Tokyo, April 7:

An Asian economic free-trade zone would be less beneficial than a global pact and a ‘Herculean task’ to achieve given diplomatic frictions, the Asian Development Bank’s chief economist said on Friday.

Japan’s trade minister Toshihiro Nikai this week said he intended to propose the formation of a vast Asian economic free-trade zone that would cover about half the global population and rival the EU and NAFTA markets.

The 16-nation proposal would include China and India, the world’s two fastest growing major economies, along with the 10-member Association of Southeast Nations (ASEAN) and Australia, Japan, New Zealand and South Korea.

An Asian free-trade area where all tariff and non-tariff barriers within the region were removed could bring significant economic benefits, said Ifzal Ali, chief economist of the Manila-based development bank.

“But (the benefits) are much less than (those from) a multilateral agreement,” he told reporters in Tokyo a day after the ADB released its annual outlook report. An Asian free-trade area would also be difficult to establish given regional political strains, Ali suggested.

Japan’s relations with China, its biggest trading partner, have slumped, mainly over wartime memories. “We have different countries at different stages of development, with different aspirations, different political systems and political agendas. For all of them to get together, bury their differences and put this thing together is going to be a Herculean task,” he said.

The ADB is concerned that overlapping free trade agreements risk making life harder for companies. ABD president Haruhiko Kuroda has warned of an “Asian noodle” effect of overlapping initiatives.

Japan has been pushing for more free-trade agremeents around the world. It has already signed deals with Malaysia, Mexico and Singapore. It has also struck basic accords with Thailand and the Philippines and launched negotiations with South Korea, Indonesia, Chile and the Association of Southeast Asian Nations as a whole.

Japan is also set to resume stalled talks with ASEAN next week.

At the same time it is involved in World Trade Organization talks which aim to craft the framework of a global liberalisation accord by April 30, and by the year-end clinch a sweeping multilateral deal that removes trade barriers.