During the period of July 1989 to June 1990, various activities of ASEAN have been carried out with different degrees of success in both tangible and intangible terms. The momentum launched by the Third Meeting of the ASEAN Heads of Government in Manila in 1987 has been maintained, as some of the initiatives were successfully implemented.

On the ASEAN machinery, the ASEAN Joint Consultative Meeting (JCM) and the ASEAN Joint Ministerial Meeting (JMM) have been convened, demonstrating ASEAN's readiness in coordinating common ASEAN's position to deal with the concept of Asia-Pacific Economic Cooperation (APEC).

Apart from the APEC concept which was officially raised for ASEAN's consideration at the Twenty-Second AMM/PMC, the period under review has witnessed momentous changes within and outside the region, particularly, those in Central and Eastern Europe. Those developments coupled with the impending Europe 1992 have posed increasing challenges and opportunities in the coming decade and beyond. The ASEAN Economic Ministers (AEM), in recognition of possible implications from those changes, at their Twenty-First Meeting in Bandar Seri Begawan, 30 November - 1 December 1989 requested senior officials to formulate a long-term policy for ASEAN by adopting a bold and innovative approach.

The Dialogue Relations have progressed smoothly and satisfactorily in various fields particularly in the areas of technical assistance and development cooperation. However, there have been disappointments in particular on issues relating to market access to products for export interest to ASEAN. On the role of the private sector, ASEAN and the Dialogue Partners have been trying to increase the dynamism of the dialogue process by. bringing in the private sector which is an indispensable part of constructive and positive economic inter-actions, notwithstanding, the matter for concern is on the funding of ASEAN projects, as the funding assistance seems to be declining in real terms.

The period under review also witnessed the signing of the agreement on the establishment of Sectoral Dialogue relations between ASEAN and the Republic of Korea on 2 November 1989, serving as a new model for ASEAN's future relations with other countries. The ASEAN Committees and related bodies have been increasingly aware of the challenges posed by developments within and out-side the region. Attempts have been made to concretise the economic initiatives of the Third Meeting of the ASEAN Heads of Government, but impediments still remain strong even in the face of cooperative spirit of member countries. Some sections of the private sector have been very active in using the ASEAN framework to promote commercial activities. The functional Committees have also been implementing their plans of activities so as to strengthen the groundwork for closer economic cooperation. The success, although in intangible terms, is noteworthy.

The period under review also noted various diplomatic efforts by ASEAN countries as well as by other countries concerned, such as the convening of the Paris Conference on Cambodia in 1989 and the Informal Meeting on Cambodia, Jakarta 26-28 February 1990. Though the warring Cambodian parties had failed to achieve substantial progress to the solution, a number of principle elements has been reached. There is still a need for more will to achieve a comprehensive political solution to the question.

As a significant economic player in the region, ASEAN as a whole cannot afford to be laxed in its dealing with intra-ASEAN cooperation and ASEAN's relations with third countries or groupings. The period under review has clearly shown the increasing awareness of ASEAN in attempting to promote closer intra-ASEAN cooperation and to cope with the challenges in a coordinated and concerted manner as follows.

In the areas of finance and banking, member countries continued in their efforts to promote further the use of ASEAN currencies in intra-ASEAN trade. Presently, those member countries which have daily official foreign exchange quotation now include currencies of other member countries in their daily quotation.

With respect to the utilization of the ASEAN-Japan Development Fund (AJDF), loans have now been committed to projects under Category B (national projects) by Indonesia and Malaysia and disbursed by Malaysia. Other ASEAN member countries have yet to finalize their negotiations with the Japanese authorities. As for the funds designated under Category A of the AJDF loan package for regional projects, there is a need to expedite its implementation as no projects have yet been identified for funding under this loan package.

The area of import and export procedures shows a potential for the member countries to further strengthen the cooperation in customs matters. A study on Analysis of Export and Import Procedures of ASEAN Member Countries which has just been completed identifies the needs and potential areas for simplification and harmonization of customs procedures of member countries. This will be an area of focus amongst member countries. To this end, member countries have also embarked upon a study to identify the differences and similarities of customs procedures which are related to the ASEAN Preferential Trade Arrangements (PTA). Through this study, further measures could be taken to enhance the intra-ASEAN trade under the PTA. Member countries also continue to exchange and update information in the areas of prevention, investigation and suppression of customs offences including those involving drug trafficking; customs procedures relating to imports and exports and drawback and warehousing system.

On cooperation in tax matters, the main issue currently being examined is the area of Taxation on Banking Institutions : Major Issues and Problems. The exchange of views amongst member countries on the structures of the banking and finance industry; governing laws and supervision and tax regimes and tax treatment on various transaction of the banks is ongoing. With regard to the issue concerning the Problems and Measures in collecting Taxes from Foreign Contractors, member countries are of the view that the tax withholding scheme is an efficient and effective measure in preventing tax evasion.

On cross border leasing, Guidelines on Taxation on Leasing for ASEAN Countries have been formulated by the Working Group on Tax Matters and endorsed by COFAB. These Guidelines aim at providing a framework for the tax treatment, of a cross-border leasing among member countries.

Cooperation in the field of insurance in the region continued in the area of collation and exchange of information with regard to insurance laws, mortality studies and ASEAN unified insurance statistics. The Insurance Commissioners will focus their minds on the challenges of the 1990 and the impact they will have on the ASEAN economies and insurance industries at the Senior Management Workshop in Bangkok in April 1990 participated by the Commissioners themselves and the executives from the industries.

The ASEAN Reinsurance Corporation (ASEAN Re) which was another initiative endorsed by the Third ASEAN Summit continues to receive the necessary support from member countries to ensure its success. Having commenced its business since January 1989, the ASEAN Re's business underwriting dealt mostly with the contracts that had been previously accepted by the ASEAN Reinsurance Pool.

