The Eighth Meeting of the ASEAN – US Dialogue was held in Washington, D.C., on February 10 – 11, 1988, in the Department of State.

The US Delegation was led by Mr. Allen Wallis, Under Secretary of State for Economic Affairs, Mr. William Piez, Deputy Assistant Secretary of State for East Asian and Pacific Affairs, was Deputy Leader of the U.S Delegation. Also participating were representatives of the Departments of State, Treasury, Commerce, Agriculture, Defense, and Labor, as well as representative from the Office of U.S. Trade Representative, the U.S. Agency for Inter- national Development, the Federal Maritime Commission, the Overseas Private Investment Corporation, the U.S. Information Agency, and the U.S. Food and Drug Administration.

The ASEAN Delegation was led by Yeo Cheow Tong, Acting Minister for Health and Minister of State for Foreign Affairs of Singapore. Pengiran Maidin Bin Pengiran Haji Hashim, Director-General, ASEAN Brunei Darussalam; Mr. Wisber Loeis, Director-General, ASEAN Indonesia; Ambassador Dato Abdullah Zawawi Bin Haji Mohamed, Director-General, ASEAN Malaysia Ambassador Felicidad B. Gonzales, Assistant Secretary, Office of ASEAN Affairs and Director-General, ASEAN – Philippines National Secretariat, Department of Foreign Affairs, Philippines; and Mr. Chawat Arthayukti, Director General, ASEAN Thailand headed their countries’ delegations.

Mr. Roderick Yong, Secretary General of the ASEAN Secretariat; Mr. Ridzwan Dzafir, Chairman of the ASEAN Committee on Trade and Tourism; Dato Ramon Navaratnam, Chairman of the ASEAN Committee on Transport and Communications; and Dato Dr. Mohamed Nor Ghani, Chairman of the ASEAN Committee on Culture and Information, also participated.

The Dialogue was opened by Mr. George P. Shultz, Secretary of State of the United States. In his welcoming remarks, he noted that ASEAN, during its first two decades, had set an example for the world through its emphasis on regional cooperation and market-oriented development strategies.

The Secretary congratulated ASEAN on the success of its Third Summit in Manila as a reaffirmation of the organization’s commitment to realistic efforts to deepen economic cooperation among its members. He observed that the ASEAN economies and their trade relations wine the United States had strengthened in 1987 and that total trade between ASEAN and the United States had set a new record. ASEAN had come to rank as the seventh largest trading partner of the United States. The Secretary assured the delegations that President Reagan would continue to resist protectionist trade legislation such as certain provisions of the Omnibus Trade Bill and the textile legislation currently being considered by the U.S. Congress. He also noted ASEAN’s contribution to the start of the Uruguay Round of multilateral trade negotiations and urged tile ASEAN governments to continue their active participation in the New Round, in order to reach agreement on enduring solutions to the problems of the world trading system.

In his opening remarks, H.E. Minister YCO Cheow Tong noted the growth in ASEAN – U.S. trade and economic relations over the previous two decades. He noted that the ASEAN – U.S. Dialogue was an important component Of ASEAN’s external relations, adding that both sides shared a broad range of common values i-3id aspirations. Among these was a belief it, fire and fair trade, demonstrated by a common commitment to a successful conclusion to the Uruguay Round of multilateral trade negotiations. The Minister noted with regret the recent decision of the U.S. Administration to graduate Singapore from the U.S. GSP program, indicating that this decision would be detrimental to long-term U.S. ASEAN relations. Singapore enacted copyright legislation which took into account major U.S. concerns on copyright protection, on the under- standing that Singapore would be granted a favorable. GSP package in return. The Minister added that ASEAN was encouraged by on-going consultations concerning the ASEAN – U.S. Initiative (AUI). He observed that agreement had been reached between the AUI Coordinators on terms of reference and other operational details of a joint economic study under the AUI to define possible approaches to extending ASEAN – U.S. economic relations. It was hoped that this study could be launched and concluded by the end of 1988 and that the AUI would facilitate and enhance trade economic relations.

