Southeast Asians Inch Toward Developing Regional Trade Bloc

Move reflects concern about future access to US and Europe markets

WARY of plans for giant European and American trade areas, the small, feisty economies of Southeast Asia are rallying behind new trade links to cement an uneasy future.At a meeting in the Malaysian capital of Kuala Lumpur, which ended yesterday, the six members of the Association of Southeast Asian Nations (ASEAN) inched closer to consensus on establishing their own regional free-trade zone. The idea, endorsed by Thailand, Singapore, and Malaysia, is among several proposals to counter the economic might of a unified European market in 1992 and the proposed free-trade agreement involving the United States, Mexico, and Canada. ASEAN also includes Brunei, Indonesia, and the Philippines. But for the economies to move in step, analysts say, the diverse and often contentious neighbors will have to override differences which have torpedoed past attempts at economic cohesion. "These are economies of different sizes and stages of development," says a Western diplomat. "ASEAN doesn't have a great track record in economic cooperation in the past." The revived attempts at forging economic bonds come as ASEAN, founded in 1967 as a bulwark against communist powers in Asia, wrestles with its future. The organization has been shaken by dramatic political and economic shifts in recent years. The end of the cold war is winding down superpower confrontation in the region, drawing out a settlement in the 12-year Cambodian civil war, and testing ASEAN unity. At the same time, the ASEAN countries, among the world's most vibrant, export-oriented economies, have nervously watched the international trade network totter amid the stalemate in the Uruguay Round of the General Agreement on Tariffs and Trade (GATT). The ASEAN countries worry that the United States and Europe, their main trading partners, are looking for trade closer to home within planned trading blocs. Contending that ASEAN needs regional clout in the changing economic landscape, Malaysian Prime Minister Mahathir Mohamad wants an Asian trade bloc called the East Asian Economic Grouping (EAEG) and anchored by powerhouse Japan. However, sharp criticism by Japan and the United States, which would be excluded from the arrangement, forced the Malaysian leader to alter his plan. The original proposal worried Japan, China, and Indonesia, ASEAN's weakest economy, and raised concerns that a close Asian trading system would block their access to markets in the US and Europe. To quiet those fears, Mr. Mahathir, says the arrangement will be a consulting organization and not a bloc to exclude others. "We view with disquiet and growing concern the trade disputes between the economic superpowers - the United States, Japan and the European Community," Mahathir told the ASEAN meeting. But amid opposition, debate, and skepticism, ASEAN has opted to move slowly. The US and Japan say the Malaysian proposal is unnecessary since ASEAN is covered by a new Pacific-Rim trade organization set up in 1989. Thailand has revived long-discussed plans for a free-trade zone which would encompass 300 million people and boost trade within ASEAN. "We're not some sort of inward-looking club that wants to close the door and shut out foreign trade and investment," says a Singapore analyst who follows ASEAN. But as ASEAN pursues deeper regional economic ties, the member countries have resisted a collective defense arrangement, a longtime taboo among the rival nations of Southeast Asia. The countries cooly rejected a Japanese proposal, backed by the United States, for an Asia-Pacific security forum, a move seen as an attempt to raise Tokyo's political profile in the region. It was the first such proposal from Tokyo since World War II, which has left deep memories of Japanese conquest and brutality in the region. Diplomats say ASEAN remains cautious despite the recent agreement between the US and the Philippines to close volcano-battered Clark Air Base next year. ASEAN was reassured that the US will retain a strong military presence with the continued operation of Subic Bay Naval Station.

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