ASEAN-China Free-Trade Plan to Create 'Double Win': Study

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Last updated at: (Beijing Time) Wednesday, February 13, 2002

ASEAN-China Free-Trade Plan to Create 'Double Win': Study

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A study of local economists showed that the plan to build a free-trade area between the Association of Southeast Asian Nations (ASEAN) and China will bring about mutual wealth, partially by diverting ASEAN's trade away from the western economic powers to China, the state-owned radio reported Wednesday.

"There will be greater exchange of raw materials, immediate and finished goods between the 10-member bloc and China," said a report from a group of economists who are assigned by the Thai government to study the issue.

The study, based on an assumption that ASEAN and China will abolish import tariffs on about 50 major products, found that an increasing two-way trade flow will boost the gross domestic product (GDP) of ASEAN by 0.38 percent and China by 3.6 percent.

ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Thailand, Singapore and Vietnam. Last year, ASEAN and Chinese leaders agreed to establish a free-trade area within 10 years. Both sides intend to make a ministerial declaration on the issue and framework for negotiations by the end of the year.

The study showed that ASEAN would gain rather than loose from closer ties with China. ASEAN countries will also likely to increase exports to China when import duty was reduced on rice, sugar, vegetable oil, garments, leatherware, paper and printing materials, chemicals, rubber and steel.

In return, the study said Chinese products benefiting from ASEAN's tariff reductions will include transport equipment, food, beverages and tobacco, petroleum products and coal, chemicals, rubber, mineral products and vehicles.

Moreover, the free-trade scheme will reduce ASEAN's heavy reliance on markets in United States, Japan and the European Union (EU), with China becoming a prominent buyer.

The plan also have benefits in other areas, e.g. promoting Japan to seek closer ties with the ASEAN, according to the study.

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