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Singapore Warns Its ASEAN Partners



Subject: Singapore Warns Its ASEAN Partners on  Protectionism 

Call to Stay the Free-Trade
                    Course 

                    Singapore Warns Its ASEAN Partners on
                    Protectionism 


                          By Michael Richardson    International Herald Tribune 

                    SINGAPORE - Protectionism in Southeast Asia and its
major markets in
                    the West could abort the region's nascent recovery,
Southeast Asian
                    officials warned Friday.

                    Opening the annual meeting of ASEAN foreign ministers,
Prime Minister
                    Goh Chok Tong of Singapore said that disillusionment
with the free-market
                    system had increased in some countries hit by the
financial crisis that
                    began in East Asia two years ago.

                    ''We may see many developing countries resorting to
protectionist
                    measures to counter the unhappy effects of
globalization,'' he said. ''Even
                    some developed countries may become selectively
protectionistic to stem
                    the influx of more competitive products from the
developing world.''

                    East Asian exports, made cheaper by the fall in the
value of most
                    currencies in the region, have flooded into the United
States and Europe in
                    the past two years, helping to spark the export-led
recovery in East Asia.

                    But the surge of Asian exports into Western markets has
caused job losses
                    in some sensitive sectors, triggering calls for import
restraints and
                    anti-dumping measures. 

                    The United States announced this week that its monthly
trade deficit
                    ballooned to a record $21.34 billion in May, much of it
with East Asian
                    countries.

                    But those countries themselves are under intense
pressure, either from the
                    International Monetary Fund or foreign investors, to
open their economies
                    and accept painful restructuring and job losses as the
price for urgently
                    needed overseas capital, analysts said.

                    This has prompted increasing calls in recent months from
affected industry
                    groups or trade unions in a number of Asian nations -
including Indonesia,
                    the Philippines, Vietnam, Malaysia, Burma, and Thailand
- for governments
                    to delay or reverse liberalization. 

                    Officials of some countries in the Association of South
East Asian Nations,
                    or ASEAN, are concerned that if members of the group
succumb to calls
                    for protection it will strengthen demands for similar
measures in the West,
                    thus feeding a global beggar-thy-neighbor cycle.

                    Singapore has the freest economy in ASEAN. Mr. Goh said
that the group
                    must keep its markets open because the price of
disconnecting from the
                    global network would be a significant loss of growth.

                    ''The only real long-term solution is to strengthen our
economies to cope
                    with global competition,'' he said. ''The lessons of the
great depression of
                    the 1930s remain instructive. Erecting walls, as all
historical experiments in
                    autarky have shown, is futile. It only harmed the
countries that tried it.''

                    There is also concern among some open-market advocates
in ASEAN that
                    a retreat from liberalization will slow the group's
plans for regional
                    integration.

                    Foreign Minister Surin Pitsuwan of Thailand said that
there had been
                    ''signs of withdrawal and retreat'' from ASEAN's
declared program of
                    regional economic integration.

                    ''On the one hand,'' he said, ''we have the ASEAN Vision
2020, which
                    talks about 'a stable, prosperous and highly competitive
ASEAN Economic
                    Region in which there is a free flow of goods, services
and investments.'

                    ''Yet, on the other hand, we seem to be unable to agree
on the sectors to
                    be liberalized.

                    ''ASEAN's credibility lies in our ability to implement
the decisions that have
                    already been taken, and not to withdraw into our cocoon
of comfort and
                    complacency.''

                    Still, officials said that ASEAN remained on track to
inaugurate its planned
                    preferential free trade area - known as the ASEAN Free
Trade Area, or
                    AFTA - by the start of the year 2000.

                    ''This means that, in a little more than five months
from now, AFTA will
                    have been substantially completed, creating a market of
half a billion
                    people with a combined gross domestic product of 700
billion U.S. dollars,''
                    said the ASEAN secretary-general, Rodolfo Severino.

                    But he cautioned that the rapid opening of ASEAN
economies and the
                    creation of an integrated regional market had caused
''anxiety in a few
                    industrial sectors and enterprises in ASEAN, mostly
those that have been
                    artificially protected from competition for a long time.''

                    ASEAN is made up of Brunei, Burma, Cambodia, Indonesia,
Laos,
                    Malaysia, the Philippines, Singapore, Thailand and Vietnam.