ASEAN TRADE & INVESTMENT FRAMEWORK ARRANGEMENT (TIFA) with US Trade Representative SUSAN SCHWAB, Asean-US 2-way US$150 billion TRADE – 4th LARGEST

US trade representative Susan Schwab exchanging FIFA agreements with Malaysia Dato’ Seri Rafidah Aziz, Minister of International Trade and Industry

At the 38 Asean Economic Ministers meeting on Friday, the Asean Ministers sealed a pact FIFA with the US trade representative Susan Schwab paving the way for a full trade agreement FTA between Washington and Asean.

FIFA will also a platform to deepen trade and investment linkages between and Asean. Susan Schwab sign the arrangement after consultation with the 10^th Asean economic ministers

Consultations between the ASEAN Economic Ministers and the United State Representative (AEM-USTR) ;Kuala Lumpur, 25 August 2006

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The ASEAN Economic Ministers (AEM) and the United States Trade Representative met on 25 August 2006 in Kuala Lumpur, Malaysia and held productive discussions on a wide range of regional and global trade issues The consultations were co-chaired by H.E. Dato’ Seri Rafidah Aziz, Minister of International Trade and Industry of Malaysia and Ambassador Susan C. Schwab, the United States Trade Representative.

ASEAN-US Trade and Investment Framework Arrangement (TIFA)

The Ministers reaffirmed the importance attached to bringing the ASEAN region and the United States closer by signing a Trade and Investment Framework Arrangement (TIFA), which will serve as the platform for further deepening and broadening their trade and investment relations. Under the TIFA, they will establish a formal dialogue to address issues between them, to coordinate on regional and multilateral trade issues, and to undertake a Work Plan that will support regional integration and help build on the already strong trade and investment ties between them. Trade between ASEAN and the United States, grew from US$ 136 billion in 2004 to US$ 152.9 billion in 2005, an increase of 12.4 percent. Foreign direct investment also continued to rise.

The Ministers agreed that at the initial stage the Work Plan will include initiatives to support the development of the ASEAN Single Window, which will facilitate the flow of goods within ASEAN and between ASEAN and the United States. It also will include cooperation on sanitary and phytosanitary (SPS) issues to foster additional trade in specific agricultural goods as well as cooperation on pharmaceutical regulatory issues aimed at speeding the delivery of innovative medicines to ASEAN countries.

A Joint Council on Trade and Investment will be formed under the TIFA to provide direction on the implementation of the TIFA and the Work Plan. The TIFA supports the objectives laid down in the Enterprise for ASEAN Initiative (EAI) announced by U.S. President George W. Bush in October 2002 and the ASEAN-U.S. Enhanced Partnership, signed by the Foreign Ministers of ASEAN and the U.S. Secretary of State in Kuala . Lim Hng Kiang, Minister for Trade and Industry, Singapore Lumpur on 27 July 2006.

ABOVE SIGNING the TIFA: TOP LEFT, Clockwise; 1. U STrade Representative, Susan C. Schwab; 2 .Dato’ Seri Rafidah Aziz, Minister of International Trade and Industry, Malaysia; 3. Lim Hng Kiang, Minister for Trade and Industry, Singapore; 4. Somkid Jatusripitak, Deputy Prime Minister and Minister of Commerce, Thailand

ABOVE: Signing the TIFA: TOP LEFT, Clockwise; 1. Dr. Mari Elka Pangestu, Minister of Trade, Indonesia; 2. U Soe Tha, Minister for National Planning and Economic Development, Myanmar; 3. Dr. Nam Viyaketh, Minister of Industry and Commerce, Lao PDR; 4. Pehin Dato Lim Jock Seng, Second Minister of Foreign Affairs and Trade, Brunei Darussalam.

