ASEAN SUMMITS: NO BREAKTHROUGHS ON THE TRADE FRONT

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"


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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?


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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


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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