ASEAN Member States remain committed to regional economic integration. This objective is being pursued in the areas of trade, investment, services, transport and communication, and industrial cooperation. Cooperation in the areas of e-commerce, tourism, food, agriculture, forestry, small and medium enterprises, and the growth areas is continuing.

ASEAN has agreed in principle to advance the elimination of all import duties by 2010, ahead of the original schedule of 2015, for the six original signatories to the Common Effective Preferential Tariff scheme of the ASEAN Free Trade Area - Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore and Thailand. Newer parties (Cambodia, Laos, Myanmar and Viet Nam) have committed to eliminate all import duties by 2015, with some sensitive products to follow the original date of 2018.

Demonstrating ASEAN's resolve to achieve the objectives of the ASEAN Free Trade Area, almost 83 percent of all products under the Common Effective Preferential Trading scheme are already in the Inclusion List. In the case of the six original signatories, the percentage of the Inclusion List out of their total product lists has reached 98 percent. The CEPT package for 2000 appears in Table 1.

Table 1 - 1999 CEPT Package
Country	Inclusion List	Temporary Exclusion	Sensitive List	General Exception	Total
Brunei	6,276	-	14	202	6,492
Cambodia	3,115	3,523	50	134	6,822
Indonesia	7,158	25	4	65	7,252
Laos	1,247	2,142	88	74	3,551
Myanmar	2,386	3,016	51	49	5,472
Malaysia	8,859	218	83	53	9,213
Philippines	5,571	35	62	27	5,695
Singapore	5,739	11	-	109	5,859
Thailand	9,103	-	7	-	9,11
Viet Nam	3,573	1,007	51	196	4,827
ASEAN	53,026	10,003	370	908	64,3
%	82.46	15.56	0.58	1.41	100.00
Note: As of February 2000 Source: ASEAN Secretariat

As part of the package of Bold Measures announced at the Sixth ASEAN Summit in December 1998, each of the original six signatories to the CEPT Agreement have reduced intra-regional tariffs to 0-5 percent on eighty-five percent of their Inclusion List. As a consequence, the average regional CEPT rate for products in the Inclusion List has fallen to 4.29 percent from 12.8 percent in 1993 (see Table 2).

Table 2 - Average CEPT Tariff Rates by Country
Country	2000	2001	2002	2003
Brunei Darussalam	1.26	1.17	0.96	0.96
Cambodia	10.4	10.4	8.93	7.96
Indonesia	4.77	4.36	3.73	2.16
Laos	7.07	6.58	6.15	5.66
Malaysia	2.85	2.59	2.45	2.07
Myanmar	4.38	3.32	3.31	3.19
Philippines	4.97	4.17	4.07	3.77
Singapore	0.00	0.00	0.00	0.00
Thailand	6.07	5.59	5.17	4.63
Viet Nam	7.09	N/A	N/A	N/A
ASEAN	3.74	3.54	3.17	2.63
N/A : not available Source : ASEAN Secretariat Regional CEPT tariff rates are weighted average with the number of tariff lines in the Inclusion List for 1999 used as the weights.

ASEAN exports recovered in 1999, growing by 6.4 percent from US$ 322.8 billion in 1998 to US $ 343.4 billion in 1999. The growth was helped by the continued strength of the U.S. economy, the economic expansion in Europe and the strong recovery of East Asia. Imports, which had contracted sharply in the wake of the crisis, came back from US$ 268.8 billion in 1998 to US$ 281.8 billion in 1999. Malaysia (15 percent) and the Philippines (19 percent) had double-digit growth in exports; while Malaysia (12 percent) and Thailand (18 percent) exhibited the strongest surge in imports. However, intra-ASEAN trade declined by 5.6 percent from US $ 33.4 billion in the first half of 1998 to US $ 31.5 billion in the first half of 1999.

ASEAN had a large trade surplus for the second year in a row. The trade surplus rose from US$ 24.3 billion in the first half of 1998 to US$ 27.3 billion in the first half of 1999, or by 12.3 percent. Large surpluses were recorded with the US (US$ 12.2 billion), EU (US$ 6.9 billion) and India (US$ 1.5 billion). However, ASEAN continued to run a huge deficit with Japan, but this was markedly lower than in the previous period (i.e. US$ 7.4 billion in first half of 1998 compared to US$ 5 billion in the first half of 1999).

The Interpretative Notes to the Framework Agreement on Mutual Recognition Arrangements (MRAs) were finalised in October 1999. Several product sectors were identified for development of MRAs, including cosmetics, pharmaceuticals, and electrical and electronics products.

Subsequently, Product Working Groups involving relevant regulatory authorities and industries were established to look into MRAs. The Cosmetic PWG has made substantial progress by developing a set of ASEAN technical documents to support the implementation of the ASEAN Harmonised Regulatory Scheme for Cosmetics. The technical documents are expected to be finalised by the end of 2000. The first sectoral MRA in ASEAN, the MRA on Product Registration Approvals for Cosmetics, will be implemented in 2001. In the pharmaceutical and electro-technical sectors, important progress was also made towards sectoral MRAs.

