EU Trade Commissioner Tells Southeast Asia To Open Markets

by Carla Johnson, Investors Offshore.com

19 February 2002

European Union Trade Commissioner, Pascal Lamy, warned on Friday that Southeast Asian countries will need to do more than reduce taxes if they are to face up to the increase in competition for investment which has come about as a result of China's World Trade Organisation entry.

Speaking at a lecture in Singapore last week, M. Lamy said that although the 10 nation Association of Southeast Asian Nations (ASEAN) has recently lost out to China as international investors take advantage of the new WTO member's potential market of more than one billion people, the Southeast Asian countries could claim back a substantial slice of the foreign direct investment pie if they reform their investment regimes in addition to the tariff reductions which have taken place.

'My personal view,' observed M. Lamy 'is that [China's WTO entry] will increase pressure for trade integration and for investment regimes which are more welcoming than they are at present. If EU investors have a feeling that they can invest here, that there is no barrier to investments and that there is a potential market...they will come. No dount about that.'

The EU Trade Commissioner went on to praise the tax measures enacted by six of ASEAN's wealthiest members, which have reduced tariffs on most goods traded within the region to between zero and 5%. The framework has also been put in place for newer ASEAN members such as Combodia, Vietnam, Laos, and Myanmar to follow suit by 2005.

However, he added the proviso that: 'Trade integration and economic integration in today's world is about more than tariffs. It's about rules, it's about investment regimes, it's about transport agreements, it's about technical standards...So there is a lot to do in this field also.'

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