Under the umbrella of COFAF, ASEAN cooperation in the field of food, agriculture and forestry has achieved considerable progress. The common thread which binds ASEAN together is the willingness to develop and share technology which will improve the livelihood of ASEAN farmers. ASEAN had agreed on agricultural policies of common interest and had cooperated in the fields of crops, livestock, fisheries, forestry and food handling. There has been common understanding on the need to improve the agricultural output by up- grading the farming methods, post harvest technology, food safety techniques and by developing new markets.

During the period under review, many points of common interest have been identified and the web of cooperative projects and efforts has been strengthened.

In the field of food handling, a pre feasibility study had been conducted in early 1990, under ASEAN-Australia Post Harvest System Improvement Programme (AAPSIP), to develop a five year programme that would contribute towards improving post-harvest technology and food safety within the region. With regard to sharing of training and extension resources, the project on Sharing and Strengthening of Development Support Communication Resources (DSC) in ASEAN Countries has successfully provided the foundation for collaboration among ASEAN member countries in the effort to enhance the effectiveness of the extension services through the development support communication activities. The extension of the ASEAN-DSC Project was endorsed by AMAF for further consideration in the UNDP Fifth Cycle Programme. The ASEAN Plant Quarantine Centre and Training Institute (PLANTI) continued to make progress for research into plant pests and provide training needs for ASEAN technicians and professional officers in phytosanitation. The ASEAN Poultry Disease Research and Training Centre (APDRTC) will also in time upgrade ASEAN's ability to control diseases in poultry.

On Foot and Mouth Diseases (FMD), several areas in ASEAN have been declared free, while more and more areas would be submitting proposal to declare themselves free of FMD.

On the forestry side, ASEAN Institute of Forestry Management (AIFM) and ASEAN Timber Technology Centre (ATTC) were given the task to coordinate the activities to counter the Anti Tropical Timber Campaign from scientific and forestry management's points of view, while Indonesia has been assigned to lead the campaign and despatch an ASEAN Ministerial delegation to the major consuming areas in 1990. Despite the encouraging progress in implementing the on-going projects, delay in the implementation of some projects has been occassioned by the inability to secure third party funding. The use of ASEAN's own fund was seen as an alternative, in addition to new direction to encourage the private sector to become more involved in the development projects.

During the period under review, the COFAF Coordinating Group on Fisheries has assisted the founding of the ASEAN Fisheries Federation (AFF), which had its Council Meetings in Bangkok in October 1989 and in Jakarta in May 1990. The main objective of AFF is to develop fisheries cooperation in ASEAN.

In addition, the COFAF Coordinating Group on Crops made preliminary discussions with the Working Group on Food, Agriculture and Forestry (WGFAF) of the ASEAN Chamber of Commerce and Industry (ASEAN-CCI) and agreed to the possible practical ASEAN Cooperation in crops in the following field :

The provision of safe and efficient transportation and communications system continues to be given its due importance within the framework of ASEAN cooperation in this field. During the period under review, various issues and challenges were encountered in this endeavour which deserves special attention for cooperation and joint action. These include issues emanating from technological advancement in the transportation and communications sector to cater for the modern needs of transportation and communications such as the introduction of enlarged containers, multimodal transport and the application of electronic data interchange, and development in the satellite communications. These issues were sufficiently deliberated and monitored but ASEAN's response to these developments however was rather slow, due to the amount of investment, required, as well as the time taken to effect administrative and legislative changes.

The implementation of projects and activities for sustaining cooperation in this field has also yield- mixed results. Some progress was made in the implementation of COTAC's new initiatives in this sector. Notable among these was the agreement by ASEAN Airlines to convene the annual meeting of its Chief Executives and Senior Executives on rotational basis. This meeting would consider matters relating to air travel as well as those related to cooperation among ASEAN Airlines. The proposed establishment of Centres of Excellence was only prominent in the area of civil aviation and related services. The proposed establishment of ASEAN transportation network however has not been properly conceptualized. Nevertheless, it is important to note that efforts were also undertaken to initiate projects that could contribute towards the successful realization of COTAC's new initiatives in all sub-sectors.

Delay was encountered in the implementation of projects and related activities due to both internal and external factors. The proliferation of ASEAN meetings, lack of continuous reporting, lack of proper planning and coordination of activities, preoccupation of officials with their national responsibilities and priorities are some of the internal factors hindering the smooth implementation of projects and activities. Externally, it was the lack of available funding to projects and this is especially so since most projects are heavily dependent upon foreign funding, primarily from Dialogue Partners. Thus, severe financial constraints encountered by some Dialogue Partners and their subsequent changes in priorities, had adversely affected ASEAN as less funds were allocated to ASEAN.

Nevertheless, some notable achievements were accomplished in strengthening cooperation in Posts and Telecommunications. To achieve better quality and standard of services continue to be the main emphasis in the provision of postal services such as reduced priority airmail, surface air lifted, international express mail and inter-country remittance services. Measures to modernize postal services are also being undertaken. In the area of telecommunications, the Memorandum of Under- standing for the construction of ASEAN Optical Fibre Submarine Cable Network was finally signed on 8 March 1990 in Jakarta. The successful implementation of this Network would greatly enhance the capacity and efficiency of telecommunication lines within ASEAN with opportunities for region-wide links in the Asia and the Pacific. In addition, efforts are also being undertaken to widen the use of cellular radio telephone in the region. Training of telecommunication personnel was also undertaken to increase their productivity and efficiency.