Not Shown: Dr. Cham Prasidh, Senior Minister and Minister of Commerce, Cambodia; Mr. Peter B. Favila, Secretary of Trade and Industry, the Philippines; Mr. Truong Dinh Tuyen, Minister of Trade, Viet Nam

Bernam account
US Gives High Priority To Its Ties With Asean August 25, 2006 13:13 PM By Massita Ahmad and Leslean Arshad

KUALA LUMPUR, Aug 25 (Bernama) -- The United States gives high priority to its ties with Asean due to crucial economic and geo-political interests, US Trade Representative said Friday.

Schwab said the just-signed Trade and Investment Framework Arrangement (TIFA) would provide a platform to further deepen trade and investment linkages between US and Asean.



U STrade Representative, Ms Susan C. Schwab: "With two-way trade constituting US$150 billion a year, Asean makes up the fourth largest trading partner for the US," she said.

However, Schwab who was on her first trip to this region after being appointed to the post in June, declined to elaborate on the geo-political interest when asked.

Schwab, representing US, today signed the framework with the 10-member grouping after consultations with the economic ministers here.

The US-Asean consultations were co-chaired by Schwab and Minister of International Trade and Industry Datuk Seri Rafidah Aziz.

Under the TIFA, the US and Asean representing Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam, will establish a formal ministerial dialogue.

Schwab said the parties would use this dialogue to jointly determine concrete steps for deepening trade and investment relations. Trade between Asean and the US grew to US$152.9 billion last year, an increase of 12.4 per cent from US$136 billion in 2004.

Under the framework both parties will undertake a work plan to support regional integration which will help enhance the flow of goods via the development of the Asean Single Window.

Schwab and her Asean counterparts also agreed to initiate a work plan under the TIFA and focus their efforts initially on three projects.

Among them is an initiative to support the development of the Asean Single Window, which will create a common system throughout Asean for entry of goods, facilitating trade within Asean and between both parties.

Ministers will also work to establish a framework agreement on sanitary and phytosanitary issues to foster increased trade in agricultural goods, an important sector in which trade is largely complementary.

The parties will also work together to support the development of harmonised standards for pharmaceutical registration and approval which will speed up the delivery of innovative medicines to Asean patients.

Meanwhile, Indonesian Trade Minister Dr Mari Elka Pangestu said there was no necessity to sign fresh agreements with the US as the TIFA with Washington was adequate.

She said Indonesia instead would concentrate on accelerating the implementation of the Tifa process.

She said it was important for Asean to intensify cooperation with the US and understand any contentious issue between both sides via the TIFA forum.

Economic Ties With Asean A Priority To United States ; August 25, 2006 11:31 AM

KUALA LUMPUR, Aug 25 (Bernama) -- Southeast Asia and the United States have pledged to work harder to take economic linkages to a significantly higher level following consultations between the two parties.

Chaired by Minister of International Trade and Industry Datuk Seri Rafidah Aziz Friday, it saw "production discussions" between Asean Economic Ministers and US Trade Representative Susan Schwab.

These are the highlights of consultations between Asean and United States:

* Asean and the United States to undertake a work plan to support regional integration under the Trade and Investment Framework Arrangement (TIFA) which will help enhance flow of goods via the development of the Asean Single Window,

* Joint council on trade and investment to be formed under TIFA,

* Asean and US urge WTO members to demonstrate flexibility to help put the Doha Development Round back on track before the end of 2006,

* Asean and US to help Vietnam and Laos gain membership in WTO,

* Both support Vietnam's hosting of the Apec leaders' meeting in November,

* Asean-US trade grew 12.4 percent to US$152.9 billion last year from US$136 billion in 2004

Fifth Consultations between the ASEAN Economic Ministers and the Minister of Commerce and Industry of India (AEM-India) Kuala Lumpur, 24 August 2006

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The Consultations was co-chaired by H.E. Dato’ Seri Rafidah Aziz, Minister of International Trade and Industry of Malaysia and H.E. Kamal Nath Minister of Commerce and Industry of India.

The Ministers took the opportunity provided by the annual consultations to exchange views on global and regional developments, in particular issues which could potentially shape ASEAN-India economic relations.

