By Ian Llewellyn of NZPA

Bangkok, Oct 21 NZPA - Prime Minister Jim Bolger was widely mocked in the early 1990s when he declared New Zealand was part of Asia, but his words now look prophetic.

New Zealand is intent on expanding its role inside what could become the world's largest trading bloc, and this week's East Asian Summit in Thailand will offer more steps down that road.

Prime Minister John Key will attend the summit , where 10 southeast Asian nations gather under the Asean banner.

Six others -- China, Japan, India, Australia, South Korea and New Zealand -- will be there to discuss moves to create a pan-Asia trading bloc.

Leaders will be asked to commit to form a Comprehensive Economic Partnership in East Asia, known as CEPEA, which will aim to break down tariffs and other barriers.

Asean (the Association of Southeast Asian Nations) is driving the plan -- some within it talk about an eventual economic union to rival the European Union, covering half of the world's population.

That may seem the stuff of fairy tales, but unlike other regional groupings, such as the Asia-Pacific Economic Co-operation (Apec), Asean nations have gone well past just talking.

Recent trade deals with Australia and New Zealand on top of those with other countries in the region are seen as building blocks to the more ambitious dreams held by some.

At a recent Asean think tank meeting many were even talking about the possibility of a region-wide common currency -- though most add hastily this would have "difficulties", and would be some way down the track.

But those holding political and business power in the region are intent on one objective -- continuing to lift trade between the Asean countries plus the "east Asian six"

In the past, Asian countries have tried to boost economic growth through exports to the United States and Europe, but the international credit crisis and the recession has led many in the region to push for more regional trade.

Some in Asean have lost confidence in the developed world and are looking within their membership for the markets.

The thinking goes if you move hundreds of millions of people from abject poverty into relative poverty, then towards the middle class, there will be a new market.

By developed world standards Asean definition of middle class is still below the poverty line, but if you multiply a few more dollars of disposable income by billions of people then that is a very large market indeed.

Internal regional trade has grown by 55 percent in recent years and was expected to grow even faster as many Asian countries weathered the recession better than many in the developed world.

But there has still been damage...stories of factory closures throughout the East Asia region abound, especially of those who relied on exports to the US.

China and other countries have been spending billions on infrastructure projects, building thousands of kilometres of new roads and railways, as well as ports and airports.

Much of this spending is done with one eye on boosting regional trade and to do this barriers have to come down, hence the push for CEPEA.

One Asean official recently told NZPA that many Asian countries had lost faith in Apec and its ability to deliver gains to the poorer Asean nations.

Apec had become an arena for a political summit, with trade talks the excuse to bring everyone together without delivering anything, he said.

But Asean is not without its problems when it comes to trade.

Its six main countries -- Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand -- were meant reach free trade status between themselves by 2010.

They signed an agreement in 1993 with the pledge to phase out tariffs by next year, with poorer members Cambodia, Laos, Myanmar and Vietnam reaching that point by 2015, but that is not going to happen.

The Asean Summit, which takes place just before the East Asian Summit, will see countries ask not to remove tariffs so fast in sensitive areas, such as rice.

Some countries have rice tariffs as high as 40 percent and want more time to remove them.

So even in the ambitious Asean region there are political problems that some times trump those with big free trade deal dreams.

But even the smallest steps are of help to New Zealand exporters.

Trade officials estimate that tariff elimination and the reduction of other trade barriers in CEPEA would lift New Zealand's GDP by $500 million, or 2 percent.

East Asia Summit countries made up 52 percent of New Zealand's recent exports, or $28 billion in 2008.

One of the lessons of the recession was that exporters needed diverse markets as insurance, when stormy economic events hit.

(Ian Llewellyn travelled to the East Asian Summit with the assistance of the Asian Foundation)

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