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Asian union plan finds support -

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ELEANOR HALL: An Australian finance specialist says the prospect of a European Union-style grouping
and even a common currency in the region is not as far-fetched as some analysts suggest.

At the weekend summit of ASEAN (Association of South East Asia Nations) nations in Thailand, both
the Australian and Japanese prime ministers floated proposals for greater cooperation between
Asia-Pacific nations, to build on the free-trade deals which ASEAN has recently signed with China,
with India and with Australia.

Kevin Rudd talked about a timeframe of 2020 and foreshadowed further discussion of his vision at a
meeting of regional leaders in Australia in December.

So is an Asian EU possible, and if so when? A short time ago I spoke about this to professor of
finance at the University of New South Wales, Fariborz Moshirian.

ELEANOR HALL: Dr Moshirian is an Asian community along the lines of the European Union a real
prospect in the not-too-distant future?

FARIBORZ MOSHIRIAN: Yes it is possible, but of course building a regional community is a process
and it might take us years or decades to see the full outcome of a regional community.

ELEANOR HALL: What exactly are we talking about with this Asia-Pacific community? I mean, there was
talk of financial integration, even a single currency at the weekend summit. But do you think
that's ever likely?

FARIBORZ MOSHIRIAN: I would say, I think we need to learn from the Europeans. They started with
some key players, they removed trade barriers, they removed economic barriers and then they went to
a deeper level of integration, which was financial integration.

Now the single currency will be the outcome of deeper level of financial integration. At this stage
I don't think anyone is seriously talking about a regional currency because they know that we need
first to get the process of economic and financial integrations right.

ELEANOR HALL: Isn't the fear of China by many in the region likely to scuttle any real EU-style

FARIBORZ MOSHIRIAN: Not necessarily, because we had the same challenges in Europe. Remember we had
Germany, a very powerful economy, France and of course the UK which was resisting to join the
common market up until 1974. And yet to our surprise all these arch-enemies of the past, they
suppressed their differences for much greater gains and now we are seeing a very vibrant regional
community in Europe.

In the Asia-Pacific region we are going to have the US probably as part of an Asia-Pacific
community, with China and Japan. And I think if Germany and France and the UK have been able to
suppress their differences, we should have similar experiences in our region.

ELEANOR HALL: So what would be the benefits for Australia, of an Asian EU?

FARIBORZ MOSHIRIAN: Well Australia has comparative advantage in financial services and we could be
surprised to know that once we have a regional community where Australia's financial services
industry could have access, not only to millions, but billions of people in our region, we might be
surprised to see much greater financial prosperity than the current resource booms that we have
experienced in our region.

ELEANOR HALL: We've already seen though, in Australia, great scepticism about Chinese investment in
key sectors like mining. I mean, is it realistic to expect that Asia-wide economic integration can
occur if even relatively strong countries like Australia are wary?

FARIBORZ MOSHIRIAN: Well, I think again the European experience will be very useful. When the
Europeans started the process of integration, many small nations were wary about investment from
Germany or France into their countries. And yet they realised that once we talk about the regional
community it's going to be a win-win situation.

It is not going to be a one-way relationship. It's going to be a two-way relationship where
Australia could create a massive amount of financial wealth by being able to access to billions of
people in China and India when it comes to insurance, funds management, pension funds.

Also let's not forget that the 21st century is different to when the Europeans started the process
in 1957. We are talking about technology including internet. We are talking about global issues
such as the environment, financial issues, trade, security, which are making nations in our region
far more interdependent than 50 or 60 years ago.

And the current global financial crisis also has brought Europeans closer to each other. They are
talking about now the European president. So in the Asia Pacific the current global financial
crisis is also assisting us to think more regionally.

ELEANOR HALL: To what extent though can you realistically expect China to be involved in something
where it had to open up its economy to foreign influence?

FARIBORZ MOSHIRIAN: Indeed we would be surprised to note how China is now dependent on regional
prosperity. China's massive foreign reserves requires investment abroad, they are trying to
strengthen the relationship in the Asia-Pacific region, they would like indeed to see more
prosperous neighbours because prosperity in Asia Pacific is going to assist China.

ELEANOR HALL: What about human rights differences though? For example, Burma, violations in China
and Vietnam, I mean, how would a joint economic community deal with these?

FARIBORZ MOSHIRIAN: I think this is one of the challenges and one of the criticisms of last
weekend, where for instance, ASEAN came up with what is called inter-governmental commission on
human rights yet that commission doesn't have much, really, teeth.

But the idea here is, again, learning from the European experience, that if we have much stronger
regional framework, we will be able then to make some other countries more accountable when it
comes to human rights, when it comes to other aspects of a regional community.

ELEANOR HALL: So when do you realistically think we could see something in this region that could
be recognisable as an Asian EU?

FARIBORZ MOSHIRIAN: I would say we shouldn't be too carried away. We should look at the concept of
a regional community building in our, in this part of the world as a process. The process has
started last weekend. The US and ASEAN will have a summit in November. Kevin Rudd called for a
summit in December, early December in Sydney to talk about the framework of a regional community

Once nations agree to a right framework, then the negotiations could be more successful and more
effective over time.

ELEANOR HALL: Dr Moshirian thanks very much for joining us.


ELEANOR HALL: That's Dr Fariborz Moshirian, he's the professor of finance at the University of NSW,
and you can listen to a longer version of that interview on our website.