The Ministers noted that, despite the challenges, bilateral trade between ASEAN and India continued to increase. In 2005, total trade increased by 30.4% from US$ 17.6 billion in 2004 to US$ 23.1 billion in 2005.

In reponse to the solution to the Palm Oil duty raised; Kamal Nath Minister of Commerce and Industry of India said: “The import of Palm Oil into the market is an excess issue. What you are talking about is the Asean Trade Agreement NOT a Palm Oil Trade Agreement, we can have that too”

ASEAN-India Free Trade Area (AIFTA)

The Ministers noted the progress in the negotiations to establish the AIFTA and the efforts to move the negotiations forward. They reaffirmed their will and commitment to establish the AIFTA and directed their senior officials to explore ways to show flexibility in resolving the issues separating both sides, especially those pertaining to the modality on trade in goods. As an impetus to moving the trade in goods negotiations forward, the Ministers agreed that each ASEAN Member Country shall provide India with its individual sensitive list, while India shall provide ASEAN with its one common single sensitive list.

In addition, the Ministers agreed that the negotiations on goods be concluded early and negotiations on trade in services and investment be commenced once substantial progress has been made in the negotiations on trade in goods.

Eleventh AEM-CER Consultations ;Kuala Lumpur, 25 August 2006

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The Consultations was co-chaired by H.E. Dato' Seri Rafidah Aziz, Minister of International Trade and Industry, Malaysia; the Hon. Mark Vaile, Deputy Prime Minister and Minister for Trade of Australia; and the Hon. Phil Goff, Minister of Trade of New Zealand.

Mark Vaile, Deputy Prime Minister and Minister for Trade of Australia “ Where we are moving in terms of strengthening the regional architexture is very very important. We refer to the original establishment of the closed economical partnership arranged between Australia and New Zealand and the 10 Asean countries”

ASEAN-CER Trade and Investment Relations

Ministers noted that ASEAN-CER (Australia and New Zealand combined) bilateral trade continue to post significant gains which provides good momentum for establishing the ASEAN-Australia and New Zealand FTA (AANZFTA). Goods trade between ASEAN, and Australia and New Zealand combined expanded in 2005 by 23 per cent (i.e. from US$28.84 billion in 2004 to US$ 35.56 billion in 2005). Trade in services between Australia/New Zealand and ASEAN also experienced strong growth over the same period.

Phil Goff, Minister of Trade of New Zealand “ We have seen a healthy growth particularly last year in the trade between the two regions. New Zealand, for example, we have able seen growth of exports into Asean”

Ministers noted that in contrast to the substantial trade relationship, ASEAN–CER investment links are still relatively weak and exchanged views on how the ASEAN-CER investment relationship can be further strengthened.

The ASEAN-Australia and New Zealand FTA (AANZFTA)

Ministers noted the progress of the negotiations for the Free Trade Agreement between ASEAN, and Australia and New Zealand. They noted that negotiations have transcended the confidence-building stage and are now in the substantive critical phase with discussions focused on the draft texts of the various chapters of the agreement, including economic cooperation provisions, and modalities for market access negotiations.

Ministers recognised that with the right level of ambition and commitment to concluding the negotiations as a single undertaking, a comprehensive FTA could be done in 2007. Ministers acknowledged that there could be some difficulties encountered in the negotiations given the diverse economic circumstances and broad range of interests of the participating countries.

Ministers tasked the Trade Negotiating Committee to find creative solutions to close the gap on difficult issues. Ministers also called on participating countries to exercise greater flexibility in dealing with the difficult issues. Ministers re-affirmed the need to ensure sufficient flexibility to accommodate the need of some ASEAN Member Countries in the FTA.

ASEAN Ministers welcomed the technical assistance and capacity-building programmes given by Australia and New Zealand to facilitate the participation of all ASEAN Member Countries in the FTA negotiations.

On the whole, Ministers are looking forward to the conclusion of the negotiations emphasising that the FTA should build on the economic linkages between the two regions and deliver greater economic benefits to each participating country.