Amidst the back-drop of the desire of the ASEAN Economic Ministers' (AEM) that the Basic Agreement on ASEAN Industrial Joint Venture (BAAIJV) be reviewed in order to expedite the approval process; and that a bold and innovative approach be taken to address the issues facing the region, the 33rd Meeting of the ASEAN Committee on Industry, Minerals and Energy (COIME) was held in Kuala Lumpur on 23-25 May 1990.

The Meeting, had preliminary discussions on the provisions of the BAAIJV which could be improved and had an exchange of views on measures that were needed to be taken to encourage investments through industrial preferential schemes. As an immediate result of these discussions, COIME approved the proposal to extend the dead line for the 60% non-ASEAN equity participation in AIJV beyond 1990.

On the Pre-Approved List of the AIJV the ASEAN Economic Ministers have agreed to the inclusion of the following products in the List:

The BBC Scheme for Nissan Motor Co. Ltd. between Malaysia and Thailand on the Model Nissan Sentra/Sunny (B11) has been approved while the Nissan BBC Scheme on the Model Nissan Sentra/Sunny (Bl3) among Malaysia, the Philippines and Thailand was also approved, subject to the replacement of those parts removed from the proposed schedule on exports from the Philippines to Malaysia.

Additional BBC Schemes proposed by Mitsubishi Motor Corporation (MMC), Mercedes Benz and Volvo are awaiting additional information from the proponents.

On Minerals, there has not been substantial progress in the implementation of- the 14 approved projects under the ASEAN Minerals Cooperation Plan.

In view of this, the Experts Group Meeting on Minerals will meet in Banding in October 1990.

Interest was expressed by the Working Group on Industrial Cooperation (WIC) of the ASEAN-CBI on the ASEAN Industrial Standardization Program and agreed that the private sector should actively participate in the Program. In this connection, COME requested Thailand, as Program Coordinator, to inform the WIC of the progress of the Program and to request the WIC to invite ISQAP representatives to attend their Meetings.

COIME also approved the full participation of Brunei Darussalam and Singapore in the programme.

During the period under review, implementation of direction in the area of trade by the Third ASEAN Summit in Manila in 1987 has progressed substantially, particularly with regard to the five- year improvement programmes of the ASEAN Preferential Trading Arrangements (PTA). The 1989 Programmes have now been implemented by all member countries, bringing another 335 new items with Margin of Preferences (MOPS) of 25% into the Scheme, besides the deepening of MOPs for existing 2,848 items. The total number of items which are accorded with preferential tariff up to now stands at 14,801, which the private sector can benefit to-increase the intra-ASEAN trade. Another benefit for the private sectors is the list of chemical products eligible for inclusion in the positive list proposed for reduction of ASEAN content requirement from 50% to 35%. The list is expected to be finalized by member countries soon.

With respect to the implementation of the Memorandum of Understanding on Standstill and Rollback of Non-Tariff Barriers (NTBs), member countries still continue to negotiate the request list for rollback of NTMS. Although no concessions have yet been granted, member countries have undertaken to exchange information on NonTariff Measures (NTMS) that were removed as well as tariff changes taken unilaterally since the Third ASEAN Summit.

On intra-ASEAN cooperation in commodity, work arrangements and prioritization of commodity list have been formulated. It was stressed that the process of implementing the 8-Point initiatives adopted by the Third ASEAN Summit should be expeditiously carried out towards achieving concrete results. The division of work which had been assigned to member countries should be implemented fully. Member countries also agreed to request the UNDP to conduct and finance a feasibility study on the establishment-of the ASEAN Data Bank on Commodities (ADBC) and Market Development Studies on Commodities.

The ASEAN-CCI was urged to consider in creasing their involvement and be more effective in the meetings conducted by ASEAN officials, particularly in meetings of the economic committees and dialogue with third countries: A "brainstorming" session was proposed to the private sector to discuss how the present arrangements could be improved to enable the private sector to benefit as much as possible from ASEAN meetings.

As the Uruguay Round of the Multilateral Trade Negotiations moves into final stage, ASEAN member countries recognize the need for even greater and closer coordination at all levels. The 21st AEM Meeting agreed that ASEAN should develop common postures on negotiating issues to guide the ASEAN negotiators in Geneva. However, the ASEAN negotiators in Geneva would be allowed to retain the flexibility of individual countries to state their positions on issues of particular interest to them within the framework of ASEAN positions.

Member countries have also been active in the international commodities issues where joint common approaches have been adopted on anti- tropical timber campaign, anti-tropical vegetable oils campaign, farm subsidies and the Common Fund for Commodities. ASEAN stressed the seriousness of the anti-tropical timber campaign affecting its timber trade and industries, therefore the 21st AEM Meeting agreed that an ASEAN Ministerial Delegation be sent to the consuming countries particularly the EC in 1990. Indonesia which was mandated to coordinate and lead this Ministerial Delegation, is in the process of organising it.

Common approaches on trade restrictive measures against ASEAN products have also been endorsed by the 21st AEM Meeting. This has led to a setting up of the ASEAN Experts Group to study the manifestation and implications of the CVD and anti-dumping actions and other trade restrictive measures of major trading partners affecting ASEAN products.

Cooperation in tourism has made a marked progress. Preparation for the Visit ASEAN Year (VAY'92) campaign has been well on the way. An advertising company and its public relations consultant have been contracted to carry out the VAY'92 promotional campaign focusing on the four principal markets, namely; Japan, Australia, West Germany and the ASEAN region. The campaign will center around the theme "ASEAN-the World's Only 6-in-1 Tropical Paradise. In addition, the assistance has also been sought from the ASEAN national carriers, ASEAN Tourism Associations (ASEANTA) and Committee on Culture and Information (COCI) to ensure the success of the VAY'92. The ASEAN Tourism Information Center (ATIC) established in Kuala Lumpur on 1 January 1989 has played a key role in coordinating and implementing the activities on the VAY'92 campaign and other projects.

