As oil prices show no signs of declining and transportation of goods becomes costlier, Asia is looking ahead. The region is strategically strengthening trade ties with its neighbors in order to improve the Asian economy. Boosting trade and tourism ties, the bloc of South East Asian countries also plans on raising funds to build missing links to a railway system from Singapore to Kunming in Southern China, connecting eight Asian countries by 2010
On Thursday, ASEAN also finalized free trade agreements with India and its Pacific neighbors Australia and New Zealand, creating a common market of 1.7 billion consumers, cutting across some of the world’s fastest growing economies. The deal will be formalized by Prime Minister Manmohan Singh in Bangkok this December and will be effective from January 2009. It will allow seamless and duty-free movement of goods across territories. India and China are also expected to sign trade agreements with each other that will boost economic synergies between them in December.
The new agreements concertize the Southeast Asian bloc of about 550 million people, forging free trade links with all major economies in the region. ASEAN earlier inked deals with China, Japan and South Korea.
Bilateral trade between India and ASEAN that totaled US$ 38 billion last year and is projected to touch US$50 billion by 2010. The free trade pact will only accelerate it. ASEAN’s total trade in goods with Australia and New Zealand increased from US$41.0 billion in 2006 to US$47.8 billion last year.
“This is the most comprehensive free trade agreement that ASEAN has ever entered. It is the largest free trade agreement that Australia has ever negotiated,” Australian Trade Minister Simon Crean told AFP.
The accord covers merchandise trade as well as services, investment, financial services, telecoms, electronic commerce, movement of people, intellectual property, competition policy and economic cooperation.
Hoping to build on the existing Singapore Trade Minister Lim Hng Kiang told the AFP, “At the same time, our dialogue partners are negotiating FTAs among themselves and so this is going to be a network of FTAs and it will be ideal if we can put this all together in the next stage.”
Studies are underway on how to handle the tangle of FTAs in the future, he added.
As part of ASEAN’s plan to establish a single market and manufacturing base by 2015, ASEAN’s members have already cut tariffs to between zero and five percent on 90 percent of goods and are moving to remove non-tariff barriers.
With the prospects for a global trading regime in limbo, some officials said, negotiations for regional FTAs such as those pursued by ASEAN could gain momentum and lead to a massive Asia-wide free-trade zone.
