This chapter examines the impact on Australia and New Zealand of the Asian financial crisis and the potential linkage between the Australia–New Zealand Closer Economic Relations Trade Agreement (CER) 1 and the ASEAN Free Trade Area (AFTA). 2 This potential linkage will be examined to determine both the feasibility and the benefit to Australia if a free-trade area (FTA) between the CER and the Association of Southeast Asian Nations (ASEAN) were established by 2010 as is currently under discussion.
When the Asian financial crisis hit, beginning with Thailand in 1997, Australia was besieged by gloom and doom predictions from pundits from across the political and economic spectrum. The assumption being that Australia was dependent on commodity exports to the rest of Asia as the backbone of its economy and that Australia, being located in the midst of the region, would suffer dire economic consequences. However, against all predictions and expectations, Australia thrived. Australia’s economy grew by almost 5 percent in 1998 during the nadir of the crisis, faster