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 November 27, 2000
ASEAN Summit Highlights

 Summary

The annual informal ASEAN Summit concluded in Singapore this weekend with pledges to study several new regional cooperation initiatives. ASEAN, along with China, Japan, and Korea, agreed to form a working group to study a proposal for a free trade zone between the 13 countries, while also agreeing to study the merits of institutionalizing the "ASEAN+3" forum as an annual Summit. The 13 countries also agreed to a regional currency swap arrangement intended to pre-empt future currency crises. Additionally, the ten ASEAN countries signed an e-ASEAN Framework Agreement, and adopted a protocol to be used by countries that opt to delay tariff reductions on certain products under AFTA. End summary.

ASEAN+3 to Study Free Trade Zone
ASEAN heads of government agreed with their counterparts from China, Japan, and South Korea, to study the idea of a free trade zone between the 13 countries. According to press reports, a working group will be formed to study the idea over the next year, and leaders will review progress at their next meeting in 2001. South Korea will lead a study group to explore the proposal. Leaders cautioned that their vision of an Asia-wide free trade zone was a long-term project. "All the leaders understand that these are just merely ideas for study and if they are to be implemented it will be over the long term," Singapore's prime minister, Goh Chok Tong, told a closing news conference. Malaysian Prime Minister Mahathir Mohamad agreed. "We think there is a possibility of a free trade and investment zone but that is not going to happen any time soon," he told reporters.

Institutionalization of ASEAN+3 Meetings

Prime Minister Goh said that ASEAN would study whether to turn its current informal forum with the three countries, known as the "ASEAN+3," into a formal East Asia Summit. Singapore was in favor of a formal summit structure for the ASEAN+3 forum, but the change should be gradual in order to preserve the Southeast Asian character of ASEAN, he added. Goh said the possible emergence of a single powerful Asian group should not worry the United States. "We need the United States to be in East Asia. This is not an attempt to shut out Washington from Asia," he said.

For a copy of the Chairman's press statement from the 4th Informal ASEAN Summit, visit the US-ASEAN Business Council Web site at www.us-asean.org/ASEANOverview/AIS2000.doc.

Japan, China, S. Korea Leaders Agree to Meet Regularly

The leaders of Japan, China and South Korea agreed in Singapore that their countries should hold top-level trilateral meetings on a regular basis. "Announcing that we will meet regularly is very meaningful as it will send a message to the international community that the three countries are aggressively working toward peace and stability in Asia," press reports quoted Japanese Prime Minister Yoshiro Mori as saying. During their hour-long meeting, leaders of the three countries discussed cooperation among themselves and with other Asian nations on a wide range of areas, including information technology, the environment and economic and cultural exchanges. They also updated each other on the preparations for joint research on economic cooperation to be launched in January. Involving think tanks from the three countries, the research will focus on the prospective impacts of China's entry to the World Trade Organization (WTO).

Japan, China, Korea and Asean Sign Currency Swap Crisis Pact

Japan, China, South Korea and the ten ASEAN countries agreed to establish a network of bilateral currency swaps and repurchase agreements that will allow member countries experiencing short-term liquidity crises to borrow money without meeting conditions set by the International Monetary Fund. Under the accord, the central banks of participating countries will provide funds to stabilize each other's currencies and can also borrow cash from each other in exchange for securities they hold on condition they are repurchased. The agreements will supplement existing international financial support mechanisms, including IMF programs, according to the Japanese Ministry of Finance.

The foreign exchange swaps conducted without linkages to IMF program will reportedly only be for durations of a year or less. No amount has been set for the ASEAN+3 swap agreements as they have to be worked out on a bilateral basis. A statement from the Finance Ministry indicated that the framework is expected to function as a pre- emptive mechanism to avert currency and financial crises.

e-ASEAN Framework Agreement Signed

As had been planned, ASEAN leaders signed a pact to promote Internet use and e-commerce in the region. The "e-ASEAN framework agreement" focuses on narrowing the digital divide among ASEAN members. The agreement commits ASEAN to boost Internet connectivity among the members, create local content, facilitate electronic commerce, liberalize trade in information and communications technology products and services, develop human resources and offer e-governance in which information is made public electronically.

For a copy of the e-ASEAN agreement, visit the US-ASEAN Business Council Web site at www.us-asean.org/easean.htm.

For more information on the US-ASEAN Business Council's e-ASEAN Working Group, contact Remy Nathan at remy@usasean.org.

AFTA Protocol Signed

Economic leaders signed off on a protocol for rules governing the relaxation of tariff reduction deadlines under the ASEAN Free Trade Area (AFTA). The protocol was first announced at the ASEAN Economic Ministers meeting in early October, and was adopted following Malaysia's decision to delay tariff tariff reductions on automobiles and CKD kits. Senior Malaysian officials will meet with their counterparts from Thailand, the country most directly affected, by the middle of December to negotiate compensatory measures. Thai Deputy Prime Minister and Commerce Minister Supachai Panitckpadi told reporters that "We have in mind a package to claim compensation from Malaysia, including relaxation of import regulations, increasing quotas for Thai goods and technical assistance to Thai production."

Under the newly signed program, the two countries have 180 days to make a deal after Malaysia submits to the AFTA Council - expected by the end of the month - a list of items to be delayed. Thailand has the right to withdraw its items in the inclusion list if fails to agree on the compensation.

(For a copy of the Protocol on Temporary Exclusions, visit the US-ASEAN Business Council Web site at
www.us-asean.org/ASEANOverview/protocol.PDF)