Asian trade breakthrough in Thailand

As fears of increased protectionism grow during the international financial crisis, New Zealand products are to benefit from a new trade deal signed up to in Thailand last night.

New Zealand and Australia entered the free trade agreement (FTA) with 10 Asian countries - members of the Association of South East Asian Nations (Asean) Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei, Vietnam, Laos, Myanmar and Cambodia - representing a market of more than 500 million people.

Trade Minister Tim Groser and Australian Trade Minister Simon Crean signed the agreement in Hua Hin, Thailand.

"We've just put down an agreement that's exactly what the world needs on a global level," Tim Groser told Reuters in an interview.

"It's a very good response in the current macroeconomic situation, when some of these economies are hurting in the massive downturn in world trade."

"This agreement is a significant agreement for the region," echoed Mr Crean to a press conference after the signing.

"It powerfully demonstrates... the region's strong commitment to opening up markets in the face of this crisis."

As leaders of the regional grouping arrived in the Thai beach resort for their three-day summit, they gave mixed signals on the region's attitude to economic protectionism, AFP reported.

"We must not resort to protectionist tendencies at trying times," Thai Prime Minister Abhisit Vejjajiva said in a speech to business leaders.

But Malaysian premier Abdullah Ahmad Badawi said in an interview with the Bangkok Post that it was a "normal reaction" to urge people to buy local goods during times of crisis.

The deal means eventually 99 per cent of New Zealand's trade in key Asian markets will be duty free.

Tariffs will be eliminated in 2010 on New Zealand exports worth $429 million a year, including in some markets butter, milk powder, wool, kiwifruit, apples and some manufactured products.

Tariffs on a further $435m of exports to Indonesia, Malaysia, Vietnam and Philippines will be eliminated between 2011 and 2020.

Within 12 years, 99 per cent of tariffs will have been eliminated in the key markets of Indonesia, Malaysia, Philippines and Vietnam.

When the FTA is fully implemented it will mean annual duty savings of about $50m.

Asean's side of the agreement means that by 2010, 85 per cent of their exports will enter New Zealand duty free.

All New Zealand tariffs on Asean goods will be phased out by 2020.

Progress is being made on deals with South Korea and India.

Meat and Wool New Zealand chairman Mike Petersen said the FTA was a big opportunity and a positive step during gloomy economic times.

Source: http://www.nzherald.co.nz/business