The AFTA-CER Dialogue: A New Zealand Perspective on an Emerging Trade Area Linkage

Abstract

In 1994 the then Prime Minister, Paul Keating, publicly floated the idea of linking two free trade areas, namely AFTA and CER. He made his announcement after consultation with ASEAN officials. Both Australia and New Zealand are interested in greater links between the two free trading areas but they are conscious that they must form the linkage at ASEAN's pace. To date the AFTA-CER dialogue has remained at the level of trade facilitation, through such means as information exchange on customs and standards, and has not yet moved into substantial trade liberation between the two areas. However, the AFTA-CER dialogue presents an important breakthrough for both free trade areas: negotiation and trade discussion between economic regions. The idea will only have currency if it contains mutual benefit to both sides of the negotiation. Introduction1 In January of 1996, Goh Chok Tong, Prime Minister of Singapore, was quoted by the Financial Review as saying that Australia and New Zealand will one day join the Association of Southeast Asian Nations (ASEAN).2 New Zealand's Foreign Minister, Don McKinnon, was reported as being kindly disposed to this idea. The other ASEAN nations, however, quickly moved to say that ASEAN was primarily grouping for Southeast Asia and it now seems that Goh's comments may have been taken out of context.3 In any event, while formal membership of ASEAN is unlikely, Australia and New Zealand will have lot more to do with ASEAN in the future. The growing dialogue between the ASEAN Free Trade Area (AFTA) and the Australia-New Zealand Closer Economic Relations Agreement (CER) may provide Australia and New Zealand backdoor to ASEAN, giving Australasia the benefits of greater two-way trade with the countries of Southeast Asia while still being outside the grouping. In 1994, the then Prime Minister, Paul Keating announced to the public that there was very real chance that AFTA and CER would be linked. While he failed to provide any details of how this might work, there were those amongst the Democrat Party and the trade union movement who assumed that this would take the form of single free trade area and therefore undermine the wages of workers. In New Zealand the announcement seemed to be hardly noticed. The proposal, however, was without shape or form and lacked concrete plan. The AFTA-CER dialogue process has been undertaken for reasons of mutual interest to both sides and seems to be an ideal way of preparing, in microcosm, the member economies for the greater liberalization and facilitation of trade that will occur in the Asia-Pacific under the AsiaPacific Economic Cooperation (APEC) forum.4 Australia and New Zealand are both enthusiastic supporters of the regional push for free trade, quietly hoping that open regionalism will be furthered, but this particular link with AFTA represents new dimension to CER: negotiation with third party. This linkage was, on 9 September 1995, described by the then Trade Negotiations Minister, Philip Burdon, as a major milestone in ... our relations with the dynamic economies of South East Asia.5 While discussion has been low-key and has centred on the establishment of information exchange this process is viewed by officials in New Zealand as having enormous potential to create greater trade and commercial activity. There is evidence that there is ground-swell of support in some sections of Southeast Asia, that gaining knowhow from the Australian and New Zealand experience of creating trade harmonization would greatly assist the emergence of AFTA. To date the progress is embryonic but there seems to be willingness on both sides of the negotiating table to ensure that this dialogue grows to facilitate greater levels of trade. The question is what exactly will this linkage entail and what will both sides gain from the agreement? After an examination of the AFTA-CER dialogue to date, this article focuses on what New Zealand can gain from this process. …