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Malaysian Trade Minister Studies Tax-Free Singapore's Threat To ASEAN Bloc

Mary Swire, Tax-news.com, Hong Kong

24 November 2000


The secretariat of ASEAN is worrying that Singapore's campaign to link itself through bilateral agreements with free trade areas outside the regional grouping could threaten the body's integrity.

Malaysia's International Trade and Industry Minister Datuk Seri Rafidah Aziz said the secretariat has been asked to look into all the provisions of such bilateral agreements.

"We have to see where do such pacts infringe upon Asean agreements and interests," she said.

Although Singapore as a sovereign state has the right to sign bilateral free-trade agreements with other nations as long as they are consistent with World Trade Organisation (WTO) rulings, Asean's most-favoured-nation (MFN) principle could call such moves into question.

"A free-trade agreement to Singapore is more symbolic than anything as they are tax free. They could not offer anything more," added Seri Rafidah Aziz.

The minister was commenting as Singapore pursues free-trade agreements with Japan and New Zealand. Singapore is also looking for similar arrangements with Mexico, Australia and Canada.

Rafidah said at present, Malaysia itself prefers a close economic partnership (CEP) concept rather than non-Asean free trade agreements (FTA).

"FTA is too rigid a concept. We are now busy with Afta and the WTO which is expected to start a new round," she added. Rafidah said the CEP concept is more suitable for the time being as it also can function to promote trade and investment flows if it is designed to be market driven.

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