Culture and information related projects are being implemented through the ASEAN Cultural Fund. For FY 1989-1990, 25 projects at a cost of US$ 2,030,046.50 are being implemented. These projects and those of previous years are designed at promoting among the member countries a greater understanding and appreciation of one another's cultural heritage and lifestyles through the various media. These media can be in the form of song, dance and film festivals cultural exchanges, work-shops, exhibitions and symposiums. In the final analysis, these programmes are expected to increase peoples' awareness of ASEAN and ASEAN's sense of solidarity.

In June 1989 a task force established by COCI held a meeting to discuss the mechanism for the evaluation of ASEAN-COCI projects. The meeting formulated criteria for the selection of ASEAN-COCI projects and the evaluation of on- going and completed projects. With the guidelines in hand, ASEAN-COCI will be in a better position to draw up projects which will have more impact on the ASEAN consciousness.

To find appropriate ways and means to properly disseminate marketable products of COCI's projects, the Meeting of ASEAN Copyright Experts was held in Bangkok in November 1989. The meeting discussed the ASEAN Secretariat's conceptual paper on the subject. Due to the issues of whether or not ASEAN has a "juridical personality" the Meeting felt that this should be referred to a higher authority. A Second Meeting was deemed necessary by the Experts' Group, as this would enable the Group to complete their task and to seek practical ways to the solution of the issue.

Due to obstacles encountered by the ASEAN- COCI at the 21st Meeting in Singapore, December 1989 in making decision for implementing the project in the field of information proposed by the ASEAN Ministers Responsible for Information, it is important to set up a formal linkage and directives between the ASEAN-COCI and the SOM of the Conference, to facilitate the implementation of the proposed projects in the future. At the 22nd ASEAN-COCI Meeting, it was observed that any budgetary difficulty arising from approved project proposals pending their implementation should be referred to the relevant working groups. The Meeting also observed that one of the criteria for prioritizing project proposals, is the issue that projects should be spread out among member countries based on the principle of equitable approach.

The Fifteenth Meeting of the ASEAN Committee on Social Development (COSD) was held in Manila on 24 to 27 May 1990. The Meeting considered and endorsed project proposals submitted by the Subsidiary bodies under it for onward transmission to the 23th ASEAN Standing Committee. The Special Meeting of the ASEAN Directors General in Bali in April 1990, recommended a proposal on taking over of COSD-ITS functions by the ASEAN Secretariat. The 15th COSD Meeting agreed to recommend to the ASEAN Standing Committee to transfer of the COSD-ITS function to-the ASEAN Secretariat and also agreed that the transfer of the COSD Chairmanship to the ASEAN Secretariat was a matter that could be addressed in a later time.

After a lapse of 13 years, the ASEAN Ministers Responsible for Social Welfare met again for the second time in Kuala Lumpur on 26 March 1990. (The First Meeting of the ASEAN ministers was held in Jakarta in 1977). The Second Meeting focussed specifically on welfare concerns as well as the strategies and programmes for addressing theme It also considered the need for a formal mechanism for implementation of these strategies and programmes.

The ASEAN Sub-Committee on Health and Nutrition which met in Manila from 6-8 March 1990 reviewed the progress of the three on-going projects in the field of health and nutrition, i.e., ASEAN Scholarship Programme for Applied Tropical Medicine and Public Health (ASEANTROPMED); ASEAN Institute for Health Development (which started as the ASEAN Training Centre for Primary Health Care under ASEAN-Japan Human Resources Development) and ASEAN Technical Cooperation on Pharmaceuticals.

The Ninth Meeting of the ASEAN Women's Programme (AWP) which was held in Manila from 24-26 January 1990 took cognizance of the difficulty in obtaining financial support for implementing projects and suggested the utilisation of local resources or the setting up of its own fund with contributions from intra-as well as extra-ASEAN resources.

The ASEAN Sub-Committee on Labour Affairs (ASCLA) met in Yogyakarta from 12-14 September 1989 and agreed on its Terms of Reference, which stated the linkage between ASCLA as one of the subsidiary body of COSD and ASEAN Labour Ministers Meeting (ALMM) through the Senior Officials of the Ministers of Labour, and that ASCLA will be responsible to both ASEAN-COSD and ALMM for technical matters of the ASEAN cooperation in labour matters.

The ASEAN Standing Committee has agreed on the establishment of the ASEAN Sub-Committee on Education (SCOE), its Terms-of Reference has been approved ad referendum by the 23rd ASEAN Standing Committee subsequent to its third Meeting in Jakarta. The 15th COSD Meeting was of the view that the convening of an ASEAN SCOE Meeting before the next Meeting of COSD would be desirable.

The Sixth Meeting of the ASEAN Experts Group on Natural Disasters (AEGND) meet in Bangkok from 13-15 December 1989 after a lapse of six years. Thailand's agreement to be the Monitoring Country for Natural Disasters in the region helped resolve the issue of the rotation of the ASEAN Natural Disaster Centre.

ASEAN is now having difficulties in trying to overcome the financial problem it faces in implementing regional social development projects. Proposals ranged from the utilisation of local resources like the ASEAN Fund to the establishment of specific funds for individual subsidiary bodies as well as the ASEAN Social Development Fund. The Third Meeting of the 23rd ASEAN Standing Committee, however, agreed that the proposal to set up the ASEAN Social Development Fund (ASDF) be further reviewed. The Fifteenth Meeting of the COSD endorsed the creation of the ASDF, the initial source of which should derive from the ASEAN Cultural Fund. The Fourth Meeting of the Twenty-Third ASEAN Standing Committee decided on the joint dimarche by the ASEAN Heads of Mission. in Tokyo to request the Japanese Government to allot US$ 5 Million from the ASEAN Cultural Fund as seed money for the ASDF.

