Government to consult over Asean trade talks

1.00pm

The Government is to begin consulting with the business sector and others over potential free trade talks with Association of South-East Asian Nations (Asean) ministers.

Trade Minister Jim Sutton met with his Asean counterparts in Jakarta over the weekend and reached agreement on terms to recommend to their leaders for initiating a free trade agreement.

Economic and trade ministers from Australia, New Zealand and the 10-member Asean are at the meeting in Jakarta.

In April Asean proposed launching free trade talks with Australia and New Zealand and a final decision on whether to begin negotiations will be made at the Asean leaders' summit in Laos in late November.

Prime Minister Helen Clark plans to go to that meeting.

Asean comprises Thailand, Singapore, Indonesia, Vietnam, the Philippines, Brunei, Laos, Myanmar, Malaysia and Cambodia.

Mr Sutton said the progress was "encouraging".

Asean officials have even talked about Australia and New Zealand joining the talks with China, but Mr Sutton recently poured cold water on that idea.

Joining those talks would make already complex negotiations more difficult and would stretch New Zealand's negotiating resources too far, he said.

New Zealand is expected to announce formal free trade talks with China at an Asia-Pacific Economic Co-operation (Apec) forum meeting in Chile in November.

Mr Sutton also announced over the weekend that New Zealand and Malaysia had agreed to undertake scoping studies on a possible free trade deal.

Australia and Malaysia made a similar agreement to carry out scoping studies for a possible free trade agreement about a week ago.

Mr Sutton has told NZPA that the Asean initiative is partly a reaction to China doing deals with Australia and New Zealand.

Asean and Japan also agreed over the weekend to start negotiations on a free trade agreement in April 2005.

A Japan-Asean free trade zone would combine the world's second-biggest economy with countries that together boast an annual trade volume of well over US$700 billion ($1.09 trillion), roughly equal to Japan's, and a population more than four times as large.

Asean and China have already been working on a deal that could result in the world's biggest free trade zone of nearly two billion people with a combined gross domestic product of US$2 trillion by 2010.

That is the target date for agreement with Asean's six more developed countries -- Singapore, Thailand, Malaysia, the Philippines, Indonesia and Brunei.

The target for China and the four other Asean members (Vietnam, Myanmar, Cambodia and Laos) is 2015.

Asean leaders agreed last year to transform the region into a giant European Union-style free trade zone by 2020.

Towards that goal, the ministers agreed on Friday that tariff and non-tariff barriers in 11 sectors should be removed by 2007 by Asean's six more developed members and 2012 by the rest.

Those proposals would be presented to Asean leaders for approval at a meeting in Laos in November.

Aside from China and Japan, Asean is also working on a free trade agreement with India and South Korea.

However, enthusiasm about moving fast to establish free trade agreements varies. Not all Asean members feel ready to compete on level playing fields in manufacturing or agriculture.

Mr Sutton told NZPA the decision by the Asean, Australian and New Zealand ministers on terms to take to leaders recommending they start negotiations for a free trade agreement was a major and necessary step towards regional economic integration.

"The combined economies of the total group would be about a trillion US dollars. Quite a number of our top 10 trading partners are within the ranks of Asean.

"Economic integration within our region -- and we are of course geographically part of Southeast Asia -- is very desirable, both in the long term view for reasons of security and stability as well as for trade," he said.

- NZPA