[aussie dollar]

PM grasps historic trade pact
By Steve Lewis and Kimina Lyall
December 1, 2004

AUSTRALIA took a historic step last night towards strengthening economic ties with Asia's high-growth economies by agreeing to negotiate a trade pact with the 10-member ASEAN bloc.


Deal ... John Howard (r) with his Thai counterpart Thaksin Shinawatra / AFP


The free trade deal, expected to be completed by 2007, will give Australian businesses access to a market of more than 500 million people with a combined annual economy of $720 billion.

The breakthrough came at a summit of Association of Southeast Asian Nations leaders in the Laotian capital Vientiane, at which John Howard also signalled plans to visit India, Japan and China in 2005.

ASEAN leaders emerged from two hours of discussions with Mr Howard and New Zealand Prime Minister Helen Clark to announce they had agreed to start negotiating a tripartite free trade agreement.

The agreement with ASEAN - comprising Indonesia, Malaysia, Thailand, Singapore, Vietnam, Cambodia, Laos, Brunei, The Philippines and Burma - was hailed as "historic" by Mr Howard, who has faced sharp criticism in the past that he was unwilling to engage with Asian economies.

"It underlines how far the countries in the region have progressed and how far our own relations with these countries individually have progressed over the past few years," he told reporters in Vientiane.

But the Prime Minister continued to play down suggestions that trade relations with Asian economies would be "benchmarked" by the number of trade deals that Australia formally entered into.

"If it (an FTA) can come off, it will be a further enhancement," Mr Howard said.

However, the real strength of Australia's relations with Southeast Asian nations was in the "substance of our bilateral relations with each of them".

"By any measure, over the past few years these bilateral relations have improved quite dramatically," he said.

The overseas push may deliver further lucrative deals for Australia's energy and education sector, with Mr Howard talking up the benefits of North West Shelf liquefied natural gas during a 30-minute meeting with the new Indian Prime Minister, Manmohan Singh.

Australia has already signed FTAs with Singapore and Thailand, and is expected to take advantage of a more favourable political relationship with Malaysia to begin talks next year.

ASEAN will appoint a 10-member panel (one from each member country) to negotiate the myriad issues, with talks expected to begin in earnest early next year.

The breakthrough comes despite continuing sensitivities over Canberra's refusal to sign a regional non-aggression pact, known as the Treaty of Amity and Co-operation.

In a surprise admission, Mr Howard said he had been caught off-guard over regional sensitivity on the issue.

"Until the last few weeks, I was not particularly conscious of the existence of this stuff," he said.

He denied that Canberra's obstinacy on the non-aggression pact was "contaminating" relations with Southeast Asian countries.

"The (treaty) has not been raised at a leader level by any of the ASEAN countries - it's just not a big issue," he said.

However, the expected willingness of New Zealand to eventually sign the TAC will leave Australia isolated diplomatically as one of the few regional players not prepared to embrace the treaty.

In parliament yesterday, Labor moved to censure the Government over its handling of the TAC, claiming it would undermine Australia's opportunities in high-growth economies such as Malaysia, Vietnam and Thailand.

"It is arrogance at a time when Australia faces an unprecedented opportunity to broaden its regional involvement in Asia," Opposition foreign affairs spokesman Kevin Rudd said.

Mr Howard is side-stepping the TAC issue, instead focusing on the growing trade links with Asian countries.

Trade and economic issues were the focus of Mr Howard's bilateral meetings with Dr Singh, Japanese Prime Minister Junichiro Koizumi and Chinese Premier Wen Jiabao that took place on the sidelines of the ASEAN summit yesterday.

Mr Howard signalled to Dr Singh that he was hoping to visit India next year. The two leaders also expressed a mutual desire to strengthen economic and cultural ties between the countries.

The sensitive issue of North Korea's continued defiance was raised during talks with Mr Koizumi. The Japanese Prime Minister told Mr Howard he wanted to renew the six-way talks process as soon as possible.

The Australian