ASEAN rejects idea of free trade with Australia, New Zealand

ASEAN rejects idea of free trade with Australia, New Zealand

October 7, 2000

CHIANG MAI, Thailand, OCT 6 (UNB/AP) - The Association of Southeast Asian Nations on Friday rejected a proposal for establishing a dlrs 1 trillion free trade zone with Australia and New Zealand.

The economic ministers of the 10-member ASEAN, holding an annual meeting, instead agreed on a weaker proposal for a "closer economic partnership," a joint press statement said.

"We can't be over-ambitious. It's not an easy thing to merge the two regions together," Thai Deputy Prime Minister Supachai Panitchpakdi told a news conference.

The press statement said the economic partnership between the two regions would be defined further by senior officials who would make recommendations in 2001.

It marks a second setback for ASEAN's ambitions to expand free trade after Malaysia backtracked on a commitment to cut tariffs on its auto industry under the ASEAN Free Trade Area, or AFTA.

ASEAN economic ministers met Friday with their counterparts from the Closer Economic Relations pact, or Australia and New Zealand, to discuss a report by a joint task force that recommended setting up a tariff-free zone "at the earliest possible time."

The report said such a free trade area was "not only feasible but advisable" as it would create a market of about 560 million people and bring a benefit of dlrs 48 billion in additional gross domestic product by 2020.

Hiding his disappointment, Australian Trade Minister Mark Vaile described the agreement to develop closer economic relations as a "significant step forward."

New Zealand and Australia had been pushing for the move, but Malaysia, Indonesia and Philippines had voiced reservations. The other members of ASEAN are Thailand, Singapore, Brunei, Cambodia, Vietnam, Laos and Myanmar.

"At this point in time, the environment is just not right as far as Malaysia is concerned. Even within AFTA we are still evolving," Malaysia's International Trade and Industry Minister Rafidah Aziz said.

"we are so preoccupied. We want to make sure the AFTA works," she said. "We are not about being political heroes. We are talking about something that benefits the people."

On Thursday, Rafidah had said that there is already an AFTA-CER linkage and to expand it to a formal organization needs political decisions.

Indonesian Minister of Industry and Trade Luhut Pandjaitan said Friday that ASEAN has to be pragmatic and realistic.

"We are not ready yet from the Indonesian side to set up a free trade area between AFTA and CER," he said.

It had been originally hoped to begin negotiations between ASEAN and CER early next year and complete them within the year with a view to full integration by 2010.