Speaking in reply, Secretary Shultz defended the decision to graduate Singapore and three other newly industrialized economies from the GSP program. The Secretary noted that the U.S. GSP was intended to help countries having trouble setting started as exporters of non- traditional products. Singapore and the other three beneficiaries involved had made great strides in that direction, lie added, and it was necessary to ensure that the benefits of trade privileges offered through the GSP were available for beneficiaries actually needing them, The Secretary noted that Singapore’s increased intellectual property protection, agreed on in the context of GSP General Review, was in Singapore’s own interest. The Secretary noted that the U.S. market remained the most open of the industrialized countries., despite the recent rise in protectionist pressure caused by the persistent U.S. trade deficit.


OVERVIEW OF ASEAN – U.S. DIALOGUE RELATIONS

The two sides reviewed ASEAN – U.S. relations and exchanged views on a wide range of economic and trade issues -of interest to ASEAN and the United States. They stressed their common desire to work towards a long-term economic relationship of mutual benefit. The two sides were pleased to note marked improvements in the Dialogue process since the Seventh Dialogue. The two sides also discussed future direction of development cooperation and agreed that future cooperation should focus on the dominant theme of economic growth in ASEAN.

The ASEAN side informed the meeting of the results of the Third ASEAN Summit in Manila in December 1987. It was noted that the decisions taken by the ASEAN Heads of Government would provide excellent opportunities for promotion of intra-ASEAN trade and investment, and would also provide incentives for U.S. companies to increase trade with and investment in ASEAN. In response, the U.S. delegation was encouraged to note that the proposed measures would not result in trade barriers to third countries.


EXCHANGE OF VIEWS ON INTERNATIONAL ECONOMIC ISSUES

The two sides reviewed recent developments and prospects concerning a wide range of important international economic issues.

The ASEAN side stated there was an urgent need to restore and stabilize prices for internationally traded commodities, so as to stabilize foreign exchange earnings needed to pay for imports and ensure future supplies to consumers. ASEAN observed that international cooperation on commodities was at its lowest ebb and regretted that major economic powers, including the United States, were lukewarm to global initiatives on commodities. ASEAN stressed the role of developed countries in assisting producers and pointed out that ASEAN growth depended largely on recovery of the commodity sector. ASEAN urged the United States to propose alternative measures to bring about effective, practical and favorable trade in commodities.

RUBBER – The ASEAN side expressed appreciation to the United States for signing the International Natural Rubber Agreement (INRA), but urged the U.S. side to expedite ratification in order to bring the agreement into force as early as possible. The U.S. side stated that it supported efforts to bring INRA II into force, and indicated that, despite difficulties, the Administration expected to proceed with the domestic procedures required for ratification of INRA II. TIN – ASEAN urged the United States to take steps to keep disposals of GSA tin stockpiles to the minimum level possible to avoid undue market disruption and to assist in the implementation of the ATPC supply rationalization scheme aimed at bringing the tin market back to normalcy. U.S. cooperation was also sought in establishing an International Tin Study Group (ITSG) to handle certain functions of the Inter- national Tin Council. In addition, ASEAN called for a collaborative research and development project to develop new uses for tin. The U.S. side indicated that GSA tin disposals could not be said to cause market disruption. U.S. government officials remained ready to consult with ASEAN regarding tin disposals. The U.S. planned to take part in the UNCTAD meeting in April on the proposed establishment of the ITSG and would consider its position in light of that meeting. The US. also noted that the ASEAN R & D proposal would be considered in the context of the ASEAN – U.S. development cooperation program.

TROPICAL VEGETABLE OILS – ASEAN expressed appreciation for the strong stand taken by the U.S. Administration in opposition to the proposed tropical oil labeling legislation, on the ground that it discriminated against tropical vegetable oils produced in ASEAN. In response the U.S. side stated that the Administration would continue to oppose this bill. The ASEAN side urged the United States to continue to work closely with ASEAN to oppose the EC Commission’s proposed levy on vegetable oils and fats. ASEAN also expressed concern about U.S. sales of vegetable oils to developing countries through the Export Enhancement Program and P.L. 480, which ASEAN feared would displace sales of non-subsidized ASEAN oils.

