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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(79)387final.
Brussels-12July1979
COMMUNITY RELATIONS WITHTHEMEMBERCOUNTRIES OFTHE
ASSOCIATION OFSOUTHEASTASIANNATIONS(ASEAN)
(Communication fromtheCommissiontotheCouncil)
fin" ■-|^sj •-'
W^^^7
"""to^
COM(79)387final.

COKT'IUIjflCATIONFROMTHECOMMISSIONTOTHE...COUNCIL
Community relations with themember countries oftheAssociation of
South East Asian Nations (ÂSEAN )
Proposal foranAgreement forCommercial andEconomic Cooperation
*
T.Introduction
1;Since 1972 there hasbeen asteady growth inrelations "between the
Community andtheAssociation ofSouth EastAsian Nations (ASEAN )despite
thelack ofaformal agreement "between thetworegions .Asanelement in
theimplementation oftheJoint Declaration ofIntent annexed tothe1973
Treaty ofAccession theCommunity negotiated andconclud.ed intheperiod
from 1973 to1975 Commercial Cooperation Agreements with four ofthe
countries oftheIndian sub-continent .Similar agreements were offered
totheASEAN countries atthet.ime "butallreplied that they preferred to
develop their relations with theCommunity onaregional "basis which meant
waiting until ASEAN itself wastaore prepared forsuch astep .Inthe
meantime it-wasagreed in1975 tocreate aJoint Study Group (JSC)composed
ofrepresentatives oftheCommission andofthefive ASEAN governments to
develop acontinuing dialogue andtoprovide aforum forexploring all
possible areas ofcooperation .TheJSGhasmetfive times over thelast
fouryears andhasexamined awide range ofproblems andinitiated joint
activities inanumber offields .
2.Inorder tosatisfy anASEAN wish foran.intensification ofits
relationship with theCommunity institutions in1977 itwasdecided to
establish aregular dialogue atambassadorial level between theASEAN
Brussels Committee ontheonehand andCOREPER andtheCommission onthe
other .The'purpose ofthedialogue wastosupplement thecooperation
activities carried outbytheJoint Study Group between ASEAN andthe
Commission andtoinvolve directly another institution oftheCommunity in
these activities .Meetings oftheambassadors have been held inNovember
1977andin 1978 andathird isenvisaged totake place inthesecond
half ofthis year .
/' /
I

3.Inview oftheimportance which acloser relationship between ASEAN
and theCommunity would have notonly ineconomic terms "butalso from the
political point ofview afirst meeting atministerial level "between the
tworegions washeld inBrussels inNovember 1978 .Itwasforthe
Community thefirst meeting atministerial level with another regional
grouping ofnon-associated countries and itdemonstrated theCommunity 's
preparedness tooffer itsfirm economic andpolitical support of .the
Association ofSouth East Asian Nations .Themeeting setcertain guide­
lines forvarious kinds ofcooperation between thetwo sides and also
agreed that exploratory discussions onthecontent ofapossible coopers­
'
tion agreement should beheld .
ι
4.Acloser relationship between theEuropean Parliament and the
Parliaments ofthe five ASEAN countries seems tobedeveloping .Agroup
ofEuropean parliamentarians visited theASEAN countries in1975 a
return visit inOctober /November ofthis year isbeing prepared .InMay
1979 "theEuropean Parliament adopted aresolution calling forthestrength
ning ofties between theCommunity andASEAN and sought the speediest
possible conclusion ofanpverall agreement asaframework for initiatives
ofall kinds .
II.The Political and Economic Background
1.Following theendoftheVietnam war ,andespecially since theBali
summit of1976 ,theAssociation ofSouth East Asian Nations hasadvanced
rapidly towards attaining areal identity both atthepolitical and
economic level .Themember countries largely speak andthink interms of
ASEAN and theoverall trend istowards greater cohesiveness created by
external forces .Asagrouping inthe last three years theAssociation
» .y
has conducted discussions andnegotiations notonly with the Community but
also with theUSA ,Canada ,Australia ,NewZealand andJapan .ASEAN' s
stated p.im istocreate azone ofpeace andneutrality inSouth East Asia
andthis isaconcept which hasbecome more andmore accepted bythemajor
powers andwas -supported strongly bytheCommunity intheMinisterial
Meeting . .• ,' < .

