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ANALYSIS-E.Asia common mkt vision s



Subject: ANALYSIS-E.Asia common mkt vision slowly emerges

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Monday November 29, 4:04 am Eastern Time=20
ANALYSIS-E.Asia common mkt vision slowly emerges
By Raju Gopalakrishnan=20

MANILA, Nov 29 (Reuters) - East Asia's vision for a common market and =
unified currency is perhaps half a century away but a weekend summit =
which discussed the issue signals the potential emergence of a powerful =
new bloc, some analysts said on Monday.=20

China, Japan, South Korea and the 10-nation Association of South East =
Asian Nations (ASEAN) agreed on extending cooperation in a wide range of =
financial and trade-related issues at Sunday's summit in Manila.=20

Talk of a common market and currency in the future gripped the meeting, =
despite the many divisions and suspicions within the group, not the =
least of which is the rivalry between China, which has more than half =
the people in the region, and Japan, which produces almost half of the =
economic output.=20

The east Asian markets encompass about two-fifths of the world's =
population and about $7.75 trillion in combined GDP.=20

Such a grouping could rival Europe and the United States, if it were =
ever united. But analysts say the staggering differences in economic =
development between the 13 nations involved would take decades to =
overcome.=20

Still, the summit moves signalled ``a search for a common identity =
partly in opposition to a Western identity,'' said Simon Flint, currency =
strategist at Bank of America in Hong Kong.=20

SAKAKIBARA MOVE FIRST SIGNS OF NEW ASSERTIVENESS=20

One sign was Japan's lobbying the summit successfully to back former =
vice finance minister Eisuke Sakakibara as the new managing director of =
the International Monetary Fund, a post usually the preserve of Europe.=20

The show of strength on Sakakibara was the first sign of the region's =
new assertiveness, said Neil Saker, head of economic research for SG =
Global Equities.=20

``It's very much like the formative years of the EU,'' he said.=20

The process would be driven by ASEAN, which has entrenched moves toward =
free trade in the region, in the same way as cooperation in iron and =
steel led to the formation of the European Union, Saker noted.=20

In the meantime the 13 countries would ``form a very strong lobby group =
to counter the U.S.,'' he said.=20

ASEAN countries range from impoverished Myanmar, Laos and Cambodia to =
the tiger economies of Singapore and Malaysia. Others include Brunei, =
Indonesia, the Philippines, Thailand and Vietnam.=20

``We are seeing the development of an East Asian focus group ...which is =
more of a caucus than APEC,'' Saker said, referring to the 21-member =
Asia-Pacific grouping.=20

Another sign could be the formation of an Asian equivalent of the =
International Monetary Fund, to stave off the possibility of regional =
financial crises, he said. The United States has looked with suspicion =
on the proposal, since it would undermine Bretton Woods institutions.=20

REGIONAL CURRENCY TRADERS NOT IMPRESSED=20

Aside from overcoming international differences, such as the wide gulf =
between the economies and approaches of China and Japan, members working =
toward an East Asian grouping will also have to deal with the sensitive =
internal issue of surrendering some independence over economic policy =
making.=20

``One of the things you need for common trade areas and free currencies =
is some kind of surrendering of sovereignty and surrendering of =
independent monetary policy,'' said Flint.=20

``And we are so far from that in either Southeast Asia or greater East =
Asia...the rise to the hegemony of the East is 50 years away. It's a =
fascinating subject but not one that my foreign exchange traders are =
interested in.''=20

Saker said the process of nations coming together also was imperative to =
counter global capital flows.=20

``What the Asian (financial) crisis has shown is that sovereignty is =
really non-existent anyway,'' he told Reuters.=20

``Money flows really run the world and countries' sovereignty is eroded. =
I think there is a case for saying a bloc like this or the EU is =
important...individual countries are now powerless in the face of =
capital flows.''=20

But he, too, agreed that a common East Asian market was about 50 years =
away.=20

LESS TALK, MORE WORK NEEDED=20

But many things need to be done, said Dewi Fortuna Anwar, a top aide of =
Indonesian President B.J. Habibie when he was in office and a regional =
political analyst.=20

``If there is a political commitment towards that vision then they =
(should) start coordinating their respective national policies and then =
set targets,'' she said.=20

``For example, how to make sure that the currencies are not so different =
in values...also the stability of the banking sector.''=20

But she said the fact that East Asia was talking about such a vision was =
a major shift.=20

``They shouldn't just talk about it, they should sit down and talk about =
the details, what particular technical cooperation they have to do to =
achieve such a target by such a date,'' Anwar said.=20

``They should be talking about clear targets, what they want to achieve =
in five years, what they want to achieve in 10 years.''=20




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<DIV><FONT size=3D2><B>Monday November 29, 4:04 am <SMALL>Eastern =
Time</SMALL></B>=20