SUGAR – ASEAN noted that its member countries exporting sugar to the United States were being adversely affected by steadily declining U.S. import quotas, and indicated it sought larger import quotas on the basis of historical export performance. ASEAN also sought U.S. support for agreement to -implement the economic provisions of the International Sugar Agreement (ISA). The U.S. delegation indicated that the Administration was committed to seek reform of the sugar program and was sympathetic to the problems it caused ASEAN sugar exporters. The U.S. considered the problem 6f sugar to be one of the agricultural questions to be addressed ire the new GATT round through the U.S. proposal to eliminate subsidies and market access barriers.

The ASEAN delegation expressed appreciation for U.S. support regarding the reallocation of export quotas in the International Coffee Agreement and requested that this support be continued.

The ASEAN side requested the assistance of the United States on research and development to improve productivity and product quality and to find new uses and applications for certain commodities to cope with marketing requirements. ASEAN invited the United States to participate in investments and technology transfer to that end.

Both sides reviewed recent developments and prospects in the Uruguay Round GATT negotiations, stressing the commonality of interest between ASEAN and the United States in a successful New Round. -The U.S. side indicated that agriculture was a core element of the New Round, and expressed the view that it should be possible to achieve the framework and objectives for a final agreement by the mid-term review later this year. ‘The U,S. side also indicated that progress and even final agreement on institutional issues, such as dispute settlement, the functioning of the GATT system, and tariff and non-tariff measures, should be possible by the mid-term review.

The ASEAN side noted that it would like to see early agreement on agriculture, tropical pro- ducts, natural resource-based products, safeguards, subsidies and dispute settlement as well as a standstill on non-tariff measures and a roll-back GATTillegal actions.

The U.S. delegation indicated that the U.S. commitment to seek improvements in intellectual property protection was a worldwide effort. The U.S. appreciated the achievements of the ASEAN countries in improving intellectual property protection and expressed the hope that such improvements would continue. The U.S. urged the ASEAN governments to support the U.S. proposal on intellectual property in the Uruguay Round.

The U.S. delegation urged the ASEAN governments to consider acceding to the Vienna Convention on Protection o the Ozone Layer and its Montreal Protocol regulating ozone-depleting chemicals.

On the international monetary situation, ASEAN called for a new world economic recovery plan to avert further worsening of the global situation brought on by low current prices for oil and other commodities. The plan should incorporate both domestic structural reforms and external cooperation.

In the context of its review of international monetary and financial issues, the U.S. side replied that the Administration did not embrace debt relief plans such as the Bradley Plan. The Program for Sustained Growth (the Baker Plan) had made progress, but would require more time for full success. The U.S. side indicted it strongly supported a General Capital Increase at the World Bank, noted its proposal for an External Contingency Fund at the IMF, and stated its support for a “menu” approach to debt management.

Concerning ASEAN financial markets, the U.S. side emphasized the need for free market access for all U.S. service firms, including financial institutions, in the region.


GENERAL BILATERAL ECONOMIC AND TRADE ISSUES

Each ASEAN delegation registered its concern over the decision of the United States to graduate Singapore from the U.S. Generalized System of Preferences (GSP) program. The U.S. side noted the presentations made by the ASEAN delegations, assured the ASEAN side that the U.S. Administration had considered their viewpoints carefully when deliberating the graduation decision.

The ASEAN side requested favorable consideration of ASEAN products in eight tariff product categories that were being considered for inclusion in the GSP program under the current annual review. The U.S. side responded by noting that both product and country practices petitions affecting ASEAN were being reviewed and additional information might be required.

