FREE TRADE LEAPS IN YEAR OF TIGER

January 7, 2010

As the United States dithers, East Asia has moved forward on market liberalization with a vengeance, creating the biggest free trade zones seen in years. The train is pulling out of the station, and America isn't on board, says Investor's Business Daily (IBD).

Largely ignored over the weekend, Jan. 1 signaled the arrival of the world's third-biggest free trade area:

  • China and Asia's Tigers -- the Association of Southeast Asian Nations -- scrapped 7,000 different tariffs to form a $200 billion open market for about 2 billion consumers, one-third of the world's population.
  • Jan. 1 also heralded another ASEAN free-trade pact with mighty India, ending tariffs on 4,000 products staggered through 2016; this deal will expand a $50 billion market for 1.5 billion consumers into something even bigger.
  • ASEAN also signed off on free trade with Australia and New Zealand, tacking on another $50 billion market to expand for their 600 million consumers.
  • It follows ASEAN's Dec. 1 agreement with Japan, which created a $240 billion market for 670 million.
  • In addition, Thailand and South Korea completed the last step of 2007's ASEAN-Korea pact, finalizing expansion of the zone to a $72 billion market for 600 million.

ASEAN's six freest members -- Thailand, Indonesia, Singapore, Philippines, Malaysia and Brunei -- even enacted a free-trade deal among themselves on Jan. 1, ending tariffs on goods sold to each other, freeing a $60 billion market for 500 million consumers.

ASEAN wasn't the only one moving on free trade, says IBD.  Over the same weekend, India announced that three years of talks with South Korea were complete, uniting the third- and fourth-largest economies in the Far East.  India's leaders said a one-year deadline for negotiating a pact with the European Union was set this week, too.

All this points to something major: While the Obama administration has put its energy into trade wars with China, enacting punitive tariffs on steel, tires, nylon, paper, and other goods and has signed no new pacts in 2009, free trade is marching on without the United States.

Source: Editorial, "Free Trade Leaps In Year Of Tiger," Investor's Business Daily, January 6, 2010.

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