U.S., Japan May Use Asean to Railroad Bilateral Trade Pacts

The coming 12th ASEAN Summit to be held in Cebu this December would continue the neo-liberal liberalization agenda, to the continuing disadvantage of the peoples of Southeast Asia.

By IBON Foundation
Posted by Bulatlat 

The US and Japan may use the Association of Southeast Asian Nations (ASEAN) to negotiate and hasten onerous free trade agreements (FTAs) with member-countries to further consolidate transnational corporate dominance over local economies, according to independent think-tank IBON Foundation.

IBON research head Sonny Africa pointed out that through its Enterprise for ASEAN Initiative, the US was able to conclude a bilateral FTA with Singapore in 2003 while launching ongoing negotiations with Thailand and Malaysia as well as exploratory studies with the Philippines. In addition, it has Trade and Investment Framework Agreements (TIFA) with Indonesia, Brunei and Cambodia, which are precursors to full-blown FTAs.

Japan in turn also completed FTAs (which it calls Economic Partnership Agreements or EPAs) with the Philippines last September, and earlier, with Singapore and Malaysia. It is also negotiating further EPAs with Thailand, Indonesia as well as with the ASEAN as a body.

Africa pointed out that these initial bilateral FTAs serve two objectives: they establish a high minimum standard of liberalization far beyond even those prescribed under World Trade Organization agreements that subsequent pacts would be pressured to follow; and they generate momentum for other bilateral FTAs towards forming a network of US-centered free trade pacts, and subsequently, for a region-wide US-ASEAN agreement. Japan would also be able to use its FTAs for such a purpose.

If these plans bear fruit, they would allow the US and Japan to set up a region-wide production base. They could use such a base to fragment their production processes across Southeast Asia and set up 'domestic' enterprises in the form of affiliates, subsidiaries and sub-contractors ready to take advantage of lowered tariffs as well as exploiting cheap labor and natural resources.

For example, Japanese car-maker Toyota rationalized its production in ASEAN by locating its steering link and radiator production in Malaysia, bumper and steering column in Thailand and transmission and meter in the Philippines. The US also has corporations with well-entrenched business interests here such as Eli Lilly, Monsanto, and General Electric. But in exchange, ASEAN countries contrive to keep wages low in order to keep foreign corporate investment in the country.

Meanwhile, reduced tariffs under earlier liberalization schemes has resulted in an influx of cheap auto parts components, oleo chemicals, textiles, plastics and rubber products from ASEAN countries into the local market. According a survey by the Federation of Philippine Industries, reduction of tariffs under the WTO and other trade agreements has resulted in 84,738 workers displaced from company closures and downsizing from 1995 to April 2002.

Africa warned that the upcoming 12th ASEAN Summit to be held in Cebu this December would continue this neoliberal liberalization agenda, to the continuing disadvantage of the peoples of Southeast Asia. Posted by Bulatlat 

IBON Foundation, Inc. is an independent development institution established in 1978 that provides research, education, publications, information work and advocacy support on socioeconomic issues. 

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