify further measures to sustain or improve them.

            The AIA Council meeting was preceded by two separate consultations with American and Japanese businessmen represented by the US-ASEAN Business Council, American Automotive Association, Keidanren, Japan Electronics Industry and Technology Association and Japan Automotive Manufacturers Association.

Sustaining its recovery from the financial crisis, ASEAN exports last year grew by 19.8% to US $ 409.3 billion from US $ 341.8 billion in 1999.  Imports grew by 22.4% from US $ 281.3 billion to US $ 344.4 billion a year earlier.  The details of ASEAN trade appear in Annexes 1 and 2.

            On the other hand, approved investment projects in ASEAN with foreign participation increased by 30%, from US $ 21.8 billion in 1999 to US $28.4 billion in 2000.  Within the first half of 2001, approved investment projects with foreign participation increased by 68.6 percent to US $11.8 billion from US$ 7.0 billion in the same period last year.

The three major sources of FDI in ASEAN are the European Union, the United States and Japan. In particular, European investments increased by 282% from US$ 2.2 billion in 1999 to US$ 8.4 billion in 2000, US investments increased by 2%, from US$ 4.7 billion to US$ 4.8 billion and Japanese investments increased by 117%, from US$ 2.2 billion to US$ 4.7 billion in the same period.

Annex 1

ASEAN TOTAL TRADE (1999 – 2000)

(US$ Million)

As of 20 August 2001

Annex 2

INTRA-ASEAN TRADE (1999 – 2000)

(US$ Million)

As of 20 August 2001