Following the approval of the ASEAN Plan of Action by the ASEAN Ministers of Science and Technology in January 1989, the year under review marked a new phase of development in science and technology cooperation. The 21st and 22nd Meetings of the ASEAN Committee on Science and Technology (COST) held in Yogyakarta on 4-8 September 1989 and in Kuala Lumpur on 21-24 March 1990, respectively, established guidelines, future plans and activities of the new sub-committees on programme areas and prepared the terms of reference of the ASEAN Senior Officials on the Environment (ASOEN). In line with the recommendations of the Plan of Action, the project activities place greater emphasis on commercialisation of results and private sector participation.

The ASEAN Science Fund established solely for S & T activities came into effect in early 1990. A bank account was opened with seed contributions from member countries and an Advisory Body was set up to assist COST in the management of the Fund. ASEAN is now seeking contributions to the Science Fund from Dialogue Partners and international organizations.

Despite problems and constraints, cooperation with some Dialogue Partners was substantially enhanced. Cooperative efforts in science and technology under Phase I of ASEAN-Australia Economic Cooperation Programme, (AAECP) has further strengthened the capability of ASEAN in food science and technology and has contributed to the growth of the food industries in the region. In recent years food exports have been one of the most rapidly growing sectors of the ASEAN economies. Following the success of Phase I, Phase II of the ASEAN-Australia Economic Cooperation Programme commenced in July 1989 with an allocation amounting to 81 % of the total AAECP Phase II budget of A$ 27.5 M for 5 years for projects in biotechnology, microelectronics, marine science and non-conventional energy research and possibly in food technology research and development. As there is potential commercialisation of results and mutual benefits from this cooperation, the issue on intellectual property rights was taken into consideration in the implementation of the projects.

Active preparations are being made to hold the 4th ASEAN Food Conference in Jakarta in July 1991 and the Third ASEAN Science and Technology Week (TASTW) in Singapore in September 1992.

During the period under review, ASEAN has also attached great importance to regional activities in the field of environment. The ASEAN Experts Group on the Environment (AEGE) was elevated to the ASEAN Senior Officials on the Environment (ASOEN), thus enabling it to report directly to the ASEAN Standing Committee and the meetings of the ASEAN Ministers of Environment The ASOEN's terms of reference were approved by the Third Meeting of the 23rd ASEAN Standing Committee in March 1990. The ASOEN would follow the spirit and wording of the Jakarta Resolution on Sustainable Development of 1987, thereby incorporating the principle of sustainable development into all aspects of development. The focus of the ASEAN would also be on policy. guidelines to protect ASEAN's common resources and development. The ASOEN, with its experience in implementing the ASEAN Environment Programme (ASEP) Phase I (1978-1982) and Phase II (1983-1987) in its former capacity as the AEGE, is actively carrying out ASEP Phase III which has been commenced since 1988. The work of ASOEN would contribute much to ASEAN's desire to protect its environment with all the appropriate and practicable means.

Although intensive efforts had been undertaken both at regional and national levels in the field of narcotics prevention and control, the danger of drug abuse still exists in the ASEAN region. Indication of its close association with the Acquired Immune Deficiency Syndrome (AIDS) continues to worry both narcotics agencies and the health authorities. The main drug abusers in the region continue to be the youth population.

Regional efforts at the control and prevention of the narcotics problem continue to be guided by the Five Year Programme of Action adopted at the 11th ASOD Meeting, the Comprehensive Multi-disciplinary Outline (CMO) adopted by the International Conference on Drugs Abuse and Illicit Trafficking (ICDAIT) in 1987 as well as international development in the battle against narcotics warlords. At the Second Interregional Heads of Narcotics Law Enforcement Agencies Meeting held at the UN Office in Vienna, in September 1989 ASEAN supported the resolution to provide moral and physical assistance to Colombia's battle against the cocaine cartels operating in the country.

To date, no ASEAN member country has ratified the Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Subtances. Nonetheless, national and regional activities conducted are very much in line with the provisions of the Convention.

In terms of regional projects implemented, there were only two in the period of 1989/1990:

The EC has also agreed to finance two ASEAN-EC Experts Seminar on Drugs Abuse later in 1990 in the areas of

The Financing Agreement for this project was signed by the Chairman of the ABC on behalf of ASEAN.

Regional cooperative efforts in drug prevention and control in the period of 1989/90 continues to be bogged down with the lack of financial support from dialogue partners.

The period under review witnessed various activities carried out under the framework of Dialogue Relations between ASEAN and Third Countries. Dialogue meetings with Japan, Canada, New Zealand and Australia were convened on 3-4 October 1989, 21-22 November 1989, 10-11 May 1990 and 17-18 May 1990 respectively. The Eighth Meeting of the ASEAN-EC Ministerial Meeting was also held on 16-17 February 1990 in Kuching, Sarawak, Malaysia. There was no dialogue meeting with the US during the period. A new development is the establishment of Sectoral Dialogue between ASEAN and the Republic of Korea on 2 November 1989.

During the PMC with Australia in July 1989, the ASEAN Ministers emphasized that more efforts were needed to narrow the trade gap. The Ministers noted that although the two-way trade had increased considerably, ASEAN's and Australia's shares in each other's global trade remained small. ASEAN is also concerned that the Australian discussion to adopt recommendations of the Australian Anti Dumping Authority (ADA) on operational guidelines of the new Australian AntiDumping Legislation would also apply to import that hinder the establishment of a new Australian industry.

