Ten South-East Asia nations last week signed a landmark accord to turn their vastly disparate states into an integrated, tariff-free trading and economic community by 2020.
At a summit on the Indonesian island of Bali, the Association of South-East Asian Nations (Asean) also agreed to complete deals with China, India and Japan by 2012. The pact with Beijing would create by far the world’s largest free-trade zone, with nearly two billion people and total gross domestic product of almost $3-trillion.
The Asean vision, dubbed the Bali Concord II, would eliminate tariff and non-tariff barriers, standardise customs procedures, reduce capital controls and abolish visas in a region that is home to 500-million people.
The leaders acknowledged that the diversity of the grouping’s economies has and will continue to hamper integration. Asean’s members range from the oil-rich autocratic monarchy Brunei, through relatively democratic nations such as Indonesia, Thailand, the Philippines, Malaysia, Singapore and Cambodia to the military dictatorship of Burma and the communist states Laos and Vietnam.
Eleven sectors, including electronics, tourism and air travel will be on a fast-track integration by 2010 and some nations, particularly Singapore and Thailand, are keen to liberalise everything as quickly as possible.
Analysts say the sense of urgency is driven by the very real fear that the region will lose out even more to China. Asean attracts only a fifth of the foreign investment going into China while data from the United States-Asean business council states that, of all the American investment into East Asia, only 10% is now going to Asean, compared with 75% a decade ago.
Chinese Prime Minister Wen Jiabao sought to play up the benefits for Asia rather than the threats from a strong Chinese economy.
”A more developed and a stronger China will bring about development opportunities and tangible benefits to other Asian countries,” he said at the business conference being held alongside the leaders’ summit. — Â