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From Financial Times, UK,

Washington signs pact with Asean nations; By John Burton in Singapore

Published: August 25 2006 18:19 | Last updated: August 25 2006 18:19

The US on Friday signed a trade and investment pact with south-east Asian nations, seen as a first step towards a comprehensive agreement to reduce trade barriers.

It was one of several trade deals that the 10-member Association of South-East Asian Nations has been negotiating with other regional partners in an effort to give the group a key role in the possible creation of a proposed pan-Asian trade zone.

Asean is hoping to conclude trade pacts with China, India, Japan and South Korea within the next several years, making south-east Asia the hub for an expanding regional trade network.

South-east Asia is a prime source of commodities and agricultural products in Asia and an important market for industrial goods. The trade agreement with the US would promote the development of an “Asean single window” to harmonise the entry of goods into the region by adopting similar customs procedures.

It also calls for “speeding the delivery of innovative medicines to Asean countries”, which has been a goal of the US pharmaceutical industry. The pact includes Burma, an Asean member, but the US has said it will not affect its trade sanctions against the country. The US is the biggest export market for Asean and the region’s biggest foreign direct investor.

Asean agreed this week at the annual meeting of its economic ministers to resume trade talks with India, after they were suspended last year over India’s refusal to reduce a list of 1,400 products that it wanted to exclude from any agreement. India has since cut the number of excluded goods by nearly two-thirds.

Asean and South Korea also agreed to cut tariffs from next January 1 in spite of a continued dispute over the export of Thai rice to Korea. Thailand has refused to join the deal in protest against the Korean decision excluding Thai rice to protect its agricultural sector.

China, which has already signed a trade deal with Asean on goods, said that it wanted to finish talks on liberalising services by 2006 as part of an effort to establish a trade area by 2010. Asean’s trade deals with China, Korea and Japan are seen as building blocks for a 16-member pan-Asian trade zone being proposed by Japan.

Asean has said it would study the proposal but that it was premature to begin discussions on it before the north-east Asian trade deals were concluded.

Japan’s proposal is viewed as an attempt to dilute China’s expanding economic influence in the region by including pro-western countries, such as India, Australia and New Zealand, in the wider trade bloc.

And some advices from International Herald Tribune ViewPoints:
Asean should crawl before it walks; Published: August 25, 2006

ASEAN: This week's meeting of economic ministers from Southeast Asia in Kuala Lumpur was not short on ambition. The officials confirmed a desire to accelerate the creation of a European-style single market to 2015 as the region struggles to strengthen its economic muscle. The plan will involve removing non-tariff-related barriers and quickening the opening up of service industries.

The next logical step would be a single-currency system. Tokyo also entered into the spirit by proposing the creation of a 16-country free trade area comprising Japan, China, India, South Korea, New Zealand, Australia and the Association of South East Asian Nations. But the Southeast Asians must try to learn the hard lessons of Europe's experience. There, the long road to a single market started in the early 1950s with the European Coal and Steel Community; and it is still struggling to bring down barriers.

In 2000, the EU introduced the Lisbon Agenda, which sought to turn the bloc into the world's premier knowledge-based economy by 2010. But there has been no shortage of setbacks to the goal, from lacking agreement on a communitywide patent system to a weakened agreement on services to a lack of common takeover rules. Corporate nationalism appears to be back on the scene.

The Asean region faces far more obstacles than Europe ever did. It comprises 10 countries - one of which is an international pariah - in highly different stages of development, with deep cultural and linguistic differences and no shortage of internal bickering. The trade ministers' meeting was overshadowed this week by a dispute between Malaysia and Thailand over automobile tariffs, and Malaysia and Singapore have a history of simmering mistrust. Malaysia has also said that it will not give up its affirmative action policy to help contractors who are Malays or belong to other indigenous groups. The success of the project will also involve Japan, China and South Korea acting in concert to support and nurture the body - something they have not proved adept at in the past. Ambition is no bad thing, but an excess of ambition can only disappoint. Ask the EU.

