Canberra – The federal government was examining introducing duty-free status for all goods of East Timor origin, Foreign Minister Alexander Downer said today.

Speaking at the launch of the Australia East Timor Business Council, Mr Downer said East Timor faced great economic challenges now that it had achieved political independence.

The private sector's take-up of opportunities would be key to economic development in Australia's northern neighbour, Mr Downer said. Trade and economic development would be an increasingly important focus of Australia's relationship with East Timor.

"We are conscious of more immediate responsibility on the part of Australia to help secure a sustainable economic future for East Timor and its people," Mr Downer told the launch in Sydney.

"I hope to be in a position to announce later this year that Australia will offer duty-free tariff treatment of all goods of East Timorese origin." About 347 Australian businesses had offices in East Timor. Many were small privately-owned concerns, Mr Downer said.