Asean Leaders Set to Agree Free-Trade Action Plan

Bali, Indonesia - Southeast Asian leaders gathered on Tuesday to endorse an action plan to transform the region into a giant free trade zone by 2020, with several urging a faster pace if they are to keep up with the rest of the world.

The 10 leaders of the Association of South East Nations (ASEAN) looked set at their annual summit to stick to their reluctance to criticize fellow member Myanmar after the junta moved democracy icon Aung San Suu Kyi into house arrest from detention.

Security was tight on Indonesia's bomb-scarred tropical island of Bali. Troops were deployed and 13 naval vessels sailed offshore to protect leaders of ASEAN, to be joined by China, Japan and South Korea and India at their two-day meeting to agree on plans to create a single market.

"The year 2020 is the goal. But, personally, I wish to see the ASEAN Economic Community achievements by earlier dates," Thai Prime Minister Thaksin Shinawatra told business people on Monday.

"Seventeen years from now might be too late," he said of the goal to cut tariff and non-tariff barriers to trade in a region with 500 million people and annual trade worth $720 billion.

"The leaders believe that the ASEAN Economic Community will enhance ASEAN competitiveness, improve ASEAN's investment environment and narrow the development gap among ASEAN members," said the draft final chairman's statement, obtained by Reuters.

The urgency for the trading bloc has been accentuated by the failure of world trade talks in Cancun. ASEAN's relatively small economies want more clout to compete with China and at the same time are working to set up a free trade zone with their giant northern neighbor.

One leader poured cold water on high expectations for quick progress by a group that has frequently adopted such plans and failed to follow through.

"Products have to comply with a bewildering range of standards, which vary from one ASEAN country to another," Singapore Prime Minister Goh Chok Tong told the business leaders.

"To bring a new pharmaceutical drug to the ASEAN market, a manufacturer needs the approval of 10 health authorities," he said. "It makes ASEAN uncompetitive.

The focus of this summit is on nurturing the economic growth of a region rocked in the past few years by a financial crisis, terror attacks and the SARS virus rather than on pushing for greater democracy in Myanmar.

The members, target of some of the worst terror attacks since the September 11, 2001 strikes, were "committed to intensify efforts, collectively and individually, to prevent, counter and suppress the activities of terrorist groups in the region," the draft chairman's statement said.

Myanmar's decision to move Suu Kyi into house arrest after she underwent major surgery recently had given the Southeast Asian grouping a cover to avoid piling pressure on Yangon.

"The ASEAN leaders welcomed the positive developments in Myanmar and the government's pledge to bring about the transition to democracy," said the draft statement, which can still be altered.

Officials have said they were encouraged by the move on Suu Kyi but want to see more steps toward democracy.

The draft signaled that, with Myanmar helping to write the comments, leaders would hold back from the recent readiness of ASEAN to shift from a fundamental principle of not interfering in each other's domestic affairs to demand faster progress.

The final communiqué, Bali Concord II, to be issued by the leaders, underscored a thrust to accelerate economic integration.

ASEAN ministers are recommending 11 key economic sectors for accelerated integration by 2010 rather than 2020.

ASEAN must aim for a single production base and single market with free movement of goods, services and capital, said Goh.

"This is the only way to make sure we remain competitive in the face of growing regional and bilateral free trade agreements, post-Cancun," he said, referring to the failed world trade talks.

ASEAN has long been viewed as a talking shop that stresses consensus over confrontation among members that can be reluctant or unable to follow through on agreed initiatives. Its disparate members range from tiny, prosperous Singapore to underdeveloped Laos.

"There is no need for one deadline for all to create the ASEAN Economic Community," Thaksin said.

"For all of us in ASEAN, there is no time for complacency, no time to waste and no time to play," he said, adding that the region should take the initiative after Cancun.

A report ASEAN commissioned from business consultants McKinsey highlighted lack of integration, non-tariff barriers and disparate policies that favor competitiveness of single nations at the expense of the group as among problems the bloc must face.

The group is working on free trade agreements to be completed with China in 2010, India in 2011 and Japan in 2012 and is considering advancing the 2020 deadline, ASEAN Secretary-General Ong Keng Yong said at the weekend.

ASEAN groups Brunei, Malaysia, Indonesia, Vietnam, Singapore, Laos, Cambodia, the Philippines, Myanmar and Thailand. -- Reuters

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