[asia-apec 1612] NZ Herald 9.10.00 on ASEAN-CER FTA

[APEC Monitoring Group]

Wheels come off Asian market bid

09.10.2000 - 

Plans for a free-trade region including New Zealand, Australia and Southeast Asia have collapsed, with Asian countries ruling out the idea. 

A meeting of regional Trade Ministers in Chiang Mai in Thailand has rejected a New Zealand-Australia push to bring down trade barriers between the countries, opting instead for a Malaysian proposal that will result in more talks between officials on the idea of a closer economic partnership. But not a single tariff will be lowered. 

Australia and New Zealand were hoping for a deal that would lead to a single market of 530 million people. 

While officials from Asean nations (Malaysia, Indonesia, the Philippines, Thailand, Singapore, Brunei, Cambodia, Vietnam, Laos and Myanmar) had recommended that formal talks on the details of a free-trade zone should begin, the free-trade plan failed at the political level with Malaysia, Indonesia and the Philippines opposed. 

Malaysia's Trade Minister, Rafidah Aziz, said that the environment was "just not right" to start the negotiations. 

The free-trade zone had to be looked at in totality. "It has to be a political decision and then we have to have the right environment. It's not simply an economic thing, it's political." 

Mrs Aziz said Malaysia had not blocked progress. "It is very important that we do things in a pragmatic and realistic manner. Please get rid of the notion that we put a brake on anything at all." 

Indonesian Trade Minister Luhut Pandjaitan echoed the "pragmatic and realistic" line. "We are not yet ready from the Indonesian side to set up a wider free-trade zone." 

Thailand Deputy Prime Minister Supachai Panitchpakdi said: "We can't be over-ambitious. It's not an easy thing to merge the two regions together." 

Asean ministers also denied there had been setbacks. "You talk about two setbacks. I think we were talking about two progresses being made," Dr Supachai said. 

Malaysia, Indonesia and the Philippines have thorny relations with Australia, and there is reported to be some political mistrust, along with protectionist pressure, within those countries. 

While the decision seems to have ended hopes of a single trade market soon, ministers on all sides are still claiming progress. 

"It's a very significant step forward," said New Zealand Trade Minister Jim Sutton. "It is now an inter-governmental process, which is a necessary step. It's gone better than I had expected, better than I had hoped." 

It has been estimated that a zone would increase New Zealand's GDP by $17.7 billion over the next 20 years. 

Australian Trade Minister Mark Vaile said the outcome of the meeting was a significant step forward in terms of Australia's economic relationship and partnership with the Asean grouping. 

"Never before have we moved this far forward in terms of the development of that relationship." 

Federated Farmers president Alistair Polson said the outcome of the Asean meeting was encouraging. 

The recommendation by senior officials that New Zealand and Australia become part of the Asean free-trade area was one of several developments that put him and the group's chief executive, Tony St Clair, in good heart as they headed to Canada for the fourth Cairns Group farm leaders meeting. 

The regional trade meeting also included talks with the European Union, and discussion about a new round of World Trade Organisation talks. A WTO meeting in Seattle last year failed to agree on an agenda for trade reform. 

Dr Supachai said Asean countries agreed there was a need for the WTO to take more notice of developing countries. 

- REUTERS, NZPA