TWN Info Service on Free Trade Agreements

08 May 2009

ASEAN-EU FTA talks frozen

Mustaqim Adamrah , 

THE JAKARTA POST ,  JAKARTA     
Thu, 05/07/2009 12:10 PM 

The Association of Southeast Asian Nations (ASEAN) and the European Union (EU) have agreed to halt ongoing talks on the free trade agreement (FTA).

The decision to halt the talks was made at the ASEAN Meeting of Economic Ministers held in Siem Reap, Cambodia, between May 4 and 5.  

“Considering that there is a difficulty on the part of the EU to resume the FTA negotiation with ASEAN, the ministers agree to temporarily halt talks with the EU, while in the meantime trying to find common ground that both parties can agree on,” said the Indonesian Trade Ministry in its statement on Wednesday.

The ASEAN ministers shared a similar position, that the EU relationship had a strategic value for ASEAN, thus engagement between the two regions needed to be maintained, according to the statement.

Official negotiations between the two regions were launched in May, 2007 with full implementation of an FTA expected by 2015.

The planned FTA is part of the EU’s effort to catch up with its economic powerhouse rivals in gaining a better political and economic footing in Southeast Asia – a region historically divided by European colonial powers including the Netherlands, France, UK and Portugal.

Analysts believe that a failure to forge closer EU ties with ASEAN could sideline EU firms as against their rivals from Japan, the United States, South Korea and Australia.

Given ASEAN’s complexity, with 10 member countries with different legal frameworks, the planned FTA with ASEAN is actually the EU’s third priority after addressing the FTAs with South Korea and India.

The EU and ASEAN tried to build a closer relation starting in 1980 by inking a deal providing a forum for political and economic dialogue, but little progress was made until 1996 when the first Asia-Europe meeting (ASEM) was held.

The EU’s trade relations with ASEAN were upgraded in 2003 following the implementation of the Trans-Regional EU-ASEAN Trade Initiative (TREATI), which seeks to expand trade and investment flows and provide a framework for dialogue and regulatory cooperation.

TREATI was intended to pave the way for the FTA as the EU knows that several major studies on long-term developments in international trade have predicted that by 2020 the epicenter of the world economy will shift to the Asia Pacific region, with ASEAN forecast to emerge as the world’s largest exporter.

At the sixth consultation meeting between ASEAN and EU trade ministers in Vietnam in April 2005, it was decided to set up the Vision Group on ASEAN-EU Economic Partnership to make a feasibility study on a possible EU-ASEAN FTA.

During the groups’ eighth consultation meeting in May 2007, there were a shared desire to enhance economic relations by establishing an FTA, providing for comprehensive trade and investment liberalization. However,  the issue of human rights   violations in Myanmar has become a persistent stumbling block to these negotiations.