ASEAN SUMMITS: NO BREAKTHROUGHS ON THE TRADE FRONT

UNCLAS BANGKOK 002768 STATE FOR EAP/MLS, EEB STATE PASS TO USTR FOR BWEISEL, BKLEIN COMMERCE FOR EAP/MAC/OKSA FOR JKELLY TREASURY FOR OASIA SINGAPORE FOR FINATT BLEIWEIS SENSITIVE SIPDIS E.O. 12958:N/A TAGS: ECON ETRD PREL TH SUBJECT: ASEAN SUMMITS: NO BREAKTHROUGHS ON THE TRADE FRONT REF: BANGKOK 2723 (ASEAN+6 SUMMIT) ¶1. (SBU) SUMMARY: While the October 23-25 ASEAN and East Asia Summits were logistically successful (reftel),the actual results emerging from the weekend's discussions on the trade front were limited. News touting multiple proposals to deepen the trading relationships in Asia may have dominated local and regional headlines, but the leaders posed for pictures in celebration of agreements made previously, not for accomplishments at the Hua Hin Summits. Thailand and the Philippines were unable to reach a resolution on their continuing rice tariff quarrel, which has further delayed more comprehensive trade discussions with the rest of ASEAN. END SUMMARY. Existing Agreements "Welcomed" -------------- ¶2. (SBU) While no trade agreements were signed at the ASEAN Summit in Hua Hin, the heads of State of the ten ASEAN nations proudly noted the completion this year of ASEAN's regional trade agreements with its six "dialogue partners" (Australia, China, India, Japan, Korea, and New Zealand). Several agreements have been in place for several years (China, Japan),but ASEAN finalized deals with Australia, New Zealand, Korea, and India during the previous year. The tariff reductions under each agreement vary greatly, but most will enter into force by January 1, 2010, if not already in force. (NOTE: January 1, 2010 is also the target date for the implementation of the ASEAN Free Trade Area (AFTA),which will eliminat tariffs on 87.2 percent of intra-ASEAN imports. END NOTE.) The Thai Chairman's Statement noted that the breadth of agreements "should help promote greater trade and investment cross-flows within the region." So What Was Signed? -------------- ¶3. (U) During the ASEAN Leaders meeting with China, which has had a trade framework agreement in place since 2002, China continued to push its trade agenda forward, signing two new economic cooperation agreements -- one to improve cooperation on intellectual property issues and one to cooperate on standards and technical regulations. (NOTE: The IP agreement deepens the existing dialogue China has with the ASEAN Intellectual Property Working Group and places emphasis on the development and protection of genetic resources, traditional knowledge and folklore in ASEAN and China. END NOTE.) The heads of state also announced that the ASEAN-China Free Trade Area will move into full implementation on January 1, 2010 (as planned). Rice Quarrels: Thailand and the Philippines -------------- ¶4. (SBU) Many ASEAN trade observers were hopeful that Thailand and the Philippines would strike a deal on rice tariffs while in Hua Hin, but the dispute continued. Rice is classified as a sensitive agricultural product under AFTA, and therefore not subject to the required tariff reductions. However, Thailand, in an effort to increase its rice export market, has encouraged its ASEAN numbers to lower rice tariffs within ASEAN. Despite existing commitments made by Malaysia and Indonesia, the Philippines has been unwilling to answer Thailand's request. Thailand also wants the Philippines to increase its Thai rice import quotas to allow the entry of more tariff-free rice into the Philippine market. The dispute may delay the implementation of the ASEAN Trade in Goods Agreement; the concluding ASEAN Chairman's Statement at the Summit "urged Member States to resolve the differences at the earliest opportunity." JOHN