Member Countries are now working on identifying additional sectors for development of MRAs, intensifying harmonisation of product standards and improving the technical infrastructure.

Customs cooperation in ASEAN is geared toward developing a world-class customs service that will facilitate trade and investment in the region. With trade liberalisation underway, through the establishment of AFTA, and globally through the enforcement of WTO rules, demand has increased for customs to modernise, simplify procedures, and provide fast clearance and more transparent and efficient service. Its trade-facilitating role is increasingly emphasised. ASEAN has embarked on cooperative efforts to improve the technical capabilities of ASEAN customs to meet the demand for a more sophisticated trading environment in support of ASEAN's economic integration. This is being forged through partnerships, not only among ASEAN member countries, but also with the trading and business community in the region, as well as through joint efforts with ASEAN's Dialogue Partners.

Priority has been accorded to preparing member countries to adopt modern and trade-friendly approaches to customs procedures, such as risk management techniques, implementation of the WTO Valuation Agreement, implementation of customs post clearance audit procedures, and making available to the trading and business community facilities such as customs pre-clearance and pre-entry tariff classification services.

As an example of the activities being pursued in the ASEAN Customs work programme, a two-day workshop on customs post clearance audit (PCA) was held in November 1999, with technical assistance from Japan. Experts from Japan's Customs and Tariff Bureau, the Australian Customs Service and the Indonesian Customs and Excise Directorate shared their experiences and perspectives with participants from all ASEAN member countries on the elements required for post clearance audit. As a follow-up to the workshop, a regional set of guidelines is being drafted to help member countries implement the PCA nationally. There will also be follow-up training of trainers on the subject.

The practice of holding back 100 percent of consignments for days in order to carry out a thorough physical examination will be eliminated. ASEAN customs will apply risk assessment to expedite clearance of goods at the border, and more thorough checks and audits are undertaken after the goods are released. In some countries, as high as 90-95 percent of consignments are channelled through the "green lane" through which goods are cleared within, at most, one to two hours. To achieve such levels of performance and service, ASEAN customs administrations need to develop the systems and human resource capabilities. Apart from PCA, Japan is providing technical assistance in the development of the ASEAN Harmonised Tariff Nomenclature and in training on customs valuation and procedures.

The Bold Measures announced at the Sixth ASEAN Summit called for ASEAN to initiate a new round of negotiations on trade in services from 1999 to 2001 covering all services sectors and all modes of supply.

ASEAN has adopted a set of parameters guiding the liberalisation of trade in services. For the short term (1999-2001), ASEAN has agreed to make commitments in subsectors where four or more countries have made commitments under the General Agreement on Trade in Services (GATS) or the ASEAN Framework Agreement on Services (AFAS). The short-term liberalisation is intended to remove all limitations pertaining to the service supply modes 1 (cross-border) and 2 (consumption abroad). Once the limitations are removed, it would allow ASEAN suppliers to provide services in the territory of another member country without establishing a commercial presence in that country. For modes 3 (commercial presence) and 4 (presence of natural persons), ASEAN agreed to target progressive improvement in commitments but with the goal of achieving the free flow of services. ASEAN is currently working on the parameters to guide the long-term liberalisation of trade in services, to achieve a free flow of services by 2020.

ASEAN is enhancing the linkages among ASEAN service suppliers in the region through consultations with the Coordinating Committee on Services (CCS). ASEAN is also encouraging meetings among associations of service suppliers. In this way, ASEAN aims to get a better understanding of the unique characteristics/requirements of each sector and the issues that need to be addressed in further liberalising the sector concerned.

Greater efforts are being focused on capacity building, establishing or improving infrastructure facilities, joint production, marketing and purchasing arrangements, research and development and exchange of information. ASEAN is currently drafting a long-term programme to enhance the capacity of its members, in particular the newer members, to fully understand the GATS, participate meaningfully in the negotiations process under GATS and AFAS, undertake liberalisation of trade in services, and collect and compile statistics on trade in services.

ASEAN continues to explore the feasibility of a free trade arrangement with Australia and New Zealand within the framework of AFTA-ANZCERTA. A high-level Task Force, chaired by former Philippine Prime Minister Cesar Virata and composed of eminent persons from ASEAN and CER, is now conducting the feasibility study. The Task Force is expected to make its final recommendations to the Fifth AEM-CER Informal Consultations in October 2000. An AFTA-CER FTA would create a market with a combined GDP of over US $ 1 trillion and total trade of US $ 740 billion. Its combined trade would make it the third largest trading arrangement after only the EU and the US.

