Trade ministers meet in Thailand on free trade
Updated
By the start of next year, the ambitious project to discard 100,000 trade-distorting tariffs across twelve countries in the region is scheduled to be up and running. But there's concern that a lot stands in the way of implementing the ASEAN-Australia-New Zealand Free Trade Agreement. The issue will be among those discussed by ASEAN and other key economic ministers in the Thai capital Bangkok on Saturday.
Presenter: Linda Mottram, Canberra correspondent
Speaker: Simon Crean, Australia's Trade minister; Professor Hal Hill, South-East Asian economic expert, Australian National University
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MOTTRAM: Australia's trade minister Simon Crean will attend the meeting and he has several issues on his mind, including making sure this very big free trade agreeement goes ahead on schedule. Its ambitious. One hundred thousand tariffs to reform over a number of years, in 12 countries at different levels of development, with combined GDP of more than three-Trillion Australian dollars.
CREAN: This is a significant free trade agreement because it involves a market opportunity for Australia of some 600 million people in a region which is the fastest growing still in the world.
MOTTRAM: Mr Crean will also join a wider meeting of economic ministers of the East Asia Summit, where Australia wants a permanent seat at the table for economic discussions.
CREAN: Building on the success of that free trade agreement, the next logical step is to develop the regional architecture, and we are seeking to get progress on the EAS, ASEAN plus six.
MOTTRAM: But Mr Crean's assumption about the success of the free trade agreement is not shared by all. Australia has commited up to $25 million to help get the agreement working by January the first, and Mr Crean's office expresses confidence about the processes being on track across the member countries. But there's been caution at best about progress and the prospects in such a short time frame.
Professor Hal Hill is an expert on South East Asian Economy and Australia-ASEAN relations at the Australian National University. He says the January first start date for the ASEAN-Australia-New Zealand Free Trade Agreement is a desirable goal but is unlikely to be met.
HILL: The international trade system and the regional trading system is really horribly complicated. In fact its in a mess.
MOTTRAM: Among the reasons for that, Professor Hill says, is the stalled world trade talks, a directionless World Trade Organisation, hesitation among nations about globalisation, on the back of the global financial crisis in part, and very complex, almost unworkable regional architecture.
HILL: So you've got the East Asian Summit is one, you've got APEC still around is another, you've got a whole lot of sub-national initiatives like ASEAN, SARC, CER and so-on. Then you've got the agreements between these regional actors. Then you've got a whole lot of bilateral initiatives, and so you put the three or four together and the spaghetti bowl, or what Jaglish Bagwati called termites in the system are becoming ever more complex.
MOTTRAM: Nonetheless it was only earlier this year when this particular very ambitious agreement was entered into in the full knowledge of those complexities. Do you have a sense that perhaps the ASEAN countries weren't seroiusly committed to it?
HILL: Well I think it's a case where the politics drives the trade ministers with the best of motives to want to do these trade deals but in practice they're extremely difficult to implement. Take the case of AFTA-CER where you've got these overlapping bilateral agreements. So Australia has an overlapping bilateral agreements. So Australia has an FTA with Singapore and one with Thailand, and we're negotiating with Philippines, Indonesia and Malaysia. Now when a consignment comes in from Thailand to Australia is it going to be recorded as coming in under the Thai-Australia FTA or will it come in under the AFTA-CER agreement.
MOTTRAM: Professor Hill also says the political will and technical capacity are absent in much of the region to get the ASEAN, Australia, New Zealand Free Trade Agreement in place. And there's the more general point, he says that more and more firms are bypassing the region's FTA's because they're administratively complex and offer little advantage.
HILL: A good case in point is AFTA, the ASEAN Free Trade Area, where currently only five per cent of intra-ASEAN trade actually avails of the facilities under AFTA.
MOTTRAM: Professor Hill says the real focus should be on getting a global free trade deal and securing reform of domestic economies. Thailand is a case in point. It's vigorously signed FTA's Professor Hill says, but it's domestic trade regime has barely changed in decades.
