[Reuters]

Published date: 14th Dec 1987

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14 December 1987 

Reuters News 

English 

(c) 1987 Reuters Limited 

MANILA, Dec 14, Reuter – Spurred by shrinking markets and the spectre of global recession, the leaders of South-East Asia were poised on Monday to end two decades of sluggish economic growth with a ringing resolve to boost collective action. 

In a draft communique dominated by concern over economic issues, leaders of the Association of South East Asian Nations set out a five-year plan to accelerate regional trade. 

The draft criticises rising protectionism in developing countries, calls for the renegotiation of international commodity agreements and urges creditors to alleviate the region’s foreign debt problem. 

The communique, a copy of which was obtained by Reuters, is to be signed on Tuesday by leaders of Indonesia, the Philippines, Thailand, Malaysia, Singapore and Brunei at the end of their two-day summit meeting. ASEAN officials said changes in the draft document were unlikely. 

The summit declaration urges the formation of producers’ associations for commodities in the resource-rich region and calls for joint action to combat trade barriers and production and export subsidies enforced by industrialised countries. 

It says ASEAN economic ministers should meet annually to review progress. 

In apparent acknowledgement of the snail’s pace at which ASEAN countries have opened their markets to each other’s products, the declaration vows to improve the 1977 Preferential Trading Arrangement (PTA) so that by the turn of the century the pact will cover the bulk of intra-ASEAN trade. 

By 1993, the draft communique said, import duties would be cut by half on goods on the PTA list exported from one ASEAN country to another, exclusion lists would be reduced to 10 per cent of each country’s traded items and exclusion lists would not account for more than half of total regional trade. 

ASEAN officials estimate that only about five per cent of the 19,000 goods included in the PTA now are actually traded within the region, while about half the items are on exclusion lists. 

Intra-regional trade currently makes up only 18 per cent of the total, with Singapore alone accounting for 23.4 per cent of ASEAN’s imports and 21.6 per cent of its exports in 1985. 

The draft document says ASEAN Industrial Joint Ventures (AIJVs), only nine of which have so far been launched, should be boosted by drawing up a list of pre-approved products. 

It says rules governing investments in AIJVs should be relaxed to increase maximum foreign participation to 60 per cent from the existing 49 per cent. 

It stipulates a cut in import duties of up to 90 per cent from the existing 75 per cent for AIJV goods. 

The draft communique says participating countries must ensure that AIJV products will not have to face dumping, unfair trade practices and unreasonable pricing for competing imports. 

It urges the conclusion of an ASEAN investment Guarantee Agreement to protect intra-regional investments. 

Striking a pessimistic note, the communique notes that the slowdown in the world economy has been Characterised by rising protectionism, massive trade imbalances and friction, as well as a constriction of international trade, instability in exchange rates and the diversion of foreign investment and financial flows to developed countries. 

Juxtaposed to this gloomy scene, the draft says, ASEAN countries had become increasingly dependent on exports to power their economies, which had moved away from an emphasis on agriculture to manufacturing. 

It urges developed countries to cut back on protectionist measures and says commodity pacts must be renegotiated at a time of sharp declines in world prices. 

Leaders of the region, which includes Indonesia and the Philippines, two of the world’s most indebted nations, called for concerted action on tackling the debt crisis. 

The draft communique says foreign investments are an effective source of capital inflow and modern technology and says ASEAN will work to attract direct foreign investments.