The ASEAN side expressed concern with the proliferation of protectionist trade bills before the U.S. Congress, which if passed would adversely affect ASEAN – U.S. trade. The U.S. delegation noted that the Administration was working with the Congress to ti7y to develop a responsible trade bill and assured ASEAN that the President would veto the bill unless there were substantial changes. The U.S. delegation also re- affirmed that the Administration was strongly opposed to the textile bill and that the President would veto it if passed by the Senate.

Both sides noted with satisfaction that the Coordinators for the ASEAN – U.S. Initiative (AUI) had at their meeting on February 8 agreed to launch a joint study on ASEAN – U.S. economic relations.

Both sides also continued discussions on the subject of the exchange of trade data.


PRIVATE SECTOR PARTICIPATION

The ASEAN and U.S. delegations met with a delegation from the ASEAN – U.S. Business, problem of pest infestation and would have a decision soon.

ASEAN noted the U.S. Administration’s explanation that antidumping (AD) and countervailing duty (CVD) cases were industry – initiated and not under its control. ASEAN also felt that the use of these actions was contrary to the U.S. Uruguay Round commitment on non-tariff barriers and constituted harassment of ASEAN trade. The U.S. delegation responded that the U.S. Commerce Department was legally account- able for AD and CVD investigations. The U.S. side added that the Administration did not support measures in the Omnibus Trade Bill that would encourage filing of more cases.

ASEAN referred to U. S. government procurement policies as discriminatory toward its high-tech-industries. The U.S. delegation noted that the Administration was compelled by Congress to implement the measures mentioned by ASEAN. The U.S. side invited the concerned ASEAN members to consider acceding to the GATT Procurement Code.

ASEAN countries exporting steel to the U.S. noted a desire on the part of U.S. interests for Voluntary Restraint Agreements (VRAS) with ASEAN members. The U.S. delegation replied that VRAs were used to help the U.S. steel industry recover from import penetration, but noted that the VRA program was due to end in September 1989.

The U.S. side expressed its concern regarding quantitative restrictions and discriminatory taxes in some ASEAN countries which adversely affected U.S. agricultural exports, especially tobacco. The U.S. urged the ASEAN side to roll back trade measures which were inconsistent with the GATT. In response, the ASEAN delegations noted the U.S. concerns and added that they were being considered primarily at the bilateral level.

The ASEAN Delegation discussed the Ocean Shipping Act of 1978 and the “Controlled Carriers Act.” The U.S. side responded that, based on previous unsuccessful efforts to obtain a legislative exemption from the Controlled Carriers Act, It did not believe the U.S. Congress would either ratify a treaty or pass any other legislation to exempt ASEAN carriers as a class. The U.S. informed ASEAN that a review of the 1984 Shipping Act was due in 1989 and advised ASEAN to present its views directly to the Congress at that time. In this regard ASEAN stressed the need for the U.S. Administration to give higher priority to using its good offices, especially with the private sector in resolving these outstanding issues as the value of ASEAN – U.S. shipping and freight was $ 3.5 billion annually.

INVESTMENT COOPERATION

ASEAN and the U.S. agreed that private foreign investment had an important role to play in ASEAN’s development. ASEAN informed the U.S. side of the steps being taken to improve the investment climate in the region, particularly the improvements agreed to at the Third ASEAN Summit with respect to the ASEAN -Industrial Joint Ventures (AIJV) Scheme. The ASEAN side urged the United States to consider providing assistance in the following areas: (a) identifying investment. projects of interest to both ASEAN and U.S. investors, (b) mounting investment missions and industrial conferences to increase U.S. business awareness of opportunities in ASEAN, and (c) organizing a workshop involving U.S. and ASEAN officials and the U.S. private sector to increase understanding concerning business conditions and expectations in ASEAN-. The U.S. believed the best way to attract foreign investment was by removing barriers, rather that, by providing investment incentives. The U-S. side also urged the ASEAN governments to support the U.S. proposal in the GATT New Round concerning the elimination of investment measures which distort or impede trade flows.

DEVELOPMENT COOPERATION

The two, sides reviewed with satisfaction the progress made in development cooperation all agreed that new areas should be identified in the context of’ a medium and long-term economic cooperation program.