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Be Realistic About Plan
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Recent years have seen much discussion about greater economic integration in East Asia. However, the majority of significant achievements have always been made within the Association of Southeast Asia Nations (ASEAN) or between ASEAN and other economies in the region.

Encouraged by progress on the path leading to freer trade among themselves, ASEAN nations on Tuesday agreed to speed up the timetable for the creation of a single market called ASEAN Economic Community (AEC) by five years to 2015.

Considering the status quo of economic relations in East Asia, and perhaps political relations as well, AEC could well serve as the core and absorb other economies to expand itself to a bigger common market in the region. This is not the only possible scenario, but it is the most likely one.

In contrast, a proposal by Japanese Trade Minister Toshihiro Nikai for a sweeping free trade agreement that involves the 16-country East Asia free trade zone which covers ASEAN, Japan, China, the Republic of Korea (ROK), India, Australia and New Zealand is too ambitious for the moment.

Japan's trade talks with both the ROK and ASEAN have not been progressing smoothly. And Japanese wariness of China's increasing influence has complicated any attempt for a free trade arrangement that would involve the two. This has made anybody talking about a free trade agreement involving China and Japan, Asia's biggest and second-biggest economies, sound naive and idealistic.

In the broader context Japan proposed, which would also include such economic powers as India and Australia, it would be much tougher to make headway.

The uncertain prospects of the multilateral trading system after the pathetic Doha Round of talks seem to justify the need for a growing effort toward bilateral and regional trade pacts in East Asia, which relies heavily on trade for growth. At the same time, a unified Europe has increasingly become the envy of businesspeople in East Asia.

Indeed, the increasing business transactions and cross-border industrial supply chains for many industries in the region do necessitate more liberalizing steps in terms of trade and economic co-operation.

There is already a patchwork of free trade agreements or potential agreements on a smaller scale in the region.

However, trade officials and company executives have to accept this regrettable fact: Relationships between nations in the region, especially between its major powers, are still not mature enough for an aggressive plan as suggested by Nikai.

Commenting on the Nikai initiative, ASEAN trade ministers said the plan was worth study but urged Japan to make its FTA negotiations with ASEAN the current priority.

This would be a realistic approach.

(China Daily August 25, 2006)


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