The ASEAN-Australia Forum, which was held in Singapore 17-18 May 1990, reviewed this particular dialogue relation. The AAECP II, with an annual budget A$ 7 million focusses on areas of trade and investment promotion, science and technology, and agro-based projects. As the 83 projects under Phase II are expected to be commercially viable, both ASEAN and Australia explored possible ways and means to reach agreement on the important issue of ownership of intellectual property. ASEAN is agreeable in principle to the equitable sharing of intellectual property rights. The details of such sharing should be negotiated among cooperating parties at the project level. ASEAN also agreed that the project proposals on cocoa market adaption and tropical fruits should be considered under TIPP.

The participation of the private sector in the 13th ASEAN-Australia Forum gave new impetus to the expansion of the commercial relationship between ASEAN and Australia. The ASEAN-Australia Business Council took active part in the 13th ASEAN-Australia Forum. In this Forum there were three new areas of activities which were discussed, namely, environment, telecommunications and education. The timing of these developments is even more significant as events in Europe may temporarily detract the attention of world economic powers away from the region.

The Sixth Meeting of the ASEAN-Canada JCC held in Bandar Seri Begawan on 21-22 November 1989 reaffirmed the commitment of the ASEAN- Canada partnership to building long-term and mutually beneficial economic ties. The JCC Meeting was marked by the active participation of the private sector which was represented by the ASEAN-Canada Business Council.

On development cooperation, the Meeting reviewed the status of the projects and addressed outstanding issues including ASEAN's concern with the pace of project implementation. It was noted that Canada planned to implement six projects under the ASEAN-Canada Regional Training Programme in 1990.

On ASEAN's economic cooperation with Canada, both sides agreed to intensify their consultations on trade issues through trade policy and MTN discussions. Canada indicated that it would be sending a team of MTN negotiators to the ASEAN region to discuss market access issues and other matters of mutual concern within the Uruguay Round.

A significant development during the period under review was the establishment of the Canada- ASEAN Centre in Singapore. The Centre was officially opened by Mr. Joe Clark, the Secretary of State for External Affairs of Canada on 10 July 1989.

The cooperation agreement between ASEAN and EC has been extended since October 1989 for another period of two years. The 8th ASEAN-EC Ministerial Meeting, held in Kuching, Sarawak, Malaysia, 16-17 February 1990 reaffirmed that the extension of this agreement demonstrate the strong commitment of both side to strengthen further their relations, with the hope that the private sector should assume a greater role in enhancing ASEAN- EC economic cooperation.

During the period under review the positive sign in this relation has been demonstrated by the increase in trade flows between the two region particularly for industrial products.

The 8th AEMM also recognized that the ASEAN-EC relations have diversified and registered impressive progress, however a review of the existing cooperation was needed to chart the course of ASEAN-EC relations to meet the challenges of the 90's, notably by on the one hand strengthening the impact of economic, financial and industrial cooperation, human resource development and science and technology programmes and by increasing trade flows and investments and by encouraging participation of the private sector, and on the other hand, continuing to stress assistance to the poorer segment of the rural population, with special attention be given to the participation of women in the development 3 process and environmental protection.

The ASEAN Ministers made known to the EC's side ASEAN's serious concern over the anti-tropical timber campaign. However, the two sides recognised that threat to global environment is a shared responsibility which requires urgent and appropriate international action. They agreed that the protection of the environment should be viewed in perspective and that due emphasis be accorded to promoting economic growth and substantial development. It was also agreed that to ensure a more integrated approach to environmental and development problems, developing countries' ability to respond to environmental concerns must be strengthened. In this context, they agreed that environment concerns should be a major issue but should not be used to introduce a new form of conditionality in aid and development financing. The EC Ministers also agreed to consider assisting the upgrading of ASEAN's facilities, capabilities and expertise in the areas of management of natural resources and environment monitoring through technical and financial assistance.

On the European Single Market of 1992, while welcoming the trade and investment opportunities created as a result of the removal of internal barriers, the ASEAN Ministers expressed concern over possible adverse impact of the Single Market on ASEAN trade with the EC. However, the EC Ministers assured them that the EC would remain open to its trading partners because of its commitment to the multilateral trading system and that the Single Market would lead to an improvement of EC competitiveness and further stimulate the liberalization of world trade. Furthermore, both sides agreed that sector specific workshops on the impact and opportunity of the Single Market on ASEAN's trade and investments with the EC, be held in an ASEAN capital.

On ASEAN-Japan Relations, the eleventh in the series of annual dialogue meetings between ASEAN and Japan was held in Manila from 3-4 October 1989 during the year under review.

Significant results of the Eleventh ASEAN-Japan Forum included Japan's agreement to the ASEAN proposal for the participation of the private sector at the Forum. The participation of ASEAN and Japanese private sector will begin at the Twelfth Forum which is tentatively scheduled for September 1990. Japan also expressed their readiness to hold a meeting of trade experts between ASEAN and Japan before the next Forum. The Trade Experts Meeting is expected to provide a venue for extensive discussion and resolution of bilateral trade issues.

On Commodities, both ASEAN and Japan had agreed to strengthen cooperation in dealing with international and bilateral commodity issues for mutual benefit. Japan indicated its willingness to exchange views with ASEAN and other interested member states in strengthening cooperation between producing and consuming countries in the implementation of the Common Fund. On the development of resource-based industries, Japan agreed to refer its direct investments on the industries to its private sector. Japan also suggested that ASEAN should present its request for development assistance on such industries in the form of an ODA project. While recognising the importance of R & D activities for commodities, Japan agreed to examine the possibilities of cooperation on the proposed R & D areas. On the proposed sogoshosha project, Japan suggested that interested parties in ASEAN could contact the Association for Over seas Technical Scholarship (AOTS) for its consideration. Meanwhile, the market access issues for processed and semi- processed products exported by ASEAN to Japan were not given due consideration.