Under the ASEAN Industrial Cooperation (AICO) scheme, related products of companies operating in two or more ASEAN countries immediately enjoy tariffs of 0-5 percent. ASEAN has waived the 30 percent national equity requirement for all AICO applications received between 1 January 1999 and 31 December 2000. This policy is expected to benefit companies especially those with majority foreign ownership. Further improvement was also made to the AICO delivery mechanism such as allowing AICO arrangement in the form of intra firm transaction and reducing the AICO processing time. In addition, ASEAN has allowed the participation of trading companies involving small and medium scale enterprises. As a result, the number of AICO applications increased from 62 to 89, of which 52 have been approved. These approved AICO arrangements are expected to generate US$ 534 million of trade transactions per year.

ASEAN has been implementing the Framework Agreement on the ASEAN Investment Area (AIA), which was signed on 7 October 1998 in Manila. ASEAN has finalized the Temporary Exclusion Lists and Sensitive Lists for granting national treatment and opening up industries in the manufacturing sector. The lists were presented to the Second Meeting of the AIA Council on 29 September 1999 in Singapore. The lists have been published and made available to the public. ASEAN has also prepared the Temporary Exclusion Lists and Sensitive Lists for the agriculture, fisheries, mining and forestry sectors.

ASEAN has formulated a Protocol to extend the coverage of the AIA Agreement to services incidental to manufacturing, agriculture, fishery, mining and forestry. Investment "bold measures" have been adopted to attract greater levels of FDI. Seven minimum types of privileges are granted to successful investment applications made before 31 December 2000 and approved thereafter.

In support of investment promotion efforts, ASEAN launched the first ASEAN Investment Report and "Investing in ASEAN: A Guide for Foreign Investors" in November 1999. In addition, ASEAN published and disseminated an ASEAN investment map and investment promotion brochure.

Work continued on the harmonization of FDI statistics, which covers definition, measurement, collection, methodology and reporting of FDI data. An initial outcome of the work of the FDI Statistical Task Force was the publication of the first edition of "Statistics of Foreign Direct Investment in ASEAN." The publication provides a comprehensive set of comparable statistics on FDI in ASEAN.

Implementing the mandate of the ASEAN leaders, ASEAN investment missions were sent to Japan, the United States and Europe. The missions held investment seminars to inform current and potential foreign investors of business opportunities in ASEAN. The seminars provided opportunities for ASEAN to reassure investors of ASEAN's continued commitment to regional economic integration and open regionalism.

The first investment promotion mission was conducted from 27 to 28 February 2000 in Tokyo under the leadership of Malaysia's Minister of International Trade and Industry. More than 700 Japanese companies participated in the two-day event in Tokyo. The second mission, covering three important cities (New York, Minneapolis, San Jose) in the U.S., was conducted between 16 and 19 May 2000 under the leadership of the Minister of Trade and Industry of Singapore. The third mission, involving three key European cities (London, Paris and Munich), was conducted from 22 to 26 May 2000 under the leadership of Thailand's Minister in the Prime Minister's Office. These missions were accompanied by the Secretary-General of ASEAN and senior officials from all ASEAN countries.

As part of the effort to integrate newer members into ASEAN, a regional workshop on the ASEAN Investment Area (AIA) was conducted on 20-21 December 1999 in Yangon in cooperation with the Hanns Seidel Foundation. Four senior investment officials from Cambodia, Laos, Myanmar, and Viet Nam took part.

As a follow-up to the regional workshop, national workshops were convened in Phnom Penh, Vientiane, Yangon, and Ha Noi between April and May 2000. Each national workshop was attended by more than 40 senior officials whose functions relate to business and investment facilitation and the implementation of the AIA Agreement.

Infrastructure development is an essential component of ASEAN's economic integration efforts. The ASEAN infrastructure agenda includes the ASEAN Highway Network, the Singapore-Kunming Rail Link, and the trans-ASEAN energy network consisting of the ASEAN Power Grid and the Trans-ASEAN Pipeline Projects, and the ASEAN Information Infrastructure. The major challenge for ASEAN is to raise the huge resources required. The ASEAN Transport Cooperation Framework Plan 1999-2004 and the ASEAN Plan of Action for Energy Cooperation 1999-2004 guide cooperation in these sectors in the new millennium.

An overall trans-ASEAN transportation network, first discussed in 1987, is now being pursued to facilitate the movement of goods and people in the ASEAN region. The highway component of 23 priority roads totalling 38,400 km is now in place. The ASEAN Highway Infrastructure Development Plan will be formulated to guide project preparation and the construction of priority roads over the next five to ten years. Plans for the ASEAN-wide port system consisting of 46 designated national ports has been finalised, while the preliminary ASEAN-wide airport system of 36 airports is currently under review by ASEAN air transport officials. The feasibility study for the Singapore-Kunming Rail Link Project identified six railway routes for possible implementation.

