Statement at the Tenth APEC Ministerial Meeting, 
Kuala Lumpur, 15 November 1998

ASEAN has remained faithful to the fundamental purposes of APEC - the liberalization of trade and investment, the facilitation of trade and investment, and economic and technical cooperation.

Through good times and bad, ASEAN countries have maintained open trade and investment regimes and are opening them further still - among themselves, within APEC and to the world at large.

ASEAN members of WTO have supported the purposes and processes of the organization and, in many cases, have gone beyond their formal commitments in WTO. ASEAN members of APEC have been forthcoming in improving their Individual Action Plans, which, people tend to forget, are the core instrument for trade liberalization in APEC.

Within ASEAN, the association's leaders and ministers have repeatedly affirmed their individual and collective commitment to the completion of the ASEAN Free Trade Area on schedule. Indeed, they have called for the acceleration of AFTA's implementation and taken steps to hasten it. Last month, ASEAN's trade and industry ministers, meeting as the AFTA Council, heard one another report on what they have done or committed themselves to do in order to advance AFTA more rapidly. Most of the actions involve the faster transfer of products from various exclusion lists to the inclusion list of items covered by AFTA. They also include the identification of more products on which tariffs would be eliminated altogether by 2003 or, in some cases, as early as 1999.

As it is, about 83 percent of all tariff lines in ASEAN, some 46,000 of them, are covered by the AFTA scheme, with tariff rates for these products down to 5.37 percent and expected to fall to less than four percent by the year 2000. ASEAN is also moving on making trade easier and more efficient through, among other ways, the harmonization of tariff nomenclatures and of customs rules and procedures.

Improvements have been made on the ASEAN Industrial Cooperation scheme, under which the products of companies operating in two or more ASEAN countries would enjoy full AFTA treatment -- that is, tariffs of at most five percent or none at all -- upon government approval of their applications for inclusion in AICO.

ASEAN, too, is far along in its negotiations on trade in services, with the first package of commitments on seven priority sectors concluded last year and a second package ready for final approval this year. A new round of negotiations will be starting soon thereafter.

Also last month, the ministers signed a framework agreement establishing the ASEAN Investment Area. Under this agreement, ASEAN countries are to open most industrial sectors to ASEAN and non-ASEAN investments to the extent of giving national treatment to such investments.

In ASEAN's view, hastening regional economic integration and keeping open trade and investment regimes are important for drawing in investments and invigorating trade.

But, in these times of crisis, these are not enough. Even in open markets, trade expansion will not take place if demand is down, if trade is not sufficiently financed, if corporations are saddled with enormous debt, if international financial flows remain volatile.

The ASEAN Secretariat has circulated a paper, attached to this statement, detailing the measures that ASEAN members have taken and are taking, individually and collectively, to deal with the effects of the global economic and financial crisis on their economies.

As a direct, collective response to the crisis, ASEAN has agreed to set up a surveillance mechanism to keep an eye on the movement of capital and on shifts in economic indicators. This will serve as an early warning system to alert ASEAN ministers to impending trouble in the future. Bilateral payments arrangements have been concluded or are under negotiation to increase the use of ASEAN currencies for intra-ASEAN trade.

Clearly, ASEAN cannot deal with the crisis all by itself. As a unique body for regional economic cooperation including both developed and developing countries, APEC would be a suitable forum for addressing the crisis, particularly with respect to its impact on trade and in terms of ECOTECH, and putting forward concrete courses of action.

For example, APEC members could agree to take action, in a concerted manner, to stimulate their economies through fiscal and/or monetary expansion and thus raise demand for one another's products and services. It would help ease the severe credit crunch. The action would have to be concerted to avoid financial de-stabilization. The European Union could be called upon to join this concerted action.

At the same time, programs for the financing of trade among APEC countries could be stepped up.

APEC, with creditor and debtor economies in its membership, might seek to encourage the re-scheduling or re-structuring of the huge debt that hangs like an albatross on the necks of some APEC economies and their corporations.

Several APEC economies participate in various groups that have looked at possible ways of reforming the international financial system. APEC might seek to ensure that the voice of its developing-country members is heard in these efforts and that the interests of their peoples are taken into account. Some specific measures could be considered, including those that have to do with strengthening the international financial institutions, liability sharing in debt workouts between debtors and creditors, establishing international rules on the transparency of international financial transactions, a system of and rules for the global governance and surveillance of such transactions, and so on.

APEC's program of economic and technical cooperation, while progressing impressively, needs a sharper focus on improving APEC economies' ability to recover from the crisis and prevent similar crises from recurring. Australia has undertaken what it has named the APEC Economic Governance Capacity Building Survey, which points in this direction. This effort should be pursued into concrete cooperative action and similar ones undertaken.

Finally, APEC economies, particularly the developed ones, might renew and, in practical ways, strengthen their commitment to a liberal trading regime. ASEAN has a critical stake in open markets in its APEC partners. After all, APEC accounts for more than seventy-five percent of ASEAN's total exports.

At the same time, ASEAN takes from APEC almost the same proportion of its imports. ASEAN's APEC partners, too, have a stake in ASEAN's recovery and strength and in ASEAN's ability to purchase and to contribute to the regional economy.