ASEAN agrees to further talks on new free trade area

ASEAN agrees to further talks on new free trade area

CANBERRA (AFP): Australia won approval from the Association of
South East Asian Nations (ASEAN) yesterday for further
consideration of its plan for a free trade area covering
Southeast Asia, Australia and New Zealand.

Senior officials from the six ASEAN countries agreed the plan
"merited further discussion" after talks with their Australian
counterparts during the 16th ASEAN-Australia Forum here.

A formal linkage between the ASEAN Free Trade Area (AFTA) and
the Australia-New Zealand Closer Economic Relations (CER) trade
agreement was first raised by Thai deputy prime minister Supachai
Panichapakdi last November.

It was enthusiastically endorsed by Prime Minister Paul
Keating during an April visit to Thailand, current chairman of
ASEAN.

Its supporters say an AFTA-CER free trade area, linking
ASEAN's A$500 billion Australian (US$350 billion) economies with
the similarly sized Australian-NZ economies, would create a major
trading force in the Pacific and significantly enhance the
economic strength of all members.

The AFTA agreement would see the ASEAN nations of Brunei,
Indonesia, Malaysia, the Philippines, Singapore and Thailand
reduce tariffs on imports from within the group over a ten year
period.

Progress

"The forum noted the progress in the implementation of the
AFTA," its joint media statement said.

"ASEAN noted that AFTA is outward-looking, and that with the
enhanced cost competitiveness of manufacturing in ASEAN with the
larger and more integrated ASEAN market, Australian investors can
enjoy economies of scale in production.

"This will in turn stimulate the growth of industry in the
region for direct investment."

Australia wants closer links with AFTA because it fears such a
trade bloc would only lower tariffs on inter-ASEAN trade to the
disadvantage of producers in countries such as Australia, who
fear lost sales due to the higher tariffs.

A foreign affairs department examination of the implications
for AFTA on Australia found the overall impact would be marginal,
with some lower sales eventually offset by higher growth within
ASEAN.

Foreign Minister Gareth Evans told the opening session of the
forum on Tuesday he expected some form of CER-AFTA link by the
end of the century.

"Economically (over the next 20 years) Australia and ASEAN are
certain to be even more closely intertwined, in line with the
increased complementarity of our economies," Senator Evans said.

The two-day forum, attended by about 100 senior ASEAN
government and business representatives, was described by
Australian officials as a key vehicle for advancing Australia's
priority national aim of engagement with Asia.