Asean club looks for two big players

By FRAN O'SULLIVAN

In July - after years of rabid antipathy fuelled by former Malaysian Prime Minister Mahathir Mohamad - Asean finally overcame its diffidence to admitting "non-Asian" New Zealand and Australia to its club.

It said it wished to start free trade talks with the two Closer Economic Relationship partners. The talks have been on the agenda since Asean and the two Antipodean countries set up a taskforce in 1999 to explore a new economic partnership, but Asean Secretary-General Ong Keng Yong admits "political considerations" knocked the proposal for a free trade deal off the table. "We just danced around it."

But early this year, well after Mahathir's departure, the Asean secretariat thought it time to have another go.

The crucial factor was the visit of Chinese President Hu Jintao to New Zealand and Australia last October, which alarmed Southeast Asian business people.

"When the Chinese started to develop closer ties with the Australia and New Zealand sector, the business people went back to their economic ministers and said, 'Look, they are moving so fast. We were the first to start talk about a Asean free trade deal with Australia and New Zealand and we are still dilly-dallying'.

"There was this notion that if we could combine the economies of Australia, New Zealand and Asean it would be a sizeable chunk - somewhere near to the Chinese economy.

"At the moment, without the Australia-New Zealand containment, the Asean economy is less than half the Chinese economy."

The Antipodean trade agenda is clear: New Zealand and Australia want to profit by greater access to Asean's market of 500 million people with a combined GDP of US$737 billion ($1115 billion).

The trade of the Asean nations - Singapore, Thailand, Indonesia, Malaysia, Cambodia, Laos, Brunei, Vietnam, the Philippines and Myanmar - is US$720 billion. But Asean is also seeking a springboard to boost its own development. "Just look at the New Zealand scenario," Ong says."Your economy is well developed, well organised. We believe that when we go into an FTA kind of relationship there will be very positive consequences for us. Our own economies will be compelled to do better - to modernise faster."

He cites regulations governing food production and export, intellectual property and commercial platforms which could be adopted outright by Asean agricultural exporters. "We don't have to reinvent the wheel."

The fact that New Zealand and Australia's rules are in English is a bonus. "We are determined that our Asean standards should be based on the English language."

Then there is the omnipresent external dimension - China.

"We are always very keen on maintaining a harmonious kind of external relations," Ong says. "We do not want to get aligned too much in one particular direction. As we intensify our economic ties with China and India, developing what is already there with Australia and New Zealand will be a very positive contribution to our aim of balancing things."

One contentious area will be the provision of skilled and unskilled labour in the region.

Ong reveals that what is really driving some of his business sectors' aspirations for free trade talks with New Zealand and Australia is the dire need for skilled human resources.

"There is a great anxiety that as they expand, their economies will run into a limit of skilled professionals. In the past they went to India - now everyone's going to India.

"The more sophisticated companies are asking: 'I can go and tap Indian or even Chinese workers but will they integrate easily with global operations?' They now look at Australia and New Zealand.

"The sense I got from the Asean political leaders is that in the economy of the coming decades, whether they have that competitive pace depends a lot on what we call human resource."

There is another side to the human resource equation. Some Asean nations, such as Philippines and Indonesia, have excesses of labour that they wish to export. "I understand there is already a shortage of construction workers and manual workers in New Zealand.

"If we can design a scheme to fill that shortage you have here it's good, because we have an excess amount of labour.

"Up until now this issue has always been gingerly handled because in the olden days it was so touchy and so emotional."

Ong says that once work begins on the free trade agreement between Asean and the CER countries the export of labour should be put on the table.

"This is an issue we must address. If we develop this FTA with Australia and New Zealand, I think this is an area where we should take advantage of this positive climate to settle this ... so that we don't have all this argument. Then we definitely can eliminate this horrible thing called trafficking in humans.

"The reason why it flourishes is because we have all these barriers. If we loosen it up there's no need to worry about it any more."

Cultural differences belong to the past.

"There's another school of thought which feels that, in the first place, the 10 Asean countries are already very culturally diverse.

"They may be all Asian faces, but we have too many different types of religion, languages and other diverse backgrounds.

"Having one more - like the European culture and background that you have in New Zealand and Australia - it will not be difficult to gel."

At people-to-people level the game has changed because of intensive educational and tourist exchanges. "In the beginning we looked at our differences and said, 'How will this impact on our future?'

"But as more students study here and in Australia and tourists come, they look back to their own society and say, 'Is it really as bad as some of the political noises make it out to be?' "

Ong "brainstormed" the relationship in meetings with Prime Minister Helen Clark and Cabinet Ministers Jim Sutton and Marian Hobbs in Wellington this week.

On November 30, Clark and her Australian counterpart - either John Howard or Mark Latham - will join Asean political leaders for the first time at their Laos summit and the free trade talks will be officially launched.

Ong also expects big-picture issues, such as how to cope with globalisation and to deal with the movement of people, will be tabled. The timetable is fast-moving. Ong predicts there is scope for FTA talks to be settled within a year and for Asean to have a more aligned perception of the bigger strategic objectives

"If I have my own wish, I think about 2008-2009 would be good for the FTA," he says. "The challenge for us is to keep on track. Some will try and push it out, but anything beyond 2012 will be too late.

The Asean nations have steered clear of forging a "supranational identity" such as a European Union. But Ong concedes that the very establishment of the Asean Free Trade Area (Afta)in the first place involves a "diminuition of national sovereignty".

"We try not to fly this in the face of our Asean leaders and officials."

He is frequently asked by Southeast Asians if Asean is moving to become a political community with a common currency. "I suspect our leaderships' approach is, 'Let this thing come, let this thing evolve.' They pretend there is nothing there. But in economic terms we are already doing it."

Security issues are drawing the Southeast Asian nations even closer and a plan of action will be submitted to Asean political leaders. "Overall, the question is why are we allowing all these terrorists, who can pack such a huge amount of explosives in some of the busiest streets in Jakarta, to have a free hand.

"This is the kind of question that some of the thinking people are asking."

More fundamentally, questions are emerging over whether Southeast Asia's populations will be divided on Muslim and non-Muslim lines.

"The responses of political leaders must be that we must not allow this to happen. The divisions should not be on religion and the divisions should not be on whether a country supports Australia's position or otherwise."

One potentially thorny issue for New Zealand is Asean's Treaty of Amity and Co-operation.

Adopted in 1976, the treaty's core principles are the renunciation of the threat of use of force, respect for sovereignty and territorial integrity, non-interference in each other's internal affairs and peaceful settlement of disputes.

Ong says there will be no direct pressure on either country. "We feel reassured if another country outside the region becomes a signatory."

Asked if it was mandatory, Ong said: "No. It's not a must-have, it's a nice-to-have.

"In the case of Australia it is a bit complicated because they are very much in an alliance with the United States and they believe this is designed to check the US' regional presence.

"We hope that New Zealand will be a bit different because of New Zealand's own foreign policy position, and that over time New Zealand can contribute to this sense of completeness."