ASEAN aims to double trade with Australia, NZ in 10 years

ASEAN aims to double trade with Australia, NZ in 10 years

Agence France-Presse, Kuala Lumpur

Southeast Asian nations moved Monday to deepen trade ties with
Australia and New Zealand with the launch of a business council
aimed at doubling trade over the next decade.

Australia and New Zealand, jointly known as the Close Economic
Relations (CER), have long sought to boost ties with the
Association of Southeast Asian Nations (ASEAN) to tap advantages
of the ASEAN Free Trade Area (AFTA).

The AFTA-CER Business Council was a step towards cutting costs
and "removing undue constraints" in doing business in the two
areas, Malaysian Trade Minister Rafidah Aziz said when launching
the council.

She said trade between the two regions was still small. In
2000, trade with Australia hit US$16.3 billion and with New
Zealand $2.1 billion, or three percent and 0.3 percent of ASEAN's
global trade respectively.

Rafidah said she hoped the council would be more than "just a
flash in the pan" and urged them to work towards having a wider
outreach to forge competitive linkages among their businessmen.

Delegates said the council would flesh out details of two
Australian proposals to double trade between both regions over
the next 10 years and reducing transaction costs in trade
administration.

"The major reason for (the proposal) is that we believe by the
sheer size of ASEAN and CER, we can do much more trade between
ourselves," Australian delegate Peter Hanenberger told AFP.

"The trade we are doing is not bad, but by the world's
standards it's tiny. And because initially when you are tiny, you
must look for a paradigm shift."

Hanenberger said the proposal to cut trade costs was important
as red-tape and bureaucracy were "blown out of proportion" in
most countries.

He was optimistic that the council could come up with
recommendations to be included in a declaration to boost AFTA-CER
ties to be signed by ASEAN economic ministers at their annual
meeting in Brunei in September.

Under AFTA launched in 1993, ASEAN's six senior members --
Brunei, Indonesia, Malaysia, the Philippines, Singapore and
Thailand -- have dropped tariffs on trade with one another to
below five percent.

The six nations have until 2010 to remove all tariffs while
newer members Cambodia, Myannmar, Laos and Vietnam have until
2015.

ASEAN economic ministers at their weekend retreat in Malaysia
launched a fresh bid to become a powerful trading bloc by
adopting a new policy to accelerate the AFTA timetable to cope
with competition from China.

The ministers said a so-called "10 minus X" principle would be
adopted in areas such as open-sky policy, telecommunications,
financial services and equity investment.

Under the formula, member countries that are ready to open up
their markets can move forward without having to wait for rest --
a departure from the normal procedure of moving together.

The move to hasten liberalization comes as the region battles
to regain its investment charm amid rising competition for funds
from China and other parts of the world.

Last year, much of the foreign direct investment in Asia went
to China. A low cost base is seeing it displace Southeast Asia as
the continent's preferred manufacturing hub, economists say.

A World Bank report in March said China attracted US$44
billion of Foreign Direct Investment last year, up 16 percent
from 2000. Thailand's share fell 32 percent.

The ministers earlier met top executives from U.S. consulting
firm McKinsey & Co. The firm is doing a nine-month study for
ASEAN on how the region can boost its competitiveness. At the
same time, ASEAN is also conducting its own study comparing its
own trade and investment policies with those of China.