VZCZCXRO9836
RR RUEHCHI RUEHDE RUEHDIR RUEHDT RUEHHM
DE RUEHJA #3316/01 3320557
ZNR UUUUU ZZH
R 280557Z NOV 06
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC 2230
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE
RUEHKO/AMEMBASSY TOKYO 0120
RUEHBJ/AMEMBASSY BEIJING 3723
RUEHBY/AMEMBASSY CANBERRA 0134
RUEHUL/AMEMBASSY SEOUL 3803
RUEHNE/AMEMBASSY NEW DELHI 1221
RUEHWL/AMEMBASSY WELLINGTON 1159
RUEHIL/AMEMBASSY ISLAMABAD 0437
RUEHBS/USEU BRUSSELS

UNCLAS SECTION 01 OF 03 JAKARTA 013316 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
DEPT FOR EAP/MTS AND EB/IFD/OMA 
TREASURY FOR IA-SETH SEARLS 
DEPARTMENT PASS USTR FOR DKATZ 
 
E.O. 12598: N/A 
TAGS: ETRD ASEAN ID
SUBJECT: USTR AND ASEAN SECRETARIAT DISCUSS TIFA AND ASEAN 
TRADE AGREEMENTS 
 
¶1. (SBU) Summary.  Assistant United States Trade 
Representative (AUSTR) for Southeast Asia and the Pacific 
Barbara Weisel and Director for Southeast Asia and Pacific 
Affairs David Katz met on November 6 with Anna Robeniol, 
head of the Free Trade Agreements (FTA) Section of the 
Bureau of Economic Integration and Finance at the ASEAN 
Secretariat to discuss ongoing work related to the ASEAN-US 
 
SIPDIS 
Trade and Investment Framework Arrangement (TIFA) and the 
status of ASEAN trade negotiations with other countries. 
AUSTR Weisel encouraged ASEAN Secretariat staff to work with 
USTR to move the ASEAN-US TIFA process forward and urged 
ASEAN officials to improve the channels of communication 
with the United States on ongoing work related to the TIFA, 
especially projects related to sanitary and phytosanitary 
standards, pharmaceuticals, and the ASEAN Single Window. 
 
¶2. (SBU) Robeniol provided a detailed readout of ongoing 
ASEAN trade agreement negotiations with China, Japan, Korea, 
India, Australia, New Zealand and the EU.  Pakistan has also 
approached ASEAN seeking to start discussions on a trade 
agreement, but ASEAN declined for now citing resource 
constraints.  ASEAN also is considering whether to seek FTA 
negotiations with the Gulf Cooperation Council (GCC). End 
Summary 
 
ASEAN and China Negotiating Multiple Agreements 
--------------------------------------------- -- 
 
¶3. (SBU) Robeniol noted that ASEAN and China finalized their 
FTA on trade in goods in mid-2005.  The agreement requires 
ASEAN countries to reduce all tariff lines to 5 percent or 
less by 2010 (although Cambodia, Laos, Myanmar and Vietnam 
(CLMV) were given two additional years to phase out 
tariffs), with the exception of a `sensitive list' of 
products for which countries will have until 2018 to cut 
tariffs to 5 percent or less.  In addition, the agreement 
includes a list of about 260 tariff lines classified as 
`highly sensitive products,' including such products as 
automobiles, rice, sugar and garments.  Robeniol noted that 
ASEAN countries made no commitments to lower tariff rates on 
these items, but would consult in the future on possible 
reductions. 
 
¶4. (SBU) Robeniol noted that China and ASEAN expect to sign 
a services agreement, based on the GATS framework, this 
December during an ASEAN Ministerial meeting in Cebu, 
Philippines.  The agreement will include only initial 
services offers.  Robeniol asserted that the final agreement 
will be `GATS-plus.'  According to Robeniol, the current 
plan is to negotiate and conclude the final ASEAN - China 
services agreement in 2007.  Robeniol acknowledged that 
there had been challenges in the run up to the agreement to 
launch, including disagreements over the definition of 
juridical person, the scope of substantial business 
operations, residency requirements and establishing a carve- 
out for taxation. 
 
¶5. (SBU) Robeniol also noted that ASEAN and China had also 
agreed to negotiate an investment agreement.  However, she 
lamented that disagreements between ASEAN and China and 
disagreements among ASEAN countries have created 
difficulties in the negotiations.  For example, ASEAN and 
China have failed to agree on the use of a negative or a 
positive list.  According to Robeniol, ASEAN looks to the 
1998 Framework Agreement on the ASEAN Investment Area as 
addressing threshold issues in both the services and 
investment agreements it would pursue with China. 
 
Japan Pursues Bilateral EPAs as Part of ASEAN Strategy 
--------------------------------------------- --------- 
 
¶6. (SBU) Japan is pursuing a strategy of negotiating a 
series of bilateral economic partnership agreements (EPA), 
their version of an FTA, with ASEAN countries, Robeniol 
said.  She noted that Japan had completed EPA negotiations 
with Malaysia, Singapore and the Philippines and was 
currently negotiating an EPA with Indonesia.  Japan had also 
 
JAKARTA 00013316  002 OF 003 
 
 
completed its agreement with Thailand and intends to sign it 
early next year, the recent military coup notwithstanding, 
Robeniol reported.  She added that Japan intends to launch 
EPA negotiations with Vietnam during 2007 and also plans in 
the near future to open EPA negotiations with Brunei.  Japan 
sees Cambodia, Laos and especially Burma as on a slower 
track toward EPAs, she concluded. 
 
