Asean-Australia-NZ Free Trade Agreement

ASEAN accounts for just under 20 percent of Australia's trade ($81bn in 20087-8), so the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA) that has now been submitted to parliaments for ratification is potentially a big deal.

How big it is difficult to say from a quick review. This is an extensive agreement with a lot of details that will take careful evaluation. It is apparently the most ambitious and liberal FTA the ASEAN countries have ever signed with non-Members. It seems to be much more ambitious than their deals with China or Japan.

But the Agreement has a number of exceptions in the goods chapters in Indonesia, for example, and some very-long implementation horizons for potentially important trading partners such such as Vietnam that could reduce its commercial value. The services chapter seems to offer some useful but not-extensive improvements in access to the strongly protected markets of ASEAN (professional, legal, accounting services chiefly) and there are some modest improvements in movements of essential personnel (mostly by Australia/NZ).

The 'fact sheets' produced by DFAT provide summaries that are a good place start with the evaluation. Below, an extract that seems to me to be among the highlights: a summary table of showing the percentage of Australia's base period (2005) goods exports that will be duty-free by the end of the implementation period (2025 in some cases) and in three intervening years.

Some limits to trade liberalization in the Agreement that are obvious on first reading include a Balance of Payments Safeguard provision that would allow re-introduction of border protection, including quotas (although ASEAN countries have some of the strongest external positions in the world right now!). The ambition is also limited in the area of 'GATT-plus' provisions on e.g. harmonized competition policy (the Chapter is brief and empty of obligation). There are provisions for 'consultation' and obligations to respond to requests for information on Quarantine matters—the most serious cause of trade contention between Australia and it's regional partners—but this is hardly a guarantee against increased Australian protection or (at best) glacial incrementalism in opening protected food markets.

The agreement also contains an apparently complex, dual 'rule of origin' provision: a 'co-equal' provision is the spin that the negotiators have put on it. This looks like the negotiating committee's compromise 'horse' (i.e. a camel). It will allow exporters, in most cases, to choose between seeking a determination of origin based on a Change of Tariff Heading (CTH) rule or on the existing ASEAN 'regional content value' rule. Yuk! Worst aspect: the origin must be documented by the appropriate 'industry association' (this is an anomalous provision in ROO given modern customs processing and risk evaluation procedures). Best aspect: regional 'cumulation' of origin so that imported goods that are inputs to the production of a manufacture in any regional country acquire the origin of that country when exported. Cumulation is essential for the development of regional production chains where duties are still a barrier.

Tags for this entry: trade tariffs regional fta services roo anz asean