On tropical forest issues, Japan indicated its support on the efforts by developing countries to sustainably utilise and conserve tropical forests through bilateral and multilateral aids. Japan pursued a policy to strengthen bilateral cooperation closely connected with life of people living in forests. Japan also pursued a policy to reinforce financial support for international organisations such as ITTO and CDIAR.

Another significant development during the period under review was the ASEAN-Japan Development Fund (AJDF). Indonesia has committed funds from the AJDF under Category B (National Projects) while Malaysia has disbursed funds from the AJDF for its projects under the same Category during the period under review. The other member countries namely, Brunei Darussalam, the Philippines, Singapore and Thailand are still in the process of negotiating with the Japanese authorities in order to expeditiously settle all outstanding issues on the utilization of the Fund between Japan and the ASEAN member countries concerned. There has been no progress on the utilization of Category A (Regional AJDF Projects) and the equity portion of the Fund.

Steps to effect the accession of Brunei Darussalam to the Agreement on the Establishment of the ASEAN Promotion Centre on Trade, Investment and Tourism (APC) in Tokyo were also taken during the period under review. On 8 June 1990, Brunei Darussalam has become a new party to the said Agreement.

In response to the ASEAN request for inclusion of new products, New Zealand explained that New Zealand's GSP should be seen in the context of the very substantial liberalisation of New Zealand's import regime. This had seen import licensing reduced to cover less than 3% of New Zealand's total imports. New Zealand had been affected by New Zealand's product graduation policy. On ASEAN's proposal to request New Zealand to introduce on extracts of classification heading in its GSP, New Zealand replied that it would cause considerable administrative difficulty to apply. New Zealand agreed to ASEAN's request to give priority to considering ASEAN's fifth request list. In respect of deeper GSP preferences offering ASEAN deeper cuts. New Zealand explained that it would be difficult to respond to ASEAN's request at this time, especially in advance of the outcome of the current Multilateral Trade Negotiation.

ASEAN and New Zealand viewed that the private sector participation at the 10th Dialogue Meeting was a valuable contribution to further promoting economic and trade relations. It is hoped that the private sector will continue to take an active part in enhancing the dialogue relations.

In the area of development cooperation at the 10th ASEAN-New Zealand Dialogue Meeting, New Zealand informed ASEAN that it would meet its commitment of NZ$ 12 million for the five year ending in 1992, and also agreed to implement four projects under Inter-institutional Linkages Programme (IILP) in July 1990. As for the Trade and Investment Promotion Package (TIPP), ASEAN and New Zealand agreed that the project proposals under this programme could be developed on the basis of New Zealand paper entitled TIPP Designing A Project Proposal as well as the comments/ inputs by ASEAN and ASEAN/New Zealand Business Council. Both sides also agreed that the project proposals would be finalised as soon as possible. New Zealand agreed to fund the project Commerce Facility, separately from the ASEAN regional programme. ASEAN appreciates to New Zealand's agreement that the ASEAN's two new project proposals would be the next priority for implementation after the IILP and TIPP, and that four projects have been categorised in the overplanning category.

With regard to New Zealand Overseas Students Policy, New Zealand has explained to ASEAN of the pressure in the availability of space and of the increased independence of educational institutions under the new policy. ASEAN wishes to reiterate its hope that the policy be applied in a flexible manner, with a view to admitting more ASEAN students into New Zealand Universities, especially in professional courses in which ASEAN students are currently restricted.

On ASEAN-US Relations, although, due to a number of reasons, the Ninth ASEAN-US Dialogue has to be postponed to the later part of 1990, the ASEAN Private Investment and Trade Opportunities (PITO) Project Agreement was signed on 26 April 1990. The project worth US$ 13 million is funded by USAID for the duration of 6 years. Its main objective is to encourage and promote trade and investment cooperation between the private sector of both sides.

On the ASEAN-US Initiative (AUI), AEM has agreed to set up an ASEAN-US Joint Working Group with the USTR, interalia, to review existing ASEAN- US economic relations, including the AUI study.

The years 1989 and 1990 are important for ASEAN-UNDP relations. These are the years when ASEAN and UNDP together prepare the ASEAN subprogrammes for the Fifth Cycle of the Inter Country Programme(ICP) covering 1992-1996. The current cycle, nearing completion of implementation, cover some 42 projects costing some US$ 13.7 million.

As part of the preparations for drawing-up the new programme, a comprehensive review of the ASEAN/UNDP technical cooperation programme will be conducted with UNDP assistance. The main purpose of the review is to make recommendations concerning priorities and thrusts to assist in the transaction towards achieving a more programmatic approach to project generation.

The UNDP technical assistance programme was the subject of discussion at the ASEAN Secretariat between the Secretary-General and Mr. Krishan G. Singh, Assistant Administrator of the UNDP New York in January 1990. Administrative and operational delays seemed to be the stumbling blocks to certain UNDP assisted project implementation, causing loss of time and resources to ASEAN and its programme. In an effort to reduce the de lays, UNDP suggested the execution of programmes and projects by ASEAN itself (self-execution). This would mean that the ASEAN Secretariat together with the economic and functional committees could play a greater role in initiating, formulating, implementing and evaluating projects, with assistance from UN specialized agencies only when necessary. The ASEAN Standing Committee welcomed the offer and requested the ASEAN Secretariat to pursue the matter with the UNDP.

Concerning the immediate preparations for the 5th Cycle of the ICP, more than 80 project proposals from the various ASEAN committees have been collated and submitted to UNDP. More are expected to be submitted until the end of the year 1990.

