Asean, Australia, New Zealand Sign Free-Trade Deal

By Gemma Daley and Shamim Adam 

Feb. 27 (Bloomberg) -- Southeast Asian nations signed a free trade pact with Australia and New Zealand, boosting the regional bloc’s efforts to increase commerce amid the global economic recession. 

The 10-member Association of Southeast Asian Nations and the three non-member nations will eliminate or lower tariffs on products such as coffee, dairy, minerals, cars and vegetables in the next 12 years. The pact, estimated to boost trade by $12 billion, was signed in Cha-am, Thailand today. 

“Such a move is even more essential in these times of economic difficulties, when interdependence, cooperation, and openness are increasingly crucial to our economies and when paving the way for businesses to reap tangible benefits is vital,” Singapore Trade and Industry Minister Lim Hng Kiang said. 

Southeast Asian nations in 2007 agreed to open up their markets further in a bid to create an economic zone modeled after the European Union, without a common currency, by 2015. The group has said it needs to improve its competitiveness as China and India, the world’s two fastest-growing major economies, attract an increasing chunk of global investment. 

Asean’s trade with Australia and New Zealand was about $50 billion last year, and foreign direct investment by the two countries into the regional bloc totaled more than $1 billion, according to Singapore’s trade ministry. 

The agreement is aimed at bringing down barriers to trade as part of efforts to develop what it calls an Asean Economic Community. The agreement covers an area with a combined population of 600 million and an estimated GDP of $2.7 trillion. 

Barriers ‘Coming Down’ 

Asean’s agreement with Australia and New Zealand covers trade in goods, investment and services which include financial services and telecommunications. It also comprises of electronic commerce, intellectual property, competition policy and economic cooperation. 

“Trade barriers are coming down in the region,” Australian Trade Minister Simon Crean said in a statement. “This is the first trade agreement Australia has signed since the onset of the global financial crisis.” 

Asean includes Indonesia, Thailand, Malaysia, Singapore, Brunei, the Philippines, Cambodia, Laos, Myanmar and Vietnam. It was formed in 1967. 

To contact the reporter on this story: Gemma Daley in Canberra at gdaley@bloomberg.net Shamim Adam in Bangkok at sadam2@bloomberg.net