The two regions will hold free-trade talks under the so-called Asean-Australia, New Zealand Closer Economic Relations (Asean-CER) in Brunei from July 24-28. Both sides want to see a conclusion by the end of the year.

After starting talks early this year, both sides have been stuck on many issues such as the environmental and labour protection and government procurement.

The environment and labour protection and improvement are key issues for New Zealand. Australia would like to put government procurements into the agreement, but Malaysia does not support this issue.

"Some conflicts have been seen between Asean members and Australia and New Zealand. But, we are positive that this pact should finally be concluded," said a source close to the talks who asked for anonymity. The agreement should be signed on schedule next year.

Asean also plans to narrow the gap on rules of origin regulations with these two countries to ensure mutual benefits under their FTA. The meeting will also focus on a tariff reduction schedule.

Asean wants to eliminate a 40-per-cent rule of origin requirement for products exported to both countries, mostly focusing on industrial goods and fishery products. This means that at least 40 per cent of a product must originate in the exporting country.

Thailand itself already has FTAs with both New Zealand and Australia.

Thailand had a trade surplus of US$260 million (Bt9.9 billion) with Australia and New Zealand in the first five months this year, according to the Commerce Ministry. Exports grew 25 per cent to $1.72 billion, while imports dropped by 5.8 per cent to Bt1.46 billion from the same period in 2005.

Asean country's major exports to Australia and New Zealand are automobiles and parts, jewellery, steel and iron, air conditioners and processed seafood.

In late July, Asean will hold a meeting to continue talks on a free-trade agreement with China.

Meanwhile, it has become more difficult for Thailand to agree to an Asean-South Korea FTA because South Korea has shown little interest in including rice and other agricultural goods in the pact. In contrast, South Korea wants to add automobiles to the agreement.

The unnamed source said Thailand would not sign the deal as long as South Korea refuses to add more goods to the Kingdom's liking.

The Asean-South Korea FTA will be implemented early next year, with or without Thailand.

Meanwhile, caretaker Commerce Minister Somkid Jatusripitak will leave for Geneva to participate in a special WTO meeting on June 27-28. The meeting is a last-ditch effort aimed at completing a global trade deal by the end of this year.

In order for a deal to be signed, the US and the EU must come up with a stance on agricultural issues that would reduce trade barriers. A positive outcome would allow WTO members to achieve the goal of eliminating agricultural subsidies by 2013.

Petchanet Pratruangkrai

The Nation