The period under review witnessed another development in fulfilling the directive of the Third Meeting of the ASEAN Heads of Government, Manila, December 1987 on the desirability of establishing sectoral dialogues in certain cases. In this regard ASEAN has established Sectoral Dialogue with the Republic of Korea (ROK) on 2 November 1989 through the exchange of letters signed on behalf of ASEAN by H. E. Mr. Ali Alatas, Foreign Minister of Indonesia and, the current chairman of the ASEAN Standing Committee and on behalf of the ROK by H.E. Mr. Choi Ho-Joong, Foreign Minister of the ROK. This Sectoral Dialogue will initially concentrate on the areas of trade, investment and tourism, with the possibility of expanding the relations to include other areas such as development cooperation, transfer of technology and human resources development (HRD). Discussions on modalities of this Sectoral Dialogue have been conducted at the officials' level. This development clearly demonstrates ASEAN's perception of potential areas of common interest and mutual benefits in its relations with third countries.

The Cambodian problem remains a major obstable to ASEAN's efforts to promote peace and stability in the Southeast Asian region. ASEAN's activities and approach in seeking a comprehensive political settlement of the Cambodian problem have received widespread support from the international community. At the 44th United Nations General Assembly, ASEAN's draft resolution on the situation in Kampuchea was again adopted by the over whelming majority of the United Nations membership, reaffirming the unequivocal endorsement of ASEAN's approach towards a just, durable, and comprehensive solution to the Cambodian problem.

Various diplomatic activities aiming at maintaining the momentum of the negotiating process during the past year met with considerable success. The two Jakarta Informal Meetings (JIMS) in July 1988 and February 1989 provided a necessary platform for the convening of the Paris International Conference on Cambodia (PICC) in August 1989 under the Co-Chairmanship of the Foreign Ministers of Indonesia and France. Although it was not yet possible to achieve a comprehensive settlement at the Paris Conference, this forum has made progress in elaborating a wide range of political elements necessary for such an objective and provided an invaluable opportunity for all parties concerned to freely exchange views and to identify the necessary conditions that will enable the Cambodian people to exercise their right of self-determination. While the Paris Conference has been suspended, there remains optimism that a comprehensive solution was attainable, since Indonesia and France, as Co- chairmen, were entrusted to proceed with consultations within a period of six months in order to assess the situation and the prospect of reconvening the Conference.

Since the Paris Conference, there has been a flurry of diplomatic activities in the search for a comprehensive political settlement. In this regard, the Permanent Members of the UN Security Council have convened a series of meetings since January 1990. At their first meeting in Paris on 15-16 January 1990, they succeeded in specifying the principles that would guide them in working for a comprehensive solution to the Cambodian problem.

As part of the regional effort, Thailand took an initiative in promoting an atmosphere conducive to more constructive dialogue among the Cambodian parties by arranging a meeting between Prince Sihanouk and Mr. Hun Sen in Bangkok on 21 February 1990. At the end of the talks they issued a Joint Communique in which both sides have expressed agreement on the need for the UN presence and the establishment of a Supreme National Council to symbolize Cambodia's national sovereignty and unity.

With a view to resolving the crucial issue of interim administration that proved to be of the main stumbling blocs at the Paris Conference, the Australian Foreign Minister proposed an idea of directly involving the UN in the administration of Cambodia during the transitional period prior to elections. Australia also drew up a useful paper on the possible roles of the UN in effecting a comprehensive political settlement.

The above activities led to the convening of the Informal Meeting on Cambodia in Jakarta on 26-28 February 1990, conducted within the frame work of the Paris Conference. Although the Meeting was preceded by reasonable optimism, the outcome confirmed that the Cambodian parties still adhered closely to their stated positions, particularly on the interim administration of Cambodia, and the control mechanisms. Compromise on these key issues has yet to be achieved.

To add impetus to the peace process, further diplomatic efforts continued and resulted in the Tokyo Meeting on 4-5 June 1990. By linking the voluntary self-restraint on the use of force with the establishment of the Supreme National Council, the Joint Communique signed by Prince Sihanouk and Mr. Hun Sen in Tokyo has made for the first time a linkage between the military and political aspects of a comprehensive political solution. The report on the Meeting was submitted to the Meeting of Permanent Members of the U.N. Security Council and to the Co-Chairmen of the Paris Conference. This is considered a positive step towards a comprehensive political settlement.

To enjoy durable peace and stability in Southeast Asia, the Cambodian problem has to be solved in a comprehensive manner so as to establish Cambodia as a free and neutral country posing no threat to its neighbours. In this regard, ASEAN will further intensify its efforts to facilitate national reconciliation and the exercise of the Cambodian people's right of self-determination trough internationally supervised free and fair elections.

On Indochinese refugee issue, the ASEAN SOM Working Group. on Indochinese Refugees, which was formed in 1989, continues to hold its meetings enabling ASEAN member countries to exchange views on recent developments and to coordinate their undertakings accordingly as regards problem of Vietnamese boat people. The forum has proven to be an important instrument for ASEAN member countries to formulate measures and position in dealing with the problem of Vietnamese boat people within the framework of the Steering Committee of the International Conference on lndochinese Refugees, and the Comprehensive Plan of Action (CPA) which was adopted by the International Conference in Geneva between 13-14 June 1989. Following the adoption of the CPA, ASEAN's efforts in this area was directed at securing the balanced implementation of the CPA. Thus far, much progress has been achieved especially in the area of resettlement of present camp populations, alleviating the burden of Vietnamese boat people on some ASEAN countries. However, ASEAN's efforts also resulted in increasing the awareness that the impasse over the issue of voluntary repatriation of non refugees to Vietnam has to be overcome in the interest of a durable solution.