2.Tosupporteconomicgrowthandgaintheadvantageswhichalargermarket
canofferASEANisalsofeelingitswaytowardseconomiccooperation .Itis
notyetafreetradearea"buthassetuppreferential tradingarrangements ,
anumberofregionalindustrialprojectsandindustrialcomplementation
schemes,andschemesforpreferential supplyofriceandcrudeoilinthe
eventofshortage.
*
3.TakentogetherthefiveASEANcountrieshaveatotalpopulationof
247million(l97?)tonlyslightlylessthantheCommunity.Theeconomies
ofthemembercountriesareamongthemostrapidlygrowingihtheworld.
WithinASEANbetween19-73and1978,theannualgrowthrateofGross
DomesticProductinrealtermsvariedbetween6.8$and7«9$»comparedto
theCommunity'sgrowthrateoflessthan3$.IntermsofGNPpercapita
(1976)thefivecountriesrangefrom$250inIndonesia,$380inThailand,
$410inPhilippines ,$860inMalaysiato$2700inSingapore.Whilst
collectively thisplacestheminthecategoryofmiddleincomecountries
accordingtotheWorldBank'sclassification therequirements ofthe
inhabitants oftheregionarefarfrombeingmet.
*
4.TheASEANregionisexceptionally richinnaturalresources.Itis
theprincipalworldsupplierofnaturalrubber(80$),abacafibres(80$),
tropicalhardwoods(75$)*palmoil(60$),andcoconut(50$)aswellas
beingasignificantproducerofoil,copper,sugar,coffee,tobacco,rice
andtin* ,
5.AsfarastradebetweentheCommunityandASEANisconcernedthe
tablebelowindicatesthatbetween1973and1978therehasbeenasub­
stantialgrowthin-tradebetweenthetworegions..
..*
mioEUA
:.-r- ..,'1973 1978(provisional)
ECimportsfromASEAN 1.777'\4*280
ECexportstoASEAN I.656 3.860
Thishasoverthe5yearperiodledtoaslightincreaseinASEAN'sshare
ofCommunity'importsfpom2.11$to2.34$andinitsshareofexportsfrom
2.05$to'2.22$./.''

Ifonthe other hand the situation islooked atfrom theASEAN point of
view over theperiod of1973 to1977 (1978 figures arenotavailable "but
areforecast tonotchange thepicture )theCommunity 'sshare ofits
exports fell from 15»7$ "to14*7$ anditsshare ofASEAN imports fell from
16.5$ to14.6$ .Japan isnowASEAN 1sprincipal trading partner with over
25$ofitsexternal trade ,followed "bytheUSAwith over 20$ .
«
Inthefield offoreign investment Japanese investments inASEAN have
grown rapidly andattheendof1977 were estimated torepresent 32$of
total foreign investment over theprevious tenyears .Community invest­
ment ontheother hand hasfallen during thesame period andstands at14$
ofthetotal .TheUSAhad16$ofthetotal .
t
III .Objectives ofthe A^reement
1.Thepicture which emerges .i6that there isagrowing political and
economic cohesion between themembers oftheAssociation ,and that the
region islikely tobeoneofthefastest growing areas oftheworld in
thenext twodecades .Despite this ,ascanbeseen from thefigures ,the
Community hasfailed tokeep upwith theopportunities ,this inspite of
thefact that itisaregion where Europe hashadhistoric trading and
investment links andconsequently should beable tocompete from a
position ofknowledge .
2.TheMinisterial Meeting recognized theproblems andresulted inmutual
agreement onanumber ofmeasures destined toimprove this situation in
amongst others thefields of .trade ,industrial cooperation ,scientific and
technological cooperation .Theactions which have already resulted 'will be
reinforced andgiven more direction bytheconclusion ofacooperation
agreement . , '
».¥' '
3.Prom the side oftheASEAN countries anagreement woujid bealogical
follow-up totheMinisterial M.eeting andalso totheoffer bythe
Community in1973 .Itwould mark aspecial relationship with theCommunity
which would bemade clear bythefact oftheagreement being thefirst
that theASEAN countries hadnegotiated collectively .ASEAN considers
anagreement would reinforce theCommunity 'sinterest inASEAN ,and
encourage agrowth ofeconomic and commercial cooperation.' Itwould fulfil

