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Australia will consider joining the P4 free trade group following the United States' decision to negotiate full entry to the existing pact between New Zealand, Singapore, Chile and Brunei.
Canberra sees the transpacific partnership as a potential stepping stone to a broader regional agreement, and as a means of ensuring Australia is not damaged by the growing number of free trade agreements throughout the Asia Pacific.
The decision to consider P4 membership follows a major review of export policies and programmes supporting the concept of FTA "clusters" that could eventually develop into the proposed free trade area of the Asia Pacific.
Washington's move to fully embrace the group, and growing interest from other countries, has also spurred Australia's decision.
"FTAs in our region that are genuinely comprehensive, covering goods, services and investment, will contribute to closer economic and trade co-operation, and help to sustain regional economic growth and prosperity," Trade Minister Simon Crean said.
"It is therefore very much in Australia's interests to consider participation in this initiative.
"The transpacific partnership initiative has the potential to make a positive contribution to continued economic liberalisation and integration in the Asia Pacific region."
Although not abandoning its policy emphasis on a new global agreement through the stalled World Trade Organisation talks, the P4 move and the outcome of the export review indicate a shift in direction by the 10-month-old Labor Government.
With the Doha round in disarray and warnings that Australia could be hurt by the mushrooming of FTAs in the region, Labor is now more inclined to continue the former conservative government's stage-by-stage approach.
In addition to the Closer Economic Relationship agreement (CER) and the deal linking CER to the 10-member Association of Southeast Asian Nations, Australia has free trade pacts with the US, Singapore and Thailand, and is negotiating with other countries, including China and Japan.
The P4 partnership sits well with Australian policy, and Canberra will soon release a discussion paper and a process of public consultation ahead of what Crean said would be detailed consideration of possible membership.
"We share the goal of the transpacific partnership members and the US of working to achieve a high-standard, comprehensive free trade agreement that brings together countries from the Asia Pacific region for their mutual benefit and economic prosperity," Crean said.
The review of export policies and programmes warned that without an expanded network of FTAs, Australia could suffer.
It said that in the past 15 years the number of bilateral and regional FTAs in the Asia Pacific had more than tripled to about 100, with at least 50 under negotiation.
The review said Australia had lost some market share because of other countries' free trade pacts, and needed an active FTA agenda to head off future risks and expand opportunities.
The review recommended membership of P4, which was comprehensive, eliminated most tariffs when it came into force in 2006, and pushed commitments on services beyond those of the WTO.
"The review sees the P4 as a potentially valuable building block for a region-wide trade agreement," its report said.
It said Canberra should focus in the short term on FTAs that included provisions able to attract other members, and in the medium and long term on drawing different pacts or clusters of FTAs into region-wide and multilateral arrangements.
