What is AANZFTA?
A united market
Morehouse predicts that there are still a number of unifying provisions to come under the agreement: “If you’re selling into an ASEAN market today, there’s a good chance in the next five to 10 years that that market will be the same everywhere in ASEAN. That’s how you should be thinking today to build your net worth for tomorrow.”
Of particular note will be attaining common standards for labelling, quarantine, and intellectual property, which Morehouse sees as bigger than the tariff side. “If ASEAN can get together and agree on building specifications, for example, or product safety specifications, or food hygiene standards it will make all of our lives so much easier,” he says. “It means that you can make to one spec and reach 10 markets.”
Potential delays may come from transferring legalities, identifies Morehouse, largely due to the different levels of development across ASEAN and the variation of legal origins across the region; for example the Philippines is based on the US system, whereas Malaysia is based on the British system, and Indonesia has a hybrid of Dutch and British. “That, to me, means delay,” he remarks.
Taxation will also take some time to work out, which would affect Australian investors. While common accounting standards are on their way, “common taxation will take time because tax is linked to government revenue and government survival, and corruption, and that’s a big issue,” says Morehouse.
Marketing will also make a shift. “The customers are changing, they’re going cross border. Look for commonality of branding. That’s a major change that will allow you to do ASEAN advertising and it may mean you do cheaper advertising if you go to every country,” he envisions.
Beyond AANZFTA, Morehouse sees positive things globally, particularly with regard to ASEAN’s bargaining power with large markets such as China, India and the USA. This FTA is therefore just the start of something bigger that will enable Australia to play a larger role in the world economy.
It’s also great for free trade in general, he says: “I’m a great believer in free trade and if you open it up, what you’re doing is opening up opportunities. If we don’t take the opportunities, that’s a disadvantage, but that’s our fault.
“I would rather have a market that’s open that I have to compete in, where I have to be really good at what I do, than a market that’s closed where I have to fiddle the system to make it work. You can run Australia from behind a wall but that will only take us backwards.”
Trade links
For the full text of the agreement, see the dedicated Department of Foreign Affairs and Trade website at www.dfat.gov.au/trade/fta/asean/aanzfta. Austrade also has an overview with links to doing business in ASEAN at www.austrade.gov.au/AANZFTA. Also keep an eye out for Austrade’s AANZFTA seminars in early 2010, designed to highlight changes and opportunities in specific industries.
Ten out of ten
The 10 nations of the Association of South East Asian Nations are:
- Brunei Darussalam
- Cambodia
- Indonesia
- Lao People’s Democratic Republic
- Malaysia
- Myanmar (Burma)
- Philippines
- Singapore
- Thailand
- Vietnam
Source: www.aseansec.org
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