South Korea, Asean sign sweeping pacts

South Korea, Asean sign sweeping pacts

SEOGWIPO, South Korea: South Korea and Asean on Tuesday completed a free-trade agreement covering almost 650 million people, while vowing to fight protectionism and tackling together the global economic crisis.
The leaders of South Korea and the group of 10 Southeast Asian nations ended a two-day summit by also pledging further cooperation to boost Asia’s financial sector by supporting the development of a stronger regional bond market.
In an immediate move to strengthen economic ties, Seoul and the Association of Southeast Asian Nations (Asean) signed an agreement to complete a free-trade pact they hope will nearly double trade to $150 billion by 2015.
The signing procedure comes after the two sides reached a free-trade agreement on investment in April this year, wrapping up years of negotiations to step up bilateral trade and investments. South Korea’s Foreign ministry expected that the agreement with each member of the Asean would go into effect within a year.
South Korea and the Asean have had free trade talks on four areas, such as merchandise, services, investment and dispute settlement, with the first round of negotiations launched in February 2005.
The investment accord is the final plank of a comprehensive pact that also covers trade in goods and services. The trade in goods pact went into effect in 2007 and the services agreement last month after talks began in 2005.
In 2008, two-way trade was worth $90.2 billion, compared with $46.4 billion in 2004. Asean is South Korea’s fifth-largest trading partner, and that country’s investments in the region topped $5.9 billion also in 2008.
Trade Secretary Peter Favila, who signed the agreement for the Philippines, said the investment pact between Asean and South Korea would not only benefit the regional bloc but also the individual member-countries. “The Asean-ROK [Republic of Korea] free-trade area will effectively eliminate tariffs and taxes for 90 percent of traded goods between Asean countries and ROK by 2010.”
Earlier, President Gloria Arroyo noted that the Philippines was the top exporter of bananas and pineapples to South Korea. With the signing of several agricultural agreements the Philippines could further boost its fruit exports to that country.
Important step
“Today, Korea and Asean have taken another important step toward being partners for real and friends for good,” summit host and South Korean President Lee Myung-Bak told a news conference.
He predicted that by 2015, when Asean achieves its goal to become a single market and manufacturing base, the grouping would “probably supersede the European Union in terms of size and importance as an economic bloc.”
Thai Prime Minister Abhisit Vejjajiva, whose country currently holds Asean’s rotating chair, described South Korea as one of the bloc’s “strongest and most active partners.”
In an end-of-summit statement, they called also for the speedy implementation of a $120-billion emergency currency pool agreed last month with China and Japan to help East Asian economies fight financial stress.
They also called for the setting up of an “independent surveillance unit” to detect signs of future financial crises before they hit the region and to assess countries wanting to draw from the currency pool.
In response to the global economic downturn, the 11 leaders reaffirmed their “commitment to do our utmost to stimulate economic growth in the region and stand firm against protectionism,” according to the statement.
They said strengthening the Asian bond market would allow the region’s massive savings to be used to fund development projects and spur growth, while there was also a pledge to expand cooperation in the energy sector.
Asean market
South Korea is pushing to further increase its presence and influence in Asean, which has a combined population of almost 600 million and gross domestic product (GDP) of around $1.3 trillion. GDP, a key measure of the economy, is the total cost of all goods and services produced in the country in a year.
Analysts said Seoul’s neighbors China and Japan were already ahead in engaging the regional bloc.
South Korea’s Finance ministry said the country sees Asean “as an export market which can offset sluggish markets in developed countries,” especially after the global financial crisis.
Apart from exports, Asean officials said South Korean companies were expected to benefit from infrastructure spending, which is a major part of government stimulus packages in Southeast Asia.
Seoul will also have better access to the region’s massive wealth in natural resources including timber, rubber and oil and gas.
Security pact
South Korean President Lee and the 10 Asean leaders also on Tuesday announced a joint statement over cooperation on regional and international security—with the North Korean issue looming large over the summit.
The leaders said North Korea’s recent nuclear test was a “clear violation” of its denuclearization agreements reached in the six- party talks and relevant UN Security Council resolutions.
“To this end, we are committed to continue our efforts to reduce tension and promote dialogue on the Peninsula, including those to achieve an early resolution of the DPRK nuclear issue in a peaceful manner,” the joint statement said. DPRK, or the Democratic People’s Republic of Korea, is the North Korea’s formal name.
Attending the summer were the South Korean president and the leaders of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Singapore, Thailand, the Philippines and Vietnam.

Manila Times