Korea FTA with ASEAN Completed, Thailand Opts Out 
--------------------------------------------- ---- 
 
¶7. (SBU) ASEAN and Korea completed negotiations for an FTA 
earlier this year and they expect to sign it by the end of 
2006, Robeniol said.  However, she continued, Thailand has 
effectively opted out of the FTA with Korea, at least for 
now, primarily over disputes on market access for rice. 
 
Australia/New Zealand FTA 
-------------------------- 
 
¶8. (SBU) Australia and New Zealand are negotiating an FTA 
with ASEAN as a single undertaking, with a target to 
complete the deal within the next 18 months to two years, 
Robeniol reported.  She acknowledged that the agreement does 
not contain chapters on labor, environment, or on government 
procurement.  She added that in addition to the ASEAN-wide 
negotiation, Australia is negotiating bilateral FTAs with 
Malaysia and Thailand, although Australia suspended the 
latter as a result of the coup.  Robeniol noted that the 
fact that Australia is conducting both the multilateral and 
bilateral negotiations simultaneously has complicated 
Australia's ability to advance the ASEAN negotiations. 
Australia apparently is reluctant to make concessions in the 
ASEAN negotiation that would undermine outcomes it is 
seeking in the Malaysia negotiations. 
 
India Looking to Defensive Equities in ASEAN FTA 
--------------------------------------------- --- 
 
¶9. (SBU) ASEAN officials do not expect to conclude the ASEAN- 
India FTA negotiations in the near future because of ongoing 
disagreement over India's insistence on significant 
exclusions, currently at 560 tariff lines and a significant 
share of trade, Robeniol said.  She noted that the excluded 
items include palm oil, coffee, black tea, pepper and many 
other items where ASEAN countries would expect to be 
competitive.  India, she said, wished to exclude all these 
items and to instead offer preferential tariff rate quotas 
on a bilateral basis.  She continued that in addition to 
this extensive exclusion list, India sought to include a 
long `sensitive list' that would phase down tariffs until 
2022, but then only to a level 20 percent to 30 percent 
below the Most Favored Nation (MFN) rate. 
 
¶10. (SBU) Robeniol reported that India has expressed concern 
that an FTA with ASEAN would open the door to transshipment 
of commodities from China and others in the region.  For 
example, she noted concerns that goods, such as tea from 
China and Sri Lanka, would enter India's market through 
ASEAN countries under the preferential basis of the ASEAN 
FTA.  As a result, she said, reaching agreement on rules of 
origin was proving to be quite difficult. 
 
¶11. (SBU) Robeniol also said that India is seeking to 
negotiate investment and services agreements along with the 
goods agreement currently under negotiation.  According to 
Robeniol, ASEAN intends to complete the goods agreement 
before moving on to negotiate services and investment. 
 
EU FTA Negotiations with ASEAN Slated for 2007 
--------------------------------------------- - 
 
¶12. (SBU) Robeniol reported that European Union Trade 
Commissioner Peter Mandelsohn planned to attend the ASEAN 
Leaders Summit in the Philippines this December and announce 
the EU's launch of FTA negotiations with ASEAN.   She said 
that negotiations would not actually start until sometime in 
 
JAKARTA 00013316  003 OF 003 
 
 
mid- or late 2007.  She indicated that the EU would use a 
dual track approach, given EU sensitivities in dealing with 
some ASEAN member countries, which attendees understood to 
mean Burma.  Under this dual track approach the EU would 
first negotiate with the more developed ASEAN economies and 
leave lesser developed economies, such as Cambodia and Laos 
along with Burma, for later. 
 
Pakistan Comes Knocking and GCC a Possibility 
--------------------------------------------- 
 
¶13. (SBU) Pakistan earlier this year had approached ASEAN to 
seek exploratory FTA discussions, Robeniol said.  She stated 
that due to limited capacity in the ASEAN Secretariat, which 
only has around eight staff to manage all FTA negotiations, 
and the very large number of ongoing FTA negotiations, ASEAN 
had politely declined.  However, she did not dismiss future 
prospects for such exploratory FTA discussions with 
Pakistan.  ASEAN also has been considering a possible FTA 
with the GCC.  These discussions are at a very preliminary 
stage. 
 
¶14. (SBU) USTR Comment.  ASEAN would seem to be in midst of 
or about to begin FTA negotiations with virtually every 
major trading nation or group or nations.  The United States 
should continue to actively engage the ASEAN region, both as 
a group and bilaterally, to maintain and advance our 
commercial and strategic interests in the region. End 
Comment. 
 
¶15. (U) USTR Director for Southeast Asia and Pacific Affairs 
David Katz drafted this report. 
 
PASCOE