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Goff calls prospect of Asia FTA ’interesting’

National Business Review, Wellington

Goff calls prospect of Asia FTA ’interesting’

But many, many other cards in the trade deck

10 April 2006

Japan’s proposed Asian regional free trade agreement got tepid support today from Trade Minister Phil Goff, who told the Gateway to Asean Summit in Auckland that the plan was "consistent" with other activities already well underway.

Mr Goff cited New Zealand’s support for an Apec-wide agreement and steps undertaken in the Trans-Pacific Strategic Economic Partnership as examples of the country’s already existing involvement in attaining regional trade agreements.

Japan’s Minister of Economy, Trade and Industry last week announced that Japan would ask the ten Asean members, and China, South Korea, India, Australia and New Zealand to consider launching free trade talks in 2008 as a precursor to the establishment of an East Asia economic community.

"The suggestion offers interesting potential," Mr Goff said. "It also is consistent with New Zealand’s desire for free trade agreements with Korea and Japan.

"There is some distance and numerous obstacles to be overcome for this proposal to achieve widespread support with the region. However we are fully supportive of further exploring ways to progress it."

Mr Goff said that while New Zealand’s focus at present was on a "timely and comprehensive outcome" of the dangerously stalled World Trade Organisation negotiations, it had consistently been a strong supporter of regional free trade deals.

He also emphasised the pre-existing importance of Apec to New Zealand’s plans and the relatively advanced stage of that effort against the lure of Japan’s still undefined plan.

"New Zealand is a strong supporter of the idea of a regional free trade agreement among Apec members. Under Apec, significant but not yet sufficient progress has been made towards the goals of removing tariffs in developed countries by 2010 and developing countries by 2020. Guidelines have also been set for ensuring bilateral free trade agreements more consistently meet high standards.

"New Zealand also played a lead role in the recent Trans-Pacific Strategic Economic Partnership negotiations with Brunei, Chile and Singapore - the first multi-party trade agreement linking Asia, the Pacific and Latin America.

"Bilaterally, we have recently finalised a deal with Thailand; started negotiations with Malaysia and Asean as a whole, and are currently in talks with China.

"We are considering possible talks with the Philippines, and the Gulf Cooperation Council with its six member states. We continue to pursue negotiations with the US and the prospects in the medium term of FTAs with Korea and Japan."

Mr Goff said good progress was being made in talks with the Chinese, although substantive differences still needed to be bridged as negotiations entered a crucial phase.

Hopes for some sort of statement about the China FTA during the recent visit of China Premier Wen Jiabao did not materialise even though Mr Wen appeared to be fast tracking an FTA with Australia earlier in his Australasia visit.

"A good quality agreement with China could boost New Zealand exports by between $200 and $400 million a year over 20 years," said Mr Goff.

There have been some successes, however.

"The Thai deal that came into force last year will see tariffs and quotas on all goods removed over time.

"Before the deal, more than 85 per cent of New Zealand’s exports were subject to duties at the border. Today that figure is less than 50 per cent, and our major exports such as infant milk food, attract no duty. By 2025 all our goods will enter duty free.

"The FTA with Malaysia will be our fourth with a member of Asean. Negotiations started last May and will hopefully be concluded later this month.

"The first round of talks on an Asean, Australia/New Zealand FTA was held last March, and the fifth round was last week in Rotorua.

The target for completion of negotiations is March 2007, reflecting the fact that it is a more complex process than negotiating a bilateral FTA.

"However we are committed to an ambitious and comprehensive agreement because Asean collectively is now New Zealand’s fifth largest trading partner.

"Our businesses did more than $2.3 billion dollars worth of goods trade into Asean markets last year, and this figure is growing by two to three per cent per annum.

"Some high quality agreements already exist between the CER partners and ASEAN members, and we want those agreements to be the basis for commitments in the current negotiations," Mr Goff said.