<H2>ANALYSIS-E.Asia common mkt vision slowly =
emerges</H2><!--rf|943866240--><!-- TextStart -->
<P>By Raju Gopalakrishnan=20
<P>MANILA, Nov 29 (Reuters) - East Asia's vision for a common market and =
unified=20
currency is perhaps half a century away but a weekend summit which =
discussed the=20
issue signals the potential emergence of a powerful new bloc, some =
analysts said=20
on Monday.=20
<P>China, Japan, South Korea and the 10-nation Association of South East =
Asian=20
Nations (ASEAN) agreed on extending cooperation in a wide range of =
financial and=20
trade-related issues at Sunday's summit in Manila.=20
<P>Talk of a common market and currency in the future gripped the =
meeting,=20
despite the many divisions and suspicions within the group, not the =
least of=20
which is the rivalry between China, which has more than half the people =
in the=20
region, and Japan, which produces almost half of the economic output.=20
<P>The east Asian markets encompass about two-fifths of the world's =
population=20
and about $7.75 trillion in combined GDP.=20
<P>Such a grouping could rival Europe and the United States, if it were =
ever=20
united. But analysts say the staggering differences in economic =
development=20
between the 13 nations involved would take decades to overcome.=20
<P>Still, the summit moves signalled ``a search for a common identity =
partly in=20
opposition to a Western identity,'' said Simon Flint, currency =
strategist at=20
Bank of America in Hong Kong.=20
<P>SAKAKIBARA MOVE FIRST SIGNS OF NEW ASSERTIVENESS=20
<P>One sign was Japan's lobbying the summit successfully to back former =
vice=20
finance minister Eisuke Sakakibara as the new managing director of the=20
International Monetary Fund, a post usually the preserve of Europe.=20
<P>The show of strength on Sakakibara was the first sign of the region's =
new=20
assertiveness, said Neil Saker, head of economic research for SG Global=20
Equities.=20
<P>``It's very much like the formative years of the EU,'' he said.=20
<P>The process would be driven by ASEAN, which has entrenched moves =
toward free=20
trade in the region, in the same way as cooperation in iron and steel =
led to the=20
formation of the European Union, Saker noted.=20
<P>In the meantime the 13 countries would ``form a very strong lobby =
group to=20
counter the U.S.,'' he said.=20
<P>ASEAN countries range from impoverished Myanmar, Laos and Cambodia to =
the=20
tiger economies of Singapore and Malaysia. Others include Brunei, =
Indonesia, the=20
Philippines, Thailand and Vietnam.=20
<P>``We are seeing the development of an East Asian focus group ...which =
is more=20
of a caucus than APEC,'' Saker said, referring to the 21-member =
Asia-Pacific=20
grouping.=20
<P>Another sign could be the formation of an Asian equivalent of the=20
International Monetary Fund, to stave off the possibility of regional =
financial=20
crises, he said. The United States has looked with suspicion on the =
proposal,=20
since it would undermine Bretton Woods institutions.=20
<P>REGIONAL CURRENCY TRADERS NOT IMPRESSED=20
<P>Aside from overcoming international differences, such as the wide =
gulf=20
between the economies and approaches of China and Japan, members working =
toward=20
an East Asian grouping will also have to deal with the sensitive =
internal issue=20
of surrendering some independence over economic policy making.=20
<P>``One of the things you need for common trade areas and free =
currencies is=20
some kind of surrendering of sovereignty and surrendering of independent =

monetary policy,'' said Flint.=20
<P>``And we are so far from that in either Southeast Asia or greater =
East=20
Asia...the rise to the hegemony of the East is 50 years away. It's a =
fascinating=20
subject but not one that my foreign exchange traders are interested =
in.''=20
<P>Saker said the process of nations coming together also was imperative =
to=20
counter global capital flows.=20
<P>``What the Asian (financial) crisis has shown is that sovereignty is =
really=20
non-existent anyway,'' he told Reuters.=20
<P>``Money flows really run the world and countries' sovereignty is =
eroded. I=20
think there is a case for saying a bloc like this or the EU is=20
important...individual countries are now powerless in the face of =
capital=20
flows.''=20
<P>But he, too, agreed that a common East Asian market was about 50 =
years away.=20
<P>LESS TALK, MORE WORK NEEDED=20
<P>But many things need to be done, said Dewi Fortuna Anwar, a top aide =
of=20
Indonesian President B.J. Habibie when he was in office and a regional =
political=20
analyst.=20
<P>``If there is a political commitment towards that vision then they =
(should)=20
start coordinating their respective national policies and then set =
targets,''=20
she said.=20
<P>``For example, how to make sure that the currencies are not so =
different in=20
values...also the stability of the banking sector.''=20
<P>But she said the fact that East Asia was talking about such a vision =
was a=20
major shift.=20
<P>``They shouldn't just talk about it, they should sit down and talk =
about the=20
details, what particular technical cooperation they have to do to =
achieve such a=20
target by such a date,'' Anwar said.=20
<P>``They should be talking about clear targets, what they want to =
achieve in=20
five years, what they want to achieve in 10 years.'' <!-- TextEnd -->
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