From AWSJ

Asean, U.S. Sign Agreement To Expand Trade and Investment
Associated Press; August 25, 2006 7:46 a.m.

KUALA LUMPUR, Malaysia -- Southeast Asian trade ministers signed an expanded trade and investment agreement with the U.S. on Friday that calls for a mechanism that allows U.S. imports easier access to the region.

The Trade and Investment Facilitation Arrangement, or TIFA, was signed by U.S. Trade Representative Susan Schwab and trade and commerce ministers from the 10-member Association of Southeast Asian Nations. It came a day after the bloc revived free-trade talks with India, breaking months of deadlock.

Asean also edged closer to completing talks on opening up service sectors with China and South Korea in meetings this week to boost links with key trade partners and make the bloc more competitive economically.

The arrangement between Asean and Washington Friday calls for the development of a so-called Asean Single Window, which calls for a "common system throughout Asean for the entry of goods," Ms. Schwab's office said in a statement. Officials say the echanism, if successful, would mean goods entering all Asean countries would be subject to similar customs procedures.

The arrangement also urges "cooperation on pharmaceutical regulatory issues aiming at speeding the delivery of innovative medicines to Asean countries," according to a joint news media statement. And it facilitates cooperation concerning sanitary issues in specific agricultural goods. American pharmaceutical companies have complained generic drug copies of patented medicines are eating into revenue, and affecting their research capabilities. Poorer countries say they can't afford the high cost of some patented life-saving or life-extending medicines.


Malaysian Trade Minister Rafidah Aziz said the agreement, at this stage, was not a precursor to a comprehensive economic partnership.

"The TIFA will be a platform to intensify our trade and investment relations with the Asean region, which collectively constitutes our fourth largest trading partner," Ms. Schwab said.

Two-way trade between Southeast Asia and the U.S. reached $152 billion in 2005, a 12% increase from the previous year. The agreement was signed despite American sanctions against military-ruled Myanmar, but Ms. Schwab said it wouldn't change Washington's stance. "The United States has very serious concerns about human rights in Myanmar. The TIFA is not going to change that," she said.

But Malaysia's Ms. Rafidah said that while she expressed hopes the agreement would help contribute toward Myanmar's national reconciliation, it shouldn't be used to pressure the country, also known as Burma, toward democracy. "I would rather not put this cloud, this whole group exercise we have with U.S. with individual country issues," she said.

In other developments, following talks with India late Thursday, Asean ministers agreed to resume free trade negotiations but urged New Delhi to provide more concessions. Talks between the two sides faltered last year over India's reluctance to open up its market.

Also Thursday, South Korea and Asean -- minus Thailand -- agreed to start cutting tariffs on merchandise trade by next January and conclude talks on services liberalization by the end of next year as part of plans to create a free-trade area by 2012.

Meanwhile, China, which has signed an agreement with Asean to free up merchandise trade, expects to finish negotiations on liberalizing the service sector by the end of 2006 to put on track plans to create a free-trade zone by 2010, Chinese Vice Commerce Minister Yi Xiaozhun said Thursday.

Attempts to liberalize trade in Southeast Asia have continued for over a decade, but distrust, nationalistic policies, poverty, and economic and political differences have hindered progress. But with a large chunk of international investment now going to China and India, Asean officials have moved economic talks along more urgently.

A wide economic gulf divides Asean's six more developed nations -- Malaysia, Indonesia, Singapore, Brunei, Thailand and the Philippines -- and its four newer members, Cambodia, communist Vietnam and Laos, and military-ruled Myanmar, in a region home to 560 million people.

ASEAN trade ministers want leaders to endorse a move creating an Asean Economic Community, or AEC, by 2015, five years earlier than originally planned. It allows for the free flow of goods and services through Southeast Asia, but doesn't include a single currency system.

http://online.wsj.com

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