Page last updated at 12:28 GMT, Thursday, 26 February 2009

Australasians eye Asia trade pact

Asean leaders at signing ceremony, Vientiane 2004
Several South- East Asian economies rely heavily on export

South East Asian economy ministers are gathering for a summit at which they will sign a free trade deal with Australia and New Zealand.

Members of the 10-member Association of South East Asian Nations (Asean) will sign the agreement during a three-day meeting that begins on Friday.

Talks on establishing the 12-nation free trade zone began in 2004.

The meeting in the Thai resort of Cha-Am will also witness two Asean accords on goods trade and investment.

Asean includes Indonesia, Malaysia, Philippines, Singapore and Thailand and some 500 million people are covered by the association.

The annual summit, which is being hled for the 14th year, has traditionally focused on human rights, but the worldwide financial crisis is set to be top of the agenda this year.

Several powerful Asian economies have seen their fortunes reversed as the economic downturn continues to bite.

Singapore, the region's most advanced economy, is already in a recession, while Thailand's economy shrank in the fourth quarter. Other economies, such as Malaysia and the Philippines, are suffering weak demand for their exports.

The global financial turmoil has raised fears about protectionism to protect home-grown industry. Any such moves could particularly affect South East Asian economies, as several derive a large share of their income from exports.

Final hurdle

An Asean goods trade agreement is set to further reduce tariffs and minimise barriers to trade, by setting up a single framework for existing and future new trade agreements.

Additionally, an investment agreement to encourage capital flow within the area covered by Asean will also be ratified.

The meeting is also set to be the stage for the signing of a plan to achieve Asean's goal of a European-style economic community by 2015.

Asean, New Zealand and Australia have been deliberating the free trade pact since 2004 and last year it was announced talks had been successfully concluded.

In 2004, it was thought the deal would add more than $48bn (£33.7bn) to the GDP of the 12 countries involved.

Last weekend, finance ministers from the Asean region plus their South Korean, Chinese and Japanese counterparts agreed, in theory, to expand a proposed emergency currency fund from $80bn to $120bn.

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