To complement infrastructure development and to support the implementation of the ASEAN Free Trade Area (AFTA), ASEAN member countries have concluded a framework agreement on the facilitation of goods in transit. Two of the nine implementing protocols have been signed - those on types and quantity of road vehicles and on technical requirements of vehicles. Once the agreement becomes operational, the National Transit Transport Coordinating Committee in each member country will be established to provide the institutional and technical support. As complementary agreements, the Multimodel Transport Operation Agreement is being finalized while the Facilitation of Interstate Transport is under consideration.

ASEAN is pursuing the development of a trans-ASEAN energy network consisting of the ASEAN Power Grid and the Trans-ASEAN Gas Pipeline Projects. The ASEAN Energy Ministers reaffirmed their commitment to these projects as the ASEAN energy program to achieve sustainable economic growth, greater economic integration and international competitiveness. Two of the 14 interconnection projects for the ASEAN Power Grid are operational, while the rest are in various stages of development.

ASEAN countries are accelerating the restructuring, privatisation and liberalisation of the energy sector, particularly the power supply industry. In a number of countries, the electricity sector is progressively being deregulated and utility assets privatised. The Greater Mekong Subregion (GMS) countries have adopted a subregional power trade policy, and a protocol for power trading and power pooling will be developed. ASEAN is cooperating in the early realisation of the Trans-ASEAN Gas Pipeline Project for greater energy security in the region. Development of natural gas reserves within the ASEAN region is accorded a high priority.

The 17th ASEAN Energy Ministers Meeting, held in Bangkok on 3 July 1999, adopted the ASEAN Plan of Action for Energy Cooperation 1999-2004. This action plan serves as a guide in the identification, formulation, and implementation of specific projects and activities in the ASEAN energy sector covering six program areas: (1) ASEAN Power Grid; (2) Trans-ASEAN Gas Pipeline; (3) Energy Efficiency and Conservation; (4) New and Renewable Sources of Energy; (5) Coal; and (6) Regional Energy Outlook, Energy Policy, and Environmental Analysis. The plan's implementation is being carried out by various Senior Officials Meeting on Energy sub-sector networks, and ASEAN-related energy organizations, such as the Forum of the Heads of ASEAN Power Utilities/Authorities (HAPUA), the ASEAN Council on Petroleum (ASCOPE), and the ASEAN Centre for Energy (ACE).

ASEAN has endorsed the technical and administrative details of the proposed EC-ASEAN Energy Cooperation Programme and the Terms of Reference for the SOME-MITI (Japan) Consultations on Energy.

ASEAN is working on broadband interconnectivity covering the policy and regulatory environment, universal access, technical standardisation and harmonisation, data security, intellectual property rights and cooperative applications. The aim is to ensure seamless roaming of telecommunications services and to ease intra-ASEAN trade in telecommunications equipment and services. More importantly, ASEAN is pursuing the development of e-ASEAN, which would pull together and integrate ASEAN members' efforts in information and communications technology. It would involve inter-connectivity, with its own high-speed backbone. It would seek to harmonise policies, regulations and standards in information and communications technology within ASEAN. A sectoral Mutual Recognition Arrangement (MRA) for Telecommunications Equipment is currently being finalised, to put in place the region-wide acceptance or recognition of conformity assessment procedures of telecommunications and telecommunications equipment.

Meanwhile, three protocols in support of the Framework Agreement on the Facilitation of Goods in Transit have been prepared for signing. These are Protocol 2 on Frontiers Post, Protocol 7 on Customs Transit System, and Protocol 5 on ASEAN Scheme of Compulsory Motor Vehicle Insurance. The Policy Implementation Work Programme (1999-2004) containing the specific activities and strategies to realize the ASEAN Customs Vision is being implemented.

ASEAN intensified its cooperation in finance, particularly by pursuing financial and banking reforms, strengthening corporate governance, and enhancing coordination of fiscal and monetary policies through the ASEAN Surveillance Process.

The ASEAN Surveillance Process continued to gather momentum. Peer reviews were conducted in November 1999, March 2000 and May 2000. The Finance Ministers exchanged views on the economic situation in the region and discussed policy options that could facilitate and sustain economic recovery. For each peer review, an ASEAN Surveillance Report was prepared to provide an update of regional economic developments and highlight policy issues for discussion.

In November 1999, the Finance Ministers met in Manila and discussed the emerging indications of economic recovery, the contributing factors, as well as the remaining challenges to ensure continued and sustainable growth in the region. In March this year in Bandar Seri Begawan, they focused on specific policy actions to further sustain the economic recovery. They discussed measures to stimulate domestic demand, maintain prudent fiscal management, expedite bank and corporate restructuring efforts as well as enhanced regional resilience to external shocks with the view to ensuring that the recent gains lead to a sustainable growth.

A five-year Finance Work Programme was developed in 1999 to implement the Hanoi Plan of Action on strengthening macroeconomic and financial cooperation. A review of the state of asset securitization and bond markets in each Member Country was completed, capped by a workshop on the development of ASEAN bond markets and asset-backed securitization, which was held in Singapore in April 2000.