anASEAN desire toobtain a "better balance initsexternal relations .It
would indicate toASEAN that theCommunity wasready todiversify its
cooperation with theThird World ."Itwould fortify .
theview that theCommunity was anatural partner ofASEAN byvirtue of
similar economic philosophies andacomplementarity ofeconomic interests .
ASEAN isanxious toattract greater European investment andtechnology to
develop theregion.and feels anagreement would beanimportant impulse
forthedevelopment ofinternal ASEAN cooperation .
4.Prom theEuropean side intheJoint Declaration oftheMinisterial
Meeting ithasalready -"been said that it"welcomed thefavourable develop­
ment ofASEAN asaregional organisation committed toeconomic growth ,
1
social progress andcultural development andrecognized ASEAN asa
factor ofstability andbalance which contributes tothemaintenance of
peace inSouth East Asia ."Attheeconomic level itisinEurope 'svital
interests tobring about closer links with oneofitsmajor suppliers of
commodities .Itisalso inEurope 'sinterest tohave closer economic
links with oneofthe fastest growing regions interms ofitspurchasing
power and ,itsdevelopment asasingle market .Further cooperation with
ASEAN isasignificant element instrengthening thecompetitiveness of
European industry an,dfinally theASEAN countries canbeabase for
supplying theother markets ofthePacific region .
5.The aim ofboth sides istherefore tocreate aframework inwhich no
kind ofcooperation would beexcluded inadvance andinwhich every sector
ofEuropean andASEAN economic life could besuccessfully encouraged to
cooperate .Such cooperation would beofmutual interest andbenefit to
both sides . " ' . '
«>
#.V ( ' '
IV.Contenta ofthe Agreement
f
1.In (conformity with therecommendations oftheMinisterial Meeting of
November 1978 theCommission hasheld three rounds ofexploratory dis­
cussions with 'representatives ofASEAN andthis section sets outthe
results ofthose discussions .The ASEAN side based itsapproach onthe
outcome oftheMinisterial Meeting .

2.Intheview ofboth sides the agreement should inprinciple t
i) aimtoconsolidate ,deepen anddiversify commercial andeconomic
relations between thetworegions within the framework which the
agreement will provide ;
ii) benon-preferential andofanevolutionary nature andable to
take account ofpolitical and economic developments onboth
sides ;%
iii) bebetween equal partners butrecognise thelevel ofdevelopment
oftheASEAN countries ;
iv) recognise theemergence ofASEAN asaviable andcohesive economic
grouping . /■ . '
3.The contracting parties totheagreement would betheCommunity onone
side and the five member countries ofASEAN onthe other side .
4.The contents oftheagreement should bemodelled onthe existing
commercial andeconomic cooperation agreements with India ,Mexico and
Canada ,buttake into account thefact that this will beforthefirst
time anagreement with five countries which cooperate closely inthe
framework ofanassociation .
5.The proposal for *negotiating directives issetoutinAnnex II.
Some ofthe important points which should benoted are set outbelow :
i) 'thetext ofanyclause onmost favoured-nation treatment will
depend upon theprogress of .theapplications byThailand and
thePhilippines toaccede tothe General Agreement onTariffs
andTrade ;» x­
ii) inaccordance with theMinisterial Declaration thecontracting
parties would ,undertake toseek their counterparts' views on
w tactions being considered which could have anadverse effect on
i'trade between them ;
iii)»foneimportant objective should betobring about industrial
cooperation .ASEAN attaches major importance tobringing about
cooperation between industries inthetworegions ;(l)
/
(l)Inparallel tothecooperation envisaged here theCommission services
axecontinuipg their examination ofthepossibilities ofestablishing
anEEC/ASEAN Trade andInvestment Forum asdecided upon inthe
Ministerial Meeting .i)
ii)
iii)
iv)
•••

