Apec project inspires wider goal

By Colin James

The Singapore-New Zealand free trade initiative announced at the Apec conference has opened the door to a much bigger prospect: a free trade area encompassing the 10-nation Association of South-east Asian Nations (Asean) and the New Zealand-Australia free trade area (CER).

A "high-level" study was agreed at a ministers-only session during the annual dialogue between the Asean Free Trade Area (Afta) and CER in Singapore yesterday.

The New Zealand initiative will be headed by former Philippines Prime Minister Cesar Virata and is to report by October 2000 on the feasibility of a joint free trade area by 2010.

This puts it on the same timetable as the Singapore-New Zealand project, which will proceed regardless of whether the bigger proposal goes ahead.

Agreement is expected by early next year on what both Singapore and New Zealand are describing as a model free trade agreement, covering not just goods (which would move to full free trade immediately) and services, but a wide range of "behind-the-border" issues.

These issues include government purchasing, investment, competition principles, safeguards, anti-dumping standards and conformance, non-tariff barriers and export subsidies.

Chile is exploring the possibility of joining the agreement.

One important factor in the Afta-CER project is Australia's backing. Australian officials have been sceptical of the value of New Zealand's attempt to bring together the United States, Chile, Singapore, Australia and New Zealand into a free trade area, code-named "P5," and even more sceptical of any proposal involving fewer than the five.

The Singapore-New Zealand initiative at Apec encouraged Australia's more free-trade-minded ministers to prompt a rethink by officials.

The Afta-CER proposal is welcome to Australia for another reason: it helps soften its difficulties with South-East Asian countries as a result of its high-profile involvement in East Timor.

At the end of his official visit after Apec last month, United States President Bill Clinton undertook to give the P5 proposal another look, after International Trade Minister Lockwood Smith worked on senior United States officials attending the Apec meeting.

Though Mr Clinton is unlikely to advance P5 at this stage because of rising anti-free trade sentiment among politicians in the United States, the Afta-CER initiative will give more weight to free trade advocates within the administration.

The new initiative adds momentum to a developing wave of bilateral and regional agreements.

Several negotiations or studies were announced or confirmed at Apec besides the New Zealand-Singapore one. They involved South Korea, Chile, Mexico and Japan.

New Zealand officials expect these moves to add impetus to the World Trade Organisation (WTO) round of talks, starting in Seattle in November, to liberalise world trade. The Afta-CER initiative is to be WTO-compatible.

If the Afta-CER initiative comes off, it also end some feet-dragging in the Apec liberalisation process, under which tariffs are supposed to be removed by developed countries by 2010 and developing countries by 2020.

Mr Smith said last night the Afta-CER agreement "would link directly into Apec's Bogor goals of free and open trade across the region and will provide useful momentum to Apec's ongoing work.

"Clearly, with the new WTO round, our objective is to promote New Zealand's economic interests in all areas, using whatever opportunities present themselves.

"In the long run, however, this should not obscure the reality that New Zealand's fundamental interests are working ever more closely with Australia and key economies of our region, including Asia and the Americas. This study can only contribute to that strategy."

Mr Smith said he would "consult closely with stakeholders within New Zealand, particularly within the rural, manufacturing and services sectors."