As a starting point in the formulation of a common ASEAN framework to facilitate bond market development, Singapore and the Philippines, as the lead in the said work program, shall conduct a survey on the bond conventions and the clearing settlement systems existing in each country to assess if a common or harmonized platform is available. This will then be discussed in another workshop to be held toward the end of the year preparatory to the ASEAN Finance Ministers Meeting in early 2001.

A study on "Capital Flows in ASEAN 5 Countries" was completed by Indonesia and Malaysia. The outcome of the study was discussed at a workshop on monitoring private capital flows in ASEAN + 3, co-organized by the ADB and the ASEAN Secretariat in Manila in April 2000, with the aim of establishing a regional system for monitoring capital flows in East Asia.

In other areas of financial cooperation, a working committee has been formed to carry out the negotiations on financial sector liberalization. A working committee on tax and public finance matters has been created.

One of the most important developments in regional financial cooperation was the inclusion of Northeast Asian countries, namely China, Japan and the Republic of Korea. The ASEAN + 3 Finance and Central Bank Deputies met in March 2000, followed by the meeting of the Finance Ministers of ASEAN, China, Japan and the Republic of Korea in Chiang Mai in May, to discuss further cooperation measures and plans in East Asia in support of the implementation of the Joint Statement on East Asia Cooperation.

At their meeting in Bandar Seri Begawan, the ASEAN+3 Finance and Central Bank Deputies proposed a regional support mechanism has been proposed to include the setting up of a network of East Asian training and research institutes and the establishment of a regional financing arrangement to supplement existing international facilities. This is in addition to the plans to set up a system of monitoring capital flows and to strengthen the regional surveillance mechanism in East Asia. In this connection, a study will be conducted to explore modalities and structures of such a financing arrangement, while a network of contact persons is being formed to coordinate surveillance activities in the region.

Initial efforts have already been made toward the proposed expansion of the existing ASEAN Swap Arrangement, originally set up by the five founding Member Countries of ASEAN to provide financial support to members with balance-of-payment difficulties, to include all ASEAN Member Countries and augment the ASEAN Swap Arrangement by a network of bilateral swap arrangements among ASEAN Member Countries, China, Japan and the Republic of Korea. A working group of selected ASEAN Central Banks is working on the modality and structure of such a new arrangement.

The ASEAN leaders have endorsed the e-ASEAN initiative at their meeting in November 1999. The project was initiated by the ASEAN Economic Ministers in September 1999. A high-level e-ASEAN Task Force comprising government and private sector representatives has been working on concrete ways to realize the initiative.

E-ASEAN aims to develop a broad-based and comprehensive action plan including physical, legal, logistical, social and economic infrastructure needed to promote an ASEAN e-space, as part of an ASEAN positioning and branding strategy. E-ASEAN would cover the economy, society and government.

The e-ASEAN Task Force has identified pilot projects for each of these sectors and is working on guidelines to clarify policy issues involved in the establishment of an electronic marketplace in ASEAN. While focusing on encouraging and facilitating the growth of e-commerce, e-ASEAN would include prescriptive measures to narrow the digital divide within the region.

In an effort to localize Internet traffic within the region to encourage the growth of indigenous content and services, the Task Force is also working on establishing an ASEAN Information Infrastructure (AII) and has initiated consultative dialogues with the private sector to explore short- and long-term plans for the AII.

The Task Force has formulated plans to accelerate the development of e-commerce across the region and identified key factors, such as cyber laws, secure messaging infrastructure, payment gateways, and on-line services and products for regional development.

The National Tourism Organizations of ASEAN have formulated the Visit ASEAN Campaign with the objective of building a strong ASEAN brand and promoting the region as a single tourism destination. The Campaign will be launched during the ASEAN Tourism Forum in Brunei Darussalam in January 2001.

The theme and logo for the Visit ASEAN Campaign will be used by the ASEAN airlines in their overseas offices and in-flight magazines and by the private sector in their own brochures, websites, trade show booths and distribution networks. Other bodies concerned with culture, information, and transportation will be approached to consider use of the brand.

The ASEAN Tourism Ministers, at their meeting in Bangkok on 23 January 2000, agreed to step up regional efforts to promote ASEAN travel and tourism on three fronts: domestic, intra-ASEAN, and international tourism. This will be done through investments in tourism facilities and infrastructure, removal of barriers, and complementary marketing programs.

Efforts are underway to encourage tourism investments, enhancing tourism manpower development, facilitation of intra-ASEAN travel and promoting environmentally sustainable tourism.

With the accession of Cambodia to the Agreement on the ASEAN Food Security Reserve, the total earmarked quantity for the ASEAN Emergency Rice Reserve now stands at 87,000 metric tonnes. Total rice production in the ASEAN region in the 1998/99 seasons, which was around 86 million tonnes, exceeded the total consumption demand by 14 percent.

