Sutton: no doubt of trade pact

By BRIAN FALLOW

A trade agreement between Southeast Asia and Australia and New Zealand is a question of when, not if, says Trade Negotiations Minister Jim Sutton.

Ministers from the Association of Southeast Asian Nations (Asean), Australia and New Zealand meeting in Chiang Mai, Thailand, two weeks ago could agree only to instruct officials to explore the issue further and report back in a year.

But Mr Sutton, insisting he is not just making the best of a bad job, says that outcome was at the upper end of his expectations.

"It is quite unrealistic to think a fully fledged trade agreement was going to be signed up at a one-two-day meeting in Chiang Mai," he said. "These things take time."

"I hope the result will be a decision in a year's time to negotiate a closer economic partnership.

"Clearly there are different degrees of enthusiasm among Asean ministers. Some are enthusiastic trade liberalisers, generally, but not entirely those from the most developed countries. Some of the newer [Asean] members are quite cautious, even sceptical, reflecting the fact that they are developing countries and possibly in need of capacity-building assistance, even to effectively participate in negotiations."

Capacity building could relate to things like sanitary and phytosanitary regulations.

"We have in the past been involved in capacity building among small Pacific nations to allow them to comply with our quarantine regulations and enable them to send us horticultural produce.

"Some such assistance will be needed in some Asean countries, which would help not just in trade with us but with other developed countries," Mr Sutton said.

A closer economic partnership agreement, of which the recently initialled New Zealand-Singapore deal is a model, encompasses not only trade in goods, but trade in services and rules surrounding investment.

That would be New Zealand's negotiating objective for a CEP between the Asean free-trade area and Australia and New Zealand.

But some Asean countries oppose including tariff cuts.

Any agreement would not necessarily involve removing all tariffs, and certainly not immediately, Mr Sutton said.

"It would be my preference not to accept a CEP which excluded tariff cuts, but conceivably we would if we got enough progress in other areas. We are pretty keen on creating opportunities for exporters of services, like educators, engineers, architects, consultants and so on. There are a lot of non-tariff barriers affecting services," he said.

"The chances [of a CEP] are so good it's a question of when, not if, but when is a big issue. The time to phase it in might be quite considerable."

Such a deal would be likely to attract opposition from the same quarters as the Singapore agreement had, only it would be more vehement.

"It would include relatively low-wage economies like Indonesia. People are bound to be concerned about that."