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Cablegate: Asean Reaches Out to Indonesian Business Leaders

VZCZCXYZ3028
RR RUEHWEB

DE RUEHJA #0424/01 0630214
ZNR UUUUU ZZH
R 030214Z MAR 08
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC 8188
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUEHKO/AMEMBASSY TOKYO 1612
RUEHBK/AMEMBASSY BANGKOK 8349
RUEHPF/AMEMBASSY PHNOM PENH 0510
RUEHML/AMEMBASSY MANILA 3192
RUEHHI/AMEMBASSY HANOI 0591
RUEHNE/AMEMBASSY NEW DELHI 1641
RUEHBY/AMEMBASSY CANBERRA 2102
RUEHWL/AMEMBASSY WELLINGTON 2376
RUEHAK/AMEMBASSY ANKARA 0140
RUEHBS/USEU BRUSSELS
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEHRC/USDA FAS WASHDC
RUEKJCS/SECDEF WASHDC
RHEHNSC/NSC WASHDC

UNCLAS JAKARTA 000424

SIPDIS

SIPDIS

DEPT FOR EAP, EAP/RSP, EAP/MTS, EAP/MLS, EAP/EP
DEPT FOR EB/IFD/OMA
DEPT ALSO FOR OES/IET AND OES/ETC/TED
USAID FOR LCHILES
BANGKOK FOR USAID/KISSINGER/PARISH
CAMBODIA FOR USAID
MANILA FOR USAID
HANOI FOR USAID
TREASURY FOR IA-SETH SEARLS
COMMERCE FOR 4430/ KELLY
SINGAPORE FOR BAKER

E.O. 12958: N/A
TAGS: ECON PHUM PREL PGOV KDEM ID BM
SUBJECT: ASEAN REACHES OUT TO INDONESIAN BUSINESS LEADERS

1. Summary. Sundram Pushpanathan, Principal Director of the ASEAN
Secretariat's Bureau for Economic Integration and Finance, presented

SIPDIS
ASEAN's plan for economic integration by 2015 at an Indonesian
business forum. According to Pushpanathan, the ASEAN foreign
ministers have expressed strong support for the ASEAN Economic
Community (AEC) and plan to mobilize additional resources for the
ASEAN Secretariat to support the integration process. Pushpanathan
also noted that ASEAN plans to take a more coherent approach to
negotiating trade and investment accords and to enforcing existing
ASEAN agreements. Pushpanathan and the business leaders agreed that
the private sector must ultimately drive the economic integration
process. End Summary.

ASEAN Secretariat Launches AEC Awareness Campaign
--------------------------------------------- ----

2. On February 28, Sundram Pushpanathan, Principal Director of the
ASEAN Secretariat's Bureau for Economic Integration and Finance,
presented ASEAN's plan for economic integration by 2015 to a group
of local business representatives. The event, entitled "ASEAN
Economic Community: Benefits and Role of Business," was sponsored by
the Singapore Chamber Indonesia and Globe Asia, a local business
publication. Pushpanathan noted that the event was the first in a
series of ASEAN speaking engagements aimed at promoting awareness
and support for the AEC in Indonesia. As Indonesia constitutes
roughly half of ASEAN's population and over 35% of ASEAN's economy,
the success of the AEC will be determined largely by the level of
Indonesia's support.

AEC Gains Momentum
------------------
3. According to Pushpanathan, all ten ASEAN foreign ministers have
expressed strong support for the AEC and plan to mobilize additional
resources for the ASEAN Secretariat in order to ensure that ASEAN
meets its 2015 target. In the short-term, ASEAN is focusing on
harmonizing standards in the cosmetics industry, and implementing
the ASEAN Single Window, which will speed customs processing.
Progress on creating a free flow of goods and services within 12
priority sectors (electronics, e-ASEAN, healthcare, wood-based
products, automotives, rubber-based products, textiles and apparels,
agro-based products, fisheries, air travel, tourism and logistics)
is also on track, according to Pushapnathan. The "ASEAN Six"
(Brunei, Indonesia, Malaysia, Philippines, Singapore, and Thailand)
plan to reduce tariffs in these categories to zero by 2010, with
full liberalization of the electronics and auto sectors expected to
occur first. Pushpanathan was less optimistic about ASEAN's plans
to liberalize financial flows, noting that this issue is in the
early stages of debate among the member countries.

4. Pushpanathan also noted that ASEAN plans to take a more coherent
approach to negotiating its myriad trade and investment agreements.
ASEAN has initiated consultations or concluded negotiations on
economic agreements with China, Japan, Korea, India, Australia, New
Zealand, and the European Union. A number of Gulf States, Pakistan,
and Russia have also approached ASEAN to explore the possibility of
economic agreements. (Note: The United States signed a Trade and
Investment Framework Arrangement with ASEAN in 2006. End note.)
ASEAN countries also maintain a number of bilateral trade and
investment agreements. Differences in rules of origin used for
these agreements have caused considerable confusion for businesses
operating in the region. As a result, Pushpanathan noted that ASEAN
plans to implement a uniform approach to negotiating agreements
moving forward.

5. According to Pushpanath, ASEAN will also increase enforcement of
existing economic agreements among member countries. ASEAN member
countries have fully implemented only 30% of the 126 existing ASEAN
economic agreements. The ASEAN Secretariat plans to monitor
implementation progress and present this information at the leaders
meetings in order to increase pressure on delinquent members.
Pushpanathan also stated that for all ASEAN agreements, ASEAN would
apply only "pre-agreed" flexibility for member countries, meaning
that ASEAN will not permit any implementation delays that members
failed to negotiate prior to the signing of the agreement. However,
he did not discuss whether ASEAN would apply penalties for
non-compliance.

Increased Business Engagement in AEC
------------------------------------
6. Local business leaders at the well-attended event revealed a
significant interest in learning more about progress on the AEC.
Pushpanathan and the business leaders agreed that the private sector
must ultimately drive the economic integration progress given their
stake in the process and the inability of political leaders to move
quickly in the absence of strong support. Business leaders and
ASEAN agreed on the need to establish additional mechanisms to share
information and solicit views on economic integration progress and
prospects. Pushpanathan also urged the business participants to
utilize ASEAN's dispute settlement mechanism, through their
respective governments, to settle intra-ASEAN business disputes and
raise awareness of issues impeding economic integration.

HUME

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