New Study Shows Big Gains From AFTA-CER Free Trade

Australian Trade Minister, Mark Vaile, released a new study this week estimating gains of US$48.1 billion (A$80.2 billion) that would flow from the creation of a free trade area linking Australia, New Zealand with the 10 ASEAN nations.

"Gains to Australia from the free trade area are estimated at US$19.1 billion (A$31.8 billion) in additional GDP over the period 2000-2020, while gains to New Zealand have been put at US$3.4 billion (A$5.7 billion)," Mr Vaile said.

The study, 'Economic benefits from an AFTA-CER free trade area: Year 2000' study, was prepared by the Centre for International Economics. It updates a 1997 study with new analysis including services trade and effects on productivity and investment.

"The study shows that all countries would gain from an AFTA-CER free trade area. Importantly, it also demonstrates clear benefits to ASEAN countries of US$25.6 billion (A$42.7 billion) over the period. The gains in economic welfare measured by real consumption would be even larger than the GDP gains.

"This study will make an important contribution to the Task Force which is currently examining the feasibility of an AFTA-CER free trade area. The third and final meeting of the Task Force will be held in early August with a recommendation to go to Ministers from ASEAN, Australia and New Zealand in October.

"Another key finding of the study is that the higher productivity from an AFTA-CER FTA would increase the return to capital and therefore increase investment. Over the decade to 2010, extra capital inflow to the region is estimated at US$38.6 billion (A$64.3 billion).

"An AFTA-CER free trade area would be complementary to efforts in APEC and the WTO to liberalise trade and would signal that the Australian Government wants to build even stronger economic links with our near neighbours in ASEAN."

ASEAN includes Brunei, Burma, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand and Vietnam.

The report is available on the Department of Foreign Affairs and Trade website: www.dfat.gov.au/cer_afta/ or link to:

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