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AUSTRALASIANS AND ASIA BREAK ECONOMIC BARRIERS TO LESSEN THE IMPACT FROM THE FINANCIAL CRISIS


  As the global financial crisis continues, nation states are all implementing various policies to lessen the impact of the economic downturn The United States has looked to decrease global trade, whilst China is seeking to increase foreign aid and investment. At a summit recently held in Thailand, the 10-member Association of South East Asian Nations (ASEAN), New Zealand and Australia signed a trade pact looking to ease current financial woes.


As the global financial crisis continues, nation states are all implementing various policies to lessen the impact of the economic downturn The United States has looked to decrease global trade, whilst China is seeking to increase  foreign aid and investment.  At a summit recently held in Thailand, the 10-member Association of South East Asian Nations (ASEAN), New Zealand and Australia signed a trade pact looking to ease current financial woes.

The summit that is currently being held in Thailand, is also attended by three non-member nations. The move to sign a free trade deal comes as no surprise. The 12-nation free trade zone talks began in 2004. But with the current economic crisis, the pact looks to booster the combined economies of the involved nations by up to $48 billion by 2020. Last year, ASEAN’s trade with Australia and New Zealand was worth an estimated $50 billion and foreign direct investment totaled more than $1 billion.

The trade pact comes as a milestone for Australia and New Zealand, whilst ASEAN had already forged free trade links with China, Japan and South Korea earlier. Both, Australian Trade Minister Simon Crean and New Zealand’s Trade Minister Tim Groser, said the deal would not only impact all national economies involved, but was also seen as a significant political deal. Previously, New Zealand and Australia viewed many member states of ASEAN as places of political instability and threats to global security.

The agreement looks to eradicate or lower tariffs on products such as coffee, dairy, minerals, cars and vegetables over a span of 12 years. The other economic sectors  that are included in the agreement include financial services, telecommunications, electronic commerce, intellectual property and telecommunications. Besides breaking down economic barriers, the pact also represents Southeast Asian nation’s efforts to further open up their markets in a bid to create an economic zone modeled after the European Union, not including the shared currency. The agreement covers a total area with a combined population of 600 million and an estimated gross domestic production of $2.7 trillion.

ASEAN is looking to increase its level of competitiveness to match those seen in China and India, the world’s two fastest-growing economies. The ASEAN Economic Community seeks an an increase of global investments. In order to create an economic model like the European Union, within ASEAN, members are also planning to establish a single market and manufacturing base by 2015.

This summit is already in its 14th year. Typically, the summit focuses on human rights issues but the economic downturn forced the global financial crisis to be at the top of the agenda. The global crisis has effected several members of ASEAN. For instance, Singapore, the region’s most advanced economy, is already said to be in recession. Thailand’s economy shrank 6.1% in the fourth quarter due to falling exports and tourism. Malaysia and the Philippines  are highly dependent on exports, but with weak global demands, both economies are struggling.

Although the agreement seeks to benefit ASEAN members, the agreement benefits all parties involved. The lowering of economic barriers seeks to lessen the impact of the global economic crisis. This is  important to ASEAN members, whose economy is  primarily driven through exports. But with many members of the global adopting protectionist policies, where the nations are looking to protect home-grown industries, the agreement allows for ASEAN members to continue to export goods, even if on a smaller scale. 

Association of South East Asian Nations consists of the following nation states: Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar (Burma), Philippines, Singapore, Thailand and Vietnam.

Source: www.AsiaEcon.org
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Source: www.asiaecon.org |


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