The ASEAN Food Security Board (AFSRB) has placed high priority on the development of guidelines and a computer programme and operating manual for the compilation of food security statistical data and information and training of AFSRB members and officials. To promote information exchange, the AFSRB Secretariat has established the ASEAN Food Security Information Homepage at www.dft.moc.go.th.

ASEAN is now preparing for the establishment of an accreditation scheme for halal food establishments and the registration and compilation of halal food additives used in ASEAN. Malaysia has set up a website at the Department of Islamic Development of Malaysia that lists halal food additives of all Member Countries. These activities form part of the ASEAN General Guidelines on the Preparation and Handling of Halal Food.

The Harmonized Regulations on Food Irradiation in ASEAN has been finalized and will be implemented together with the Model Protocol for the Use of Irradiation as a Quarantine Treatment for the Export and Import of Fresh Fruits and Vegetables to ensure the safety and high quality of irradiated foods.

ASEAN has initiated, through the International Committee on Phytosanitary Measures (ICPM), the development of international standards for the use of irradiation for the phytosanitary treatment of fresh agricultural commodities. One such standard is the adoption of a generic dose of 250 Gy for the quarantine treatment of fresh fruits against tephritid fruit flies.

ASEAN has completed the project on Quality Assurance Systems for ASEAN Fruits (QASAF) - Fresh and Minimally Processed. These systems cover post-harvest handling techniques and minimal processing for selected fruit types.

To speed up the comparative analysis of pest data for the formulation of a model of harmonized phytosanitary requirements for a particular commodity, individual Member Countries have been assigned to carry out the analysis of designated commodities. ASEAN is considering forging closer cooperation with Australia and New Zealand in pest risk analysis for the 10 commodities and in the electronic transfer of certificates and permits offered by Australia.

Most of the Member Countries have formed their National Committees for Harmonization of Maximum Residue Limits (MRL) of Pesticides in Vegetables. The MRL for methamidophos in tomato, adopted last year, has been amended from 2 to 1 ppm, in order to conform to Codex standard.

The ASEAN Vegetable Oils Club has endorsed an ASEAN Common Contract for Vegetable Oils and recommended that ASEAN Member Countries use the Contract for intra-ASEAN trade in vegetable oils and fats, and, on best effort basis, for extra-ASEAN trade. ASEAN has written to the EC requesting it to rescind Article 2(2) of the EU Council Directive 96/3/EC on the Hygiene of Foodstuffs, which has badly affected the long-term development activities of vegetable oils and fats industry in the ASEAN region.

The ASEAN Cocoa Club is finalizing the ASEAN Cocoa Contract, compiling the ASEAN Cocoa Database and identifying issues on market access in the EU, China and India. Several joint cooperation projects among the Member Countries have also been agreed for implementation. An International Cocoa Research Conference will be held in October 2000 in Kota Kinabalu. The Conference will be attended by 250 participants from cocoa producing and consuming countries.

A strategic Plan of Action on Pepper has been formulated to discuss future regional cooperation for trade promotion of pepper among ASEAN Member Countries. The Plan includes the establishment of common ideas in pepper quality, development of generic promotion to identify market segment, HRD and cooperation in R&D.

On regularizing the production and utilization of animal vaccines, ASEAN is considering adoption of standards for swollen head syndrome vaccine, viral arthritis vaccine and inactivated food and mouth disease vaccine for pigs, and revisions to the existing ASEAN standard for foot and mouth disease vaccine for use in cattle. ASEAN has agreed that the product code of vaccines should be from the manufacturers. For the products which do not have product code assigned by the manufacturers, Member Countries have agreed on a code system that indicates vaccine type, serial number, and country of manufacture. The ASEAN Vaccine Audit Team has been formed to assess applications for accreditation of animal vaccine testing laboratories in the region as ASEAN Animal Vaccine Testing Laboratories.

As part of the efforts to promote international trade in livestock and livestock products, ASEAN is considering a criteria for accreditation of day-old chicks and hatching eggs and day-old ducklings and hatching eggs establishments. A set of criteria is being drafted for rearing pigs, cattle and buffaloes for slaughter; for cattle and pig slaughterhouses; and for poultry and meat processing plants.

With a view to promote aquaculture, some Member Countries have translated into their respective national languages the ASEAN Manual on Good Shrimp Farm Management Practices for use by their shrimp farmers. As a follow-up, Member Countries have drafted manuals on Harmonization of Hatchery Production of Penaeus Monodon (tiger prawn) in ASEAN and Practical Guidelines for the Development of High Health Penaeus Monodon Broodstock.

ASEAN has agreed to work closely with the Network of Aquaculture Associations and the FAO in harmonizing fisheries SPS measures in the region. Fisheries SPS measures of Member countries have been compiled for this purpose.

