EU/ASEAN : SERVICES AND PUBLIC PROCUREMENT KEY ITEMS ON NEGOTIATION AGENDA.

Ensuring better access for European businesses to the government procurement contracts and the services market in South-East Asia will be one of the key points in the free trade negotiations which the EU wants to initiate in 2007 with the Association of Southeast Asian Nations (ASEAN). The discussions promise to be hard because while some of the Asian countries are ready to discuss the so-called Singapore questions (trade facilitation, government procurement, competition and investment), many wish to retain control of the public market and maintain strict regulations for certain services. The desire of the ASEAN countries to obtain better access to the EU markets, by cancelling the last tariff protection barriers, could also impact on certain sectors of European industry.

ECONOMIC PATRIOTISM

The reluctance of the Asian countries to open the public procurement market is stressed very clearly in a report drafted by the vision group' (a group of European experts charged with looking into the feasibility of a future FTA), submitted to ASEAN trade ministers and to Peter Mandelson, the EU Trade Commissioner, in May 2006. Experts are making no effort to deny that this will be the most "sensitive" question in the future negotiations, noting that it was not included in the agreements negotiated by the ASEAN with their other trade partners such as China or Japan.

Malaysia, the most defensive, Laos and Burma (Myanmar) have already let it be known that they will not include the public procurement dossier in the FTA with the EU. This economic patriotism is shared to a lesser degree by most of the governments in the region. European enterprises gazing longingly at these markets may have to make do with minimum openings limited to a greater transparency of calls for tender. These limited ambitions are reflected in the vision group's report proposing that a possible approach would be "to agree on transparency provisions at the ASEAN level, while maintaining a differentiated approach as to the market access commitments to be adopted by individual ASEAN members".

Another priority for the EU is the services sector, one of the strengths of many European enterprises which are hoping to benefit from the FTA to gain a foothold in the growing market. "The bulk of the gains (actually three quarter of the gains accruing to ASEAN), are associated with liberalisation in services," notes the report. It is in this sector that EU exports have grown most over the past few...