The European Union and Southeast Asia agreed on Friday to launch free-trade talks and embark on one of the world's largest regional trade negotiations.
The two groups, which together include 37 nations and are home to more than a billion people, agreed to start talks despite differences over military-ruled Myanmar, the subject of EU sanctions over human rights concerns.
"I think it has a huge potential not just to deepen economic ties between us but to grow international trade as a whole and make an important boost to the global economy," European Trade Commissioner Peter Mandelson said in announcing the talks at a meeting with Asean trade ministers in the tiny kingdom of Brunei.
Analysts say Asean (the Association of South East Asian Nations) regards better ties with Europe as a way to balance China's growing might and also wants to emulate the European Union's success by establishing its own single market by 2015.
Neither Mandelson nor Asean ministers gave a time-frame for the negotiations, but Malaysian Trade Minister Rafidah Aziz told reporters the two sides would assemble a joint panel of senior trade officials to draft a schedule and programme for talks.
"This will be the most wide-ranging negotiation Asean has started," Asean secretary-general Ong Keng Yong told Reuters. "It is very broad in scope, and very deep, as well."
The EU spans 27 nations and 490 million people, while the 10-member Asean is home to around 560 million people. Trade between the two groups stood at around $141 billion in 2005, according to Asean data.
At a news conference to announce the talks, the ministers side-stepped the issue of differences over Asean member Myanmar, on which the EU has maintained sanctions since its military rulers ignored a 1990 election victory for the main pro-democracy party.
"We're launching an FTA on a region-to-region basis," Rafidah said in reply to a question on Myanmar. "The joint committee will deal with all the details. This is just to launch first, we haven't come up to any conclusions or anything yet."
EU External Relations Commissioner Benita Ferrero-Walder recently said the grouping wanted to see Asean countries press for improvement of human rights in Myanmar, including the release of opposition leader and Nobel Peace laureate Aung San Suu Kyi.
Over the five years from 2001, the European Union has been the biggest investor in Asean, with cumulative inflows of foreign direct investment amounting to $31.5 billion, or nearly 27 percent of the total, Asean figures show.
With total trade flows amounting to nearly $141 billion in 2005, the EU ranked as Asean's fourth largest partner, after members of the grouping, the United States and Japan.
EU-Asean free trade would boost trade and investment by up to 10-18 percent each way, Ong said, quoting an Asean study. Asean has declared itself a free-trade area but has yet to forge a free-trade agreement as a bloc with any external trade partner. It is negotiating free-trade pacts with China, Japan, South Korea, India, Australia and New Zealand.
The United States, the region's largest trade partner, has signed a trade and investment arrangement with Asean but free-trade talks are still seen as a long way off. Asean has also begun exploring the possibility of similar ties with Canada.
Asean aimed to wrap up talks on a trade pact with Japan in time for signing at a summit in November, while talks with India were scheduled to be concluded by the end of the year, Ong said.
"I think there is a good political will to settle this," he said, adding that he envisaged the talks on goods with Japan would be finished by October, while political leaders were keen to complete talks on a free trade pact with India by end 2007.
Asean groups Brunei, Cambodia, Indonesia, Malaysia, Myanmar, Laos, the Philippines, Singapore, Thailand and Vietnam.