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Summit Advances Southeast Asia's Free-Trade Prospects

AFTER years of dodging cooperation, the fiercely competitive economies of Southeast Asia are grudgingly giving it a try.

At a Jan. 27 summit meeting, six noncommunist countries known as the Association of Southeast Asian Nations (ASEAN) hammered out plans for a free-trade area covering industrial goods to be instituted within 15 years.

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The organization includes Singapore, Indonesia, Thailand, Malaysia, Brunei, and the Philippines.

Even amid a new air of conciliation, the leaders meeting in Singapore didn't come to agreement easily. The original idea, suggested by Thailand, called for a 10-year phase-in. That was pushed back five years at the insistence of economically lagging Indonesia.

In the wake of a shrinking United States military presence in Asia and resurgent regional tensions, the countries for the first time agreed to talk about security cooperation, but backed off from action.

"Many issues are still being swept under the carpet," says a Western diplomat in Bangkok. Chandran Jeshurun, a Singapore defense analyst, says "1992 truly portends a rather troubled period of adjustment and realignment in Southeast Asia and Asia-Pacific as a whole."

ASEAN's gingerly approach to burying old differences risks sidetracking what have been among the world's most vibrant economies, say analysts who were hoping for a bolder stance.

Vying for investment and trade, especially with Japan and the US, Southeast Asia's small economic powerhouses have posted inflation-adjusted growth rates of 8 percent or more in the last five years.

Analysts say the countries will face a greater struggle to sustain strong growth as the single European Community market and a North American trade bloc linking the US, Canada, and Mexico emerge and compete for capital and trade.

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"If we do not synergize our strengths, ASEAN will risk missing the boat," warned Singapore Prime Minister Goh Chok Tong.

"When George Bush visited the region [in January], he told us not to worry. But we do," says a diplomat from a member country.

Tariffs on manufactured goods, processed agricultural products, and capital goods in the new zone will start to fall next January to a maximum of 5 percent within 15 years. Trade among these countries now represents about one-fifth of the region's $270 billion external trade.

A 1977 effort to remove trade barriers between the nations failed to make much progress. Observers had hoped ASEAN this time would move dramatically to heighten regional competitiveness.

Indonesia and the Philippines feared being left behind by their faster-growing neighbors and urged a more gradual changeover to the new free-trade system.

Worries of endangering trade with the US, the region's main trading partner, also continue to sideline a plan by Malaysian Prime Minister Mahathir Mohamad to build an Asian trade bloc around Japan's economic clout. The US, fearing trade discrimination by the bloc, has pressured Japan and South Korea to oppose the idea. Indonesia also worries about losing part of its US market if it supports the plan. Mr. Mahathir, in a jab at the US, said, "Is this a foretaste of the new world order?"

Southeast Asia's economic jitters carry over into security concerns. For years, noncommunist governments, dominated by military juntas and autocrats, have relied on strong economic growth to salve domestic tensions. With the Soviet Union's collapse and a Cambodian peace accord, security dilemmas that had bonded regional rivals for years are gone. Traditional tensions are reviving amid a brisk arms buildup and intensifying competition for timber, oil, and other resources.

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