Manila, 23 June - Speaking here today at the seminar on AFTA's Relevance in the Aftermath of the Asian Financial Crisis, Rodolfo Severino, Secretary-General of ASEAN, said that the ASEAN leaders have "re-affirmed their commitment to regional economic integration". Severino said that ASEAN has made regional economic integration "a primary component of the region's response to the economic troubles that have hit the region since the middle of 1997". He stated that ASEAN's commitment to liberalization schemes would create a large integrated market that could attract investments much more effectively than small, fragmented ones.

Severino said that in a little more than six months, AFTA will have been substantially achieved, at least for the original six signatories, with some exceptions and flexibility. These countries include Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore, and Thailand. The Sixth ASEAN Summit which was held in Hanoi in December 1998 decided to advance the date for the formal completion of AFTA from 2003 to 2002. At the same time, ASEAN agreed to ensure that tariffs on at least 90% of tariff lines in the Inclusion List drop to 5 percent and less by the beginning of 2000, with each individual country committing itself to at least 85% of its tariff lines.

Meanwhile, under the ASEAN Industrial Cooperation (AICO) scheme, products of cooperative production processes between companies operating in two or more ASEAN countries can receive full AFTA treatment immediately. As of the beginning of June this year, 62 applications have been received, twenty-eight have been approved, while others are under consideration. Beneficiaries or applicants for AICO incentives include Matsushita, Denso, Toyota, Honda, Volvo, Sony, Nestle, Isuzu, Mitsubishi, Hitachi, Nissan, and Ford.

Severino informed the Seminar that ASEAN is now laying the conceptual framework and negotiating parameters for the start of the next round of negotiations on trade in services. In previous rounds, mutual commitments were made in the seven areas of air transport, business services, construction, financial services, maritime transport, telecommunication, and tourism. In the next round, all sectors and all modes of supply will be open to negotiation.

Under the ASEAN Investment Area (AIA), ASEAN countries are committed to open their manufacturing sectors to ASEAN investors and extend national treatment to such investments. Exclusions are to be phased out by 2003.

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