ASEAN has agreed to collaborate with the Southeast Asian Fisheries Development Centre (SEAFDEC) in the implementation of projects intended for sustainable management of fisheries resources in this region. The projects identified are: (i) Upgrading of Traditional Fish Processing Industry in Southeast Asian Countries; (ii) Conservation and Management of Sea Turtles in Southeast Asian Countries; (iii) Promotion of Mangrove-friendly Aquaculture in Southeast Asian Countries; (iv) Development of Fish Diseases Diagnostical Inspection Methodologies for Artificially-bred Seeds; (v) Development of the Monitoring System of the Aquatic Environment for Substances Contained in Fish Bodies; (vi) Improvement of Fisheries Statistics in the Region; and (vii) Development of a Common Guidelines for the Regionalization of the Code of Conduct for Responsible Fisheries.

A SEAFDEC-ASEAN Workshop on Conservation and Management of Sea Turtles was held in Kuala Trengganu, Malaysia, on 26-27 July 1999, as a first step in implementing the regional sea turtles conservation and protection programme. The Workshop initiated an exchange of information on ongoing and future national research programmes in sea turtles conservation and management. Countries involved have agreed to establish a network among sea turtles researchers and conservationists and NGOs.

Another important activity was the series of sea trials by the SEAFDEC Training Department (TD) in Thailand to test the suitability and acceptability to this region of three U.S.'s (Anthony Weedless, Super Shooter and Bent Pipe) and two Mexico's (Georgia Jumper and Mexican) TD. It was found that the Thai Turtle Free Device (TTFD) was the most efficient in excluding sea turtle from the catch and retained the highest shrimp and fish by-catch, except in garbage and stingray prevalent waters where their entrapment could cause considerable loss of shrimp and fish by-catch.

ASEAN-SEAFDEC FCG had also decided to undertake new initiatives on "Fish Trade and Environment" and to organize the ASEAN-SEAFDEC Conference on Sustainable Fisheries in November 2001 in Bangkok.

ASEAN continues to promote and intensify the application of integrated pest management in fruits and vegetables. The training modules for durian has been published by the ASEAN Secretariat. Training modules on IPM techniques are also being prepared for other crops such as rice, shallots, corn, mango, and cotton. A workshop on IPM on Cotton was held on 6-10 September 1999.

A Seminar on Rural Women and Youth in Agricultural Development was held on 20 May - 1 June 1999 in Chiang Mai to promote institutional capacities of ASEAN Member Countries in the area of rural women and youth in agricultural development. An exchange of visit of rural women extension group will be held in Malaysia in 2000.

ASEAN adopted the Guidelines on the Risk Assessment of Agriculture-related Genetically Modified Organisms. The Guidelines provide a common framework for undertaking science-based risk assessment of GMOs.

The ASEAN IPM electronic network is being configured by utilizing the Internet as the network backbone. The ASEAN IPM Regional Centre's Internet connection is provided by SEARCA through its local area network. At the first stage of implementation, the country hubs in Indonesia, Malaysia, the Philippines, Thailand and Viet Nam would be established and operationalized. Electronic linkage between the regional centre and these country hubs started operation in July 1999.

The IPM Regional Centre has finalized a classification standard for IPM knowledge bases, considering the documents' form, IPM standard classification, and its relation to ASEAN IPM's common vision. The Regional Centre continuously gathers IPM-related materials, which are reviewed and categorized according to these standards. The ASEAN IPM Knowledge Network Web Page was activated in May 1999. The Web Page serves as a tool for information dissemination and promotion, especially for international organizations and potential donors.

The ASEAN Experts Group on Criteria and Indicators for Sustainable Forest Management met in Kuala Lumpur in May 1999. Member Countries agreed to adopt the definitions of related terminologies worked out by the International Tropical Timber Council in the formulation of the ASEAN C&I and the seven criteria framework approach of the ITTO's revised C&I for sustainable forest management with appropriate modifications.

To enhance cooperation in forest products, the ASEAN Forest Products Industry Club and the Workshop on ASEAN Forest Products Standardization had been established to further promote trade in forest products, in particular trade promotion strategies in timber and timber products among public and private sectors of producing and exporting ASEAN Member Countries. In addition, the Revised MOU on ASEAN Cooperation and Joint Approaches in Agriculture and Forest Products Promotion Scheme signed by AMAF in 1999, had included logs, sawn timber, panel products and Builders-Carpentry and Joineries (BCJ) to the list of forest products.

ASEAN has decided to initiate research on and development in forest products through (i) Reduction and Utilization of Wood Residues; (ii) Utilization of Plantation Grown Species; (iii) Quality Improvement in ASEAN Bamboo Products through Appropriate Preservative Treatment, Drying and Gluing Procedures; (iv) Extraction of Cashew Nut Shell Liquid; and (v) Utilization and Quality Improvement of Rattan.

ASEAN has undertaken the following initiatives to promote sustainable forest management: (i) Establishment of Forest Information System for the ASEAN Region; (ii) Development of Criteria and Indicators (C&I) for Sustainable Forest Management in ASEAN; and (iii) Establishment of Demonstration Forest Area Network on Sustainable Forest Management in ASEAN.

