ASEAN signs pacts to speed up economic union

CEBU, Philippines, Dec 9 (Reuters) Southeast Asian trade ministers hastily signed four agreements aimed at speeding up regional economic union after the high-profile summit of Asian leaders this weekend was postponed due to a typhoon.

The ministers also signed two pacts with China late yesterday, including one that reduces tariffs on an expanded list of goods, but left out an agreement on trade in services. They said the services pact would be signed when their leaders meet next month.

Japan, keen to strengthen its own economic ties with the Association of Southeast Asian Nations (ASEAN), said today it would provide 52 million dollars of fresh grant aid to support the grouping's integration efforts and to promote its economic partnership with Japan.

Japanese Prime Minister Shinzo Abe, who had planned to unveil the decision at the summit in the central Philippines city of Cebu, did so instead in a meeting with Philippine President Gloria Macapagal Arroyo in Manila.

Most of the trade and foreign ministers of Southeast Asia were due to fly out of Cebu today as Typhoon Utor swept into the region some 200 km north of Cebu.

Southeast Asian countries have stopped short of pushing for a full free market in the region, calling instead for ''flexibilities'' for exporters and ASEAN manufacturers in some industries.

Philippine Trade Secretary Peter Favila said the 10-member ASEAN recognised the need to speed up integration of its markets to compete for foreign capital with faster-growing neighbours China and India. But some industries, such as farming, still needed protection.

''The process of integration should be viewed with caution,'' he said.

The Economist Intelligence Unit (EIU) said in a study on ASEAN exports that the region needed to create a genuinely, integrated market and lessen its dependence on trade with outside the trading bloc to fuel growth in its manufacturing sector.

''For ASEAN to become more attractive as a location for investors to set up manufacturing plants, tariffs must continue to be lowered and non-tariff barriers dismantled,'' the EIU said.

The trade ministers of ASEAN, home to more than 560 million people and with a combined economy bigger than India's, have agreed to eliminate duties on 3,523 tariff lines on January 1, 2007, and simplify customs procedures, ASEAN said in a statement.

They also agreed to eliminate non-tariff barriers within the region in three phases starting in 2008, with all such barriers being dropped by 2010.

REUTERS AB VV1535