The 10-state Association of Southeast Asian Nations (Asean) must embrace free trade in services and overhaul its institutional structure if it is to compete effectively on the global stage, the group's secretary-general has said. Rodolfo Severino told the South China Morning Post that Asean's leaders faced critical decisions about reforming the trade club in the coming years, and they should dramatically extend its liberalisation programme. 'I think the leaders now are at a point when they will have to decide where Asean is headed . . . We have done away with most tariffs within the region on intra-regional trade but that is not all there is to regional integration, so we have to move to a higher stage,' he said. His comments come ahead of Asean's annual leaders' summit, which opens in Cambodia on Sunday. They also come as he nears the end of his five-year term as secretary-general, in December. 'We have the Asean Free Trade Area, we have minimal tariffs on trade among one another and now we have to lay the groundwork for doing the same thing in services and strengthening the transport and communication linkages,' he said. Trade in goods between Asean's core members - Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand - attracts tariffs of zero to 5 per cent, although Kuala Lumpur has an exemption for its vehicle industry. Asean, which has half the population of China but about the same gross domestic product, has seen foreign direct investment slump as firms have been drawn to the mainland. Talks on forming a free-trade agreement between Asean and China within 10 years are under way. 'I think that in the rather near future the [Asean] secretariat, or some body, should be given the mandate to ensure compliance with Asean commitments,' he said. 'The secretariat has to be encouraged to take more initiative in pushing regional economic integration and other forms of co-operation.' Asean's institutional mechanisms are - deliberately - rather weak. In recent years, Malaysia has lobbied to host a new body to co-ordinate Asean's burgeoning relations with China, Japan and South Korea, its so-called plus-three partners. But this proposal has failed to make headway. 'We have to move to the next stage and that has implications for the institutional arrangements. You need more stringent measures for compliance with commitments,' he said, adding 'The frameworks are there, the foundations are there, but we need to move faster on taking actual measures that would be considered by investors and businessmen to be of real benefit.' His call echoes that of Singapore Prime Minister Goh Chok Tong who earlier this month threw his weight behind moving Asean towards a model of the European Economic Community, the forerunner of the European Union.