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.