From:  The Asian Wall Street Journal
9 October 2003

ASEAN Strikes Deals With Rivals

Japan Moves to Cut Barriers To Trade, and China, India Join Group's Security Pact

Associated Press

BALI, Indonesia -Fresh from a landmark accord 10 establish a European style economic community, 10 Southeast Asian leaders forged deals with China, India and Japan to make partners out of regional competitors.

China and India joined the Association of Southeast Asian Nation's founding security pact, while Japan signed a pledge to reduce tariffs and nontariff barriers.
"It will be implemented. All countries will join hands,'" Indian Prime Minister Atal Bihari Vajpayee said after signing the security pact.

China and Asean also agreed to work faster toward a free-trade agreement that would create the world's most populous market, with 1.7 billion consumers. "It's good for the region. It's good for the rest of the world," Chinese Foreign Minister Li Zhaoxing said.

The deals were signed on the closing day of an Asean summit that also included South Korea. It was held in Bali, the site of last October's bombings, to show the region wouldn't be cowed by terrorism.

China and India have been siphoning off an increasing share of foreign investment and trade in Asia in recent years, and many Asean members are concerned their larger Asian neighbors will economically overpower Southeast Asia; with a population of 500 million people.

Tuesday, Asean Leaders signed the Bali Concord ll, which envisions an economic community by 2020 in a region whose annual trade totals $720 billion, but doesn't create any political union or a military alliance akin to the North Atlantic Treaty Organization. It calls for a regional-security community to combat terrorism and other transnational crimes.

China joined Asean's 1976 Treaty of Amity and Cooperation, the group's founding nonaggression pact to promote regional stability. Beijing also signed an agreement that calls for greater economic and political cooperation.

"It means we will now try and solve problems through dialogue and negotiations," Singapore Prime Minister Goh Cook Tong said.

Indonesian Foreign Minister Hasan Wirayuda said he hoped that South Korea, Japan and Russia also would soon sign the treaty.

Beijing and Asean are already committed to establishing by 2010 a free trade area that would combine their huge markets. Chinese Premier Wen Jiabao enthusiastically promoted closer ties during his visit to Bali, saying China should be seen as an opportunity rather than an economic threat.

"China cannot develop without the support of the rest of East Asia, and the prosperity of East Asia also needs China," Mr. Wen said.

Asean-China trade amounted to $55.4 billion in 2001, with trade growing by an average of 25,7% annually between 1993 and 2001, according to the latest Asean statistics.

Japan's Prime Minister Junichiro Koi' zumi signed a wide-ranging trade deal With Asean. Japan traditionally has been Southeast Asia's largest trading partner and investor, With two-way trade amounting to $99.2 billion in 2001or 14.4% of Asean's total trade. However, in contrast to China, Japan has seen its Asean trade drop from a peak of $121.2 billion in 1995.

Mr. Vajpayee of India sealed his country's first agreements with Asean, acceding to the nonaggression treaty and adopting a pact to cooperate in fighting regional terrorism. In the past decade., India's' annual trade with Asean has tripled from about $3 billion to $10 billion.

Asean includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.

Copyright 2003, The Asian Wall Street Journal