special reference should ,bemade tomining activities andaccess
toandprocessing ofresources ,given theinterest expressed "by
both sides inthis field during theMinisterial Meeting ;
special reference should bemade tocooperation inthefield of
energy ;
both sides attach importance tothemaintenance and improvement
ofthe investment climate and are anxious tofacilitate this
through investment promotion andprotection arrangements .The
ASEAN countries have already indicated during theMinisterial
Meeting their readiness toextend thepattern ofinvestment
promotion andprotection arrangements .During themeeting both
sides agreed toseek toimplement this atanearly date ,
theconcept ofeconomic cooperation would also cover science and
technology aswell asenvironment andtransport and communications ,
totheextent that there areCommunity activities inthese areas ;
theinclusion ofcooperation with EURATOM ortheconclusion ofa
separate protocol oricoal andsteel isnotenvisaged with ASEAH ;
all initiatives within the framework oftheAgreement would be
promoted and supervised bythe Joint Cooperation Committee which
I
would also supersede theexisting Commission-ASEAST Joint Study
Group ;
oneimportant innovation compared toother Community non-prefe -
rential agreements would betheinclusion ofaclause relating to
financial cooperation asameans towards achieving theobjectives
ofeconomic cooperation .This would notmean that theagreement
would cover development aid .Itrefers inparticular tothe
encouragement ofcooperation between sources offinance inthe
tworegions ,inparticular the commercial banking sector andpublic
..Vdevelopment finance institutions .This .ismaccordance with the
^Declaration oftheMinisterial Meeting ;
ASEAN atone stage inthediscussions proposed thecreation ofa
small fund tofacilitate theoperation oftheagreement .The
Commission asked ,ifASEAN wasready tomake this ajoint fund but
after long deliberations theASEAN countries were notready to
*
participate .illsuch afund .

The Commission isoftheopinion that theright ofMember States tomain­
tain existing agreements foreconomic cooperation and ,where appropriate ,
toconclude new ones ,should notbereferred tointhetext oftheagree­
ment .This ,being aquestion involving therepartition ofcompetence as
between Community andMember States ,isaninternal matter ,andthe
Commission considers that themost appropriate way todeal with itwould
betoinscribe the%following statement intheminutes oftheCouncil of
Ministers j
"Inthefield ofeconomic cooperation Member States retain thepower
toundertake bilateral activities and toconclude ,where appropriate ,
z' '
newcooperation *agreements with themember countries ofthe
Association ofSouth East Asian Nations without prejudice however to
therelevant provisions oftheTreaties establishing theCommunities
orprovisions adopted onthebasis ofthese Treaties ,and subject ,
furthermore ,tothecondition that anybilateral action undertaken
byMember States must notaffect theproper functioning anddevelop­
ment oftherelations established under thepresent agreement ".
i ♦
I
 
* *
V. Conclusions
The Commission recommends tothe Council :
«
-toauthorise' ittoopen negotiations with themember countries ofthe
Association ofSouth East Asian Nations fortheconclusion ofanagree­
ment forcommercial andeconomic cooperation ;
-toapprove thenegotiating directives herewith attached . *

ANNEX I
RECOMMENDATION
for aCouncil Decision
authorising "theopening ofnegotiations with themember countries ofthe
Association ofSouth East Asian Nations
«
THE COUNCIL OPTHE EUROPEAN COMMUNITIES
Having regard totheTreaty establishing theEuropean Economic Community ;
Having regard totheRecommendation from theCommission that negotiations
beauthorised foracommercial andeconomic cooperation agreement with the
member countries ofthe Association ofSouth East Asian Nations -Indonesia
Malaysia ,Philippines ,Singapore andThailand ;
t
Whereas theaimofthese negotiations should betoconclude anagreement
forcommercial and'economic cooperation ;
HAS DECIDED ASFOLLOWS »
Article 1
TheCommission ;ishereby authorised toopen negotiations with themember
countries oftheAssociation ofSouth East Asian Nations –Indonesia ,
Malaysia ,thePhilippines ,Singapore andThailand -for theconclusion of
anagreement forcommercial andeconomic cooperation between theEuropean
Economic Community andthemember countries oftheAssociation ofSouth
East Asian Nations .
:>.r , • '
*
Article 2
I '
F
'I
TheCommission shall conduct these negotiations inaccordance with the
directives annexed hereto ,inconsultation with therepresentatives ofthe
Member States . ~. S ,
Done at . .'i .
for the Council .

