U.S. criticizes ASEAN as Myanmar overshadows new charter

SINGAPORE (Reuters) - Southeast Asian nations called on Myanmar on Monday to move towards democracy after facing criticism and sanctions from the United States and Europe.

The Association of South East Nations (ASEAN) said Myanmar should work with the United Nations on democracy and release political detainees, but barred U.N. envoy Ibrahim Gambari from briefing a summit in Singapore.

The grouping has criticized sanctions on Myanmar and rejected calls for its suspension from ASEAN, prompting some Western officials to put in doubt economic deals.

International division over military-ruled Myanmar, after its September crackdown on pro-democracy protestors, has also overshadowed the group's plan to sign a charter on Tuesday that also aims for free trade and economic integration by 2015.

Philippine President Gloria Macapagal Arroyo said the Philippines might not ratify the charter if Myanmar did not commit to democracy and release opposition leader Aung San Suu Kyi, who met a senior junta official on Monday but is detained.

"Until the Philippine Congress sees that happen, it would have extreme difficulty in ratifying the ASEAN charter," Arroyo said in a statement.

The top U.S. trade negotiator, Susan Schwab, said a free trade deal between Washington and ASEAN was unlikely because of "the political situation".

"The credibility and reputation of ASEAN has been called into question because of the situation in Myanmar. Business as usual can't be business as usual," Schwab told reporters.

"It's impossible to imagine a free trade agreement with ASEAN in the near term given the political situation."

SANCTIONS

The United States expanded its sanctions against Myanmar's rulers in October and the Senate voted unanimously on Friday to urge ASEAN to suspend Myanmar. The European Union adopted sanctions on Monday against 1,270 firms in Myanmar.

But ASEAN has criticized the sanctions, while members Vietnam and Laos told Reuters they had no plans for democracy. The group said Myanmar had to work for a peaceful transition to democracy and address economic problems.

Singapore's prime minister, Lee Hsien Loong, said: "Most leaders expressed the view that Myanmar could not go back or stay put. The process of national reconciliation has to move forward and the U.N. plays a vital role in this process."

Singapore banned all outdoor protests on Myanmar but small groups of international students briefly defied the ban.

Diplomats say the ASEAN charter, which gives the group a legal identity, means that the current option of excluding Myanmar from deals will end.

Free trade talks between ASEAN and the European Union could also stall. Together the U.S. and EU account for 27 percent of ASEAN's exports and a third of its inward direct investment.

Japan, one of the strongest U.S. allies in Asia, said on Monday that it was neither for nor against the sanctions.

"We do not want to side with our U.S. ally nor with Singapore on this. The Japanese position is more nuanced," a Japanese government official told reporters in Singapore, adding Japanese Prime Minister Yasuo Fukuda would demand an explanation for the killing of a Japanese photographer by Myanmar soldiers.

(Additional reporting by Koh Gui Qing, Vivek Prakash, Daryl Loo and Geert De Clercq; editing by Elizabeth Piper)