ASEAN has agreed to promote the development of a database on herbal and medicinal plants; training programmes on herbal and medicinal plants; and other regional projects on herbal and medicinal plants. Under the training programme, a workshop on conservation and cultivation of herbal and medicinal plants will be conducted.

ASEAN has agreed on joint approaches on the results of the Second and Third Sessions of the Intergovernmental Forum on Forests (IFF), held in Geneva on 24 August - 4 September 1998 and on 3-14 May 1999, respectively. Joint positions were taken at the 14th Session of the Committee on Forestry Meeting of the FAO and the FAO Ministerial Meeting on Forestry, held in Rome on 1-5 March 1999 and 8-9 March 1999, respectively.

Malaysia hosted the East and Southeast Asia Regional Meeting on International Arrangements and Mechanisms to Promote the Management, Conservation and Sustainable Management of All Types of Forests (ESEARM) on 2-5 August 1999 in Kuala Lumpur, in support of the Costa Rica - Canada Initiative (CRCI) towards assisting the programme of work of the IFF on Category III. The ESEARM was one of the many regional meetings aimed at providing a neutral, transparent and participatory forum to facilitate technical discussions on possible elements and building consensus on the usefulness of having an international arrangement or mechanism for forestry.

ASEAN Member Countries were urged to coordinate common positions on forest products at the APEC SOM III on 12-13 August 1999, 11th APEC Ministerial Meeting on 9-10 September 1999 and the 7th APEC Economic Leaders Meeting on 12-13 September 1999, which were held in Auckland. Malaysia submitted a proposal on "Training and Familiarization of Local Personnel to Act as Independent Assessors in the Implementation of Timber Certification" for the consideration of APEC.

In line with the recent sessions of the International Tropical Timber Council (ITTC) pertaining to sustainable forest management and tropical timber trade, ASEAN members of the ITTO have agreed: (a) to reaffirm their commitment to ITTO Objective Year 2000 and to urge temperate and boreal forested countries to adopt an equivalent commitment; (b) to stress that ITTO Objective Year 2000 should not be held against tropical timber producing countries in international trade, aid or cooperation; (c) to support the ITTO's resolution to inform the market place and traders that the attainment of ITTO's Objective Year 2000 is a continuing process that requires constant assistance from consumer member countries and that producer member countries are progressing well towards meeting the Objective; and (d) to stress that market access and remunerative prices are essential to ensure the sustainability of tropical forests and the sustainable development of tropical timber producing countries.

On the FAO/WHO Standards Programme, ASEAN shall maintain its common position and approaches to keep the current advisory status of Codes of Practices and the Annexes to the standards under the Codex Committee on General Principle (CCGP), the text in the Annex to the Codex Committee on Fats and Oils (CCFO) Draft Standard for Named Vegetable Oils, and Named Animal Fats and Edible Fats and Oils Not Covered by Industrial Standards. This ASEAN position also applies to the CCFO Draft Revised Recommended Code of Practice for Transport and Storage of Fats and Oils in Bulk, which is currently at Step 8, and the Codex Committee on Food Import and Export Inspection and certification Systems (CCFICS) Draft Guidelines for the Development of Equivalence Agreements Regarding Food Import and Export Inspection and certification Systems, which is currently at Step 7.

ASEAN has also undertaken to adopt common positions on the Table for Maximum Levels of Lead, Tin and Other Contaminants in Food Products resulting from the Meeting of the Codex Committee on Food Additives and Contaminants, which was held on 19-26 March 1999 in the Hague. ASEAN shall generate support for the use of background data of lead levels in food products from ASEAN as a basis for the finalization of the Codex Standards.

Most of the activities of the ASEAN-Mekong Basin Development Cooperation focus on human resources development. The project Human Resources Development in Forest Management for the Mekong Basin, Training in Groundwater Resource Development for CLM Countries (Cambodia, Laos and Myanmar), and Mekong Basin Animal Quarantine Network will be developed. Thailand has reserved 40 acres of land on the banks of the Mekong River in its Chiang Rai Province for the construction of the Mekong Giant Catfish Centre. Singapore has trained participants from Myanmar in fisheries post-harvest technology at its Marine Fisheries Post-harvest Technology Centre.

Small and medium scale enterprises (SMEs) account for 90 per cent of all manufacturing establishments in ASEAN. They make significant contributions to the overall economic development of ASEAN member countries in terms of employment and income generation. The ASEAN SME Agencies Working Group continued its cooperative work in developing small and medium enterprises, including a match-making workshop to promote SME joint ventures and linkages between SMEs and large scale enterprises; compiling ASEAN SME policies and best practices and a directory of SME experts; linking member countries' SME-related websites to the ASEANWEB; promoting Internet use for SME networking and business opportunities; training in basic industrial production techniques and entrepreneurship for new ASEAN member countries; and a roundtable discussion on finance for SMEs.