-annex ,iy
Draft ."•';VV 'v
NEGOTIATING DIRECTIVES
A.NatureoftheAgreement
ι
1.Scope
%
Theaimofthenegotiations shouldbetoconcludeanagreementforcommer­
cialandeconomiccooperation betweentheEuropeanEconomicCommunityand
Indonesia,Malaysia,Philippines ,SingaporeandThailand,membersofthe
Association ofSouthEatftAsianNations.
2.Flexibility '-
Theagreementshouldbeofanevolutionary nature,flexibleenoughtotake
accountofchangesinthepoliticalandeconomicdevelopmentofthecon­
tractingparties.NofieldforeconomiccooperationwithinCommunitycom­
petenceshouldbeexcludedinadvance.Thepartiestotheagreementwould
useaJointCooperation Committeeastheinstrumentforexploringand
implementing practicalcooperationpossibilities .
3.Duration
Theagreementwouldbeofanindefiniteduration.Itcouldbedenounced
afterfiveyearsbyanyofthepartiestotheagreementwithoneyear's
notice.' ' ', ■
B.ContentsoftheAgreement
•» ' '*•<« ,
«V
1.Preamble
ut' •t
p.m./• ' '■
I'
2.Cdmpnercial Cooperation .
Thenegotiators shouldsecureprovisionswhichwouldcommitthecontracting
partiesto:< y
,-•/ -/'./
•••/•••
I

-amost-favoured-nation treatmentclause;1
-thedevelopment anddiversification oftheirtradetothehighestpossible
leveltakingintoaccounttheirrespectiveeconomicsituations ;
-studywaysandmeansofovercomingtradebarriers(andinparticular
existingnon-tariffandcjuasi-tariff "barriers)takingintoaccountthe
workofinternational organisations ;
-seekinginaccordancewiththeirlegislation ,policyandobjectivesto:
-cooperatebilaterally andmuItilaterallytosolvecommoncommercial
problemsincludingthoserelatedtocommodities ;
-grantthewidestfacilitiesforcommercialtransactions ;
-takeaccountofneedsandinterestsonaccesstoandfurtherpro­
cessingofresources;
-bringtogethereconomicoperatorsinthetworegionswiththeaimof
creatingnewtradepatterns;
-studyandrecommendtradepromotionmeasureslikelytoencouragethe
developmentofimportsandexportsinordertofosterbalancedtrade;
»-seektheotherparties'viewsonmeasureslikelytohaveanadverse
effectontrade. ,
3.EconomicCooperation
a)Objectives
Inthelightofthepotentialcomplementarity ofinterestsofthecon­
tractingpartiesandoftheirlong-terraeconomiccapabilities theywould
committhemselvestobringaboutmutualeconomiccooperation aimedatt
-th©encouragement ofcloserindustriallinksthroughmutuallybeneficial
investment ;
-theencouragement oftechnological andscientificprogress;
-theopeningupofnewsourcesofsupplyandnewmarkets;
-thecreationofnewemploymentopportunities .
'.f'
b)Fields
Inviewoftheflexiblenatureoftheagreement,nofieldinwhicheconomic
cooperation couldtakeplacewithinthecompetences ofthecontracting
partieswouldbeexcludfedinadvance.
.I'''/',/

c)Means
The contracting parties could encourage andfacilitate inter alia >
-acontinuous exchange ofinformation relevant toeconomic cooperation as
well asthedevelopment ofcontacts andpromotion activities "between
firms andorgani sations inboth regions ;
-thefostering ,"between respective firms ,ofindustrial andtechnological
«
cooperation ,including mining ;
-themutual recognition ofthenecessity tomaintain and improve a
favourable investment climate ,particularly through investment promotion
andprotection agreements ;
-cooperation inthefields ofscience andtechnology ,inenergy ,
environment andtransport andcommunications ;
-financial cooperation asameans towards achieving theobjectives of
economic cooperation .
4.Institutions
A3>int Cooperation Committee 'should becreated tosupervise andpromote
1
thevarious economic andcommercial cooperation activities envisaged .It
should beempowered tocreate Subcommissions toassist itintheper­
formance ofits tasks .
5.Territorial application
»
p.m. , '
" '* 1-
6.Languages ofthe Agreement
p.m. *- •• -
7.Other ^Agreements ' <