Chile and others test waters of free trade

By Collin James

Chile might join the New Zealand-Singapore free-trade initiative launched during Apec, adding impetus to the trend towards bilateral and trilateral trade deals around the region.

While New Zealand and Singapore press on with their bilateral talks, the three countries said yesterday they would also study whether Chile might join.

"This links the Americas through CER into East Asia," said International Trade Minister Lockwood Smith.

A deal might also mark a step towards reviving New Zealand's proposal for P5, a free-trade grouping involving the three countries plus the United States and Australia.

"This brings P5 into focus, although it's still not in prospect," said Dr Smith.

The P5 deal foundered on Australian scepticism about the benefits and the United States' distraction by other issues.

The flurry of announcements about bilateral talks suggests new life is being breathed into the free-trade cause. Officials are hailing this as a milestone achievement for the Auckland Apec meeting -- though one that may not be fully apparent for some time.

Other proposals announced over the past few days are:

* A semi-official exploratory study of a New Zealand-South Korea trade agreement, marking a shift of direction for Korea. The study will be conducted by the New Zealand Institute for Economic Research and a Korean state economic research institute.

* South Korea and Chile will discuss a free-trade area.

* Japan and Mexico will hold talks on an investment agreement that both said might develop into a full-fledged trade deal.

* Japan also held Apec's first trilateral meeting with South Korea and the United States, and has been exploring separate free-trade possibilities with Korea. Although the aim is apparently more related to security in case of an American military withdrawal from South Korea, this represents a "tectonic" shift in Japan's previously antipathetic attitude to free trade, says a trade observer.

* Mexico is pursuing a free-trade agreement with the European Union.

* Singapore will look into a possible free-trade pact with Mexico.

These initiatives are still confined to a few countries. But officials are interpreting them as providing new impetus to the free-trade cause - an important development as the World Trade Organisation round looms in November.

If this push continues, other countries may begin to fear being left out, which could give the movement to free trade even more drive.