US likely to sign ASEAN trade deal

Original Publication Date: 
22 August, 2006

The US is set to conclude an agreement with Southeast Asia this week that is expected to boost free trade and help Americans benefit from a larger East Asian tariff-busting program.

The trade and investment pact is expected to be clinched by US Trade Representative Susan Schwab and her counterparts from ASEAN after talks in Kuala Lumpur on Friday, officials said.

The US at present has trade and investment framework agreements, popularly known as TIFA, with key individual ASEAN economies, aimed at setting the stage for free trade agreements.

As the upcoming TIFA deal is regional in nature, many expect it to lay the guidelines for a future free trade pact between the 10-member ASEAN and the US, its largest trading partner.

"It's early to predict what the next step is but the US-ASEAN TIFA arrangement is a positive opening of possibilities on the trade front," said Ben Dolven, senior director at BrooksBowerAsia, a Southeast Asia focused advisory firm.

"It reflects an understanding on the part of the United States that a great deal is happening at the regional level and that the United States wants to be there," he said.

ASEAN member countries now are the fourth-largest trading partner of the US, with two-way trade totaling about US$150 billion last year. The US has a free trade agreement with only Singapore in ASEAN, and is negotiating pacts with Malaysia and Thailand.

It has TIFA deals with Indonesia, the Philippines, Brunei and Cambodia, addressing issues ranging from intellectual property rights to regulations impeding agricultural trade to customs agreements to combat shipments of illegal goods.

The other ASEAN member states are Laos, Myanmar and Vietnam, which has concluded a much-awaited agreement with the US for its accession to the WTO.

US bilateral free-trade agreements in Southeast Asia should ultimately bring down business barriers across ASEAN and enhance regional integration, officials said.

"I do believe that our ASEAN-TIFA is a very important first step, and it will help us lay the groundwork, and build the capacity, and intensify cooperation and address specific trade issues that are going to be necessary to facilitate those consultations and ultimately achieve that vision," Deputy US Trade Representative Karan Bhatia said recently.

Analysts note that the US is beginning to strengthen links with ASEAN as a grouping, moving away from its traditional focus on bilateral links in the region which has come under criticism.

"This criticism has finally sunk in," said Brad Glosserman, executive director of the Hawaii-based Pacific Forum.

This shift "is an attempt to broaden the terms of engagement and to demonstrate the US commitment to being a partner to the region," he said.

The emphasis on building ties with ASEAN, for example, could help link the US to an evolving East Asian regional free trade area, analysts said.

ASEAN economies, aside from forging a regional free trade area among themselves, have launched plans for a free trade area with China that could create a unified market of nearly 2 billion people -- the largest in the world.