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Last updated at: (Beijing Time) Tuesday, November 05, 2002

Historic Step to Win-win Deal for China, ASEAN

China and 10 Southeast Asian countries agreed Monday to establish a free-trade zone between them by 2010, a move regarded as a milestone in the Sino-ASEAN economic cooperation. Chinese Premier Zhu and the leaders of the ASEAN signed the Framework Agreement on China-ASEAN Comprehensive Economic Cooperation to kick off the free-trade process.


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Chinese Premier Zhu Rongji and leaders of the ASEAN (Association of Southeast Asian Nations) member countries signed a landmark framework agreement Monday in Phnom Penh on enhancing full-range economic cooperation, marking the beginning of setting up a China-ASEAN free trade zone.

According to the agreement, the free trade zone covers trade in goods and services, investment and economic cooperation, with the trade of goods being the core of the free trade. Tariffs and trade limits on most goods and products will be abolished gradually.

China and the ASEAN countries singled out agriculture, IT technology, human resources and investment promotion and the exploration of the Mekong River valley as the priorities for economic cooperation.

The signing of the agreement in Phnom Penh, Cambodia, was a major step for China and ASEAN toward coming out on top in the face of a world economic slowdown, analysts said.

Last November, Zhu and the ASEAN leaders made the decision to build a China-ASEAN free trade zone -- the world's largest -- within 10 years. The decision, analysts say, represents the political desire for strengthening good-neighborly cooperative relations.

"That was both a political decision and a natural outcome of the growing economic relations between the two sides," said an official with the Ministry of Foreign Trade and Economic Cooperation, who declined to be named.

Chinese and ASEAN experts have predicted that the China-ASEAN free trade zone, once established, will create an economic area of 1.7 billion consumers, about 2,000 billion US dollars worth of gross domestic product (GDP) and a trade volume of 1,200 billion US dollars.

With the free trade zone in operation, China's exports to ASEAN will increase by 10.6 billion US dollars, or 55 percent, and its imports from ASEAN will rise by 13 billion US dollars, or 48 percent. Two-way investment will also surge, experts say.

Chinese and ASEAN officials kept busy following last November's decision, establishing a trade negotiation committee and launching working-level negotiations in May this year.

On Sept. 13, the first China-ASEAN economic ministers meeting was held in Brunei, and a consensus was reached on the time frame for setting up the China-ASEAN free trade zone.

Analysts say the framework agreement signed in Phnom Penh Monday lays a legal foundation for the free trade zone. It makes clear the relevant goals, ranges, measures, time span, early schedules, detailed arrangements concerning economic and technological cooperation, promises on offering Vietnam, Laos and Cambodia most-favored-nation treatment, and future negotiation arrangements on cargo, service and investment.

As neighbors, China and ASEAN countries enjoy advantages in promoting economic and trade cooperation. By 1991, China had established diplomatic ties with all ASEAN countries, and five years later, it became an all-round dialogue partner of ASEAN.

In 1997, President Jiang Zemin and ASEAN leaders decided to boost the good-neighborly cooperation of mutual trust in the 21st century, which laid a solid foundation for further economic ties.

The two sides enjoy huge economic and trade potential owing to their complementary economies in energy and industrial structures.Recent years witnessed the rapid development of China-ASEAN economic relations, with bilateral trade growing at an average annual rate of 15 percent since 1995.

Last year, despite the downturn of the global economy and the Sept. 11 incident, bilateral trade still reached 41.6 billion US dollars, up 5 percent on a year-on-year basis.

Currently, ASEAN is China's fifth largest trade partner and China is the sixth largest trade partner of ASEAN. In the first nine months this year, bilateral trade rose 27.19 percent to 38.55billion US dollars.

Analysts here say ASEAN countries now wish to gain the maximum benefit from China's booming economy, and both sides realize the necessity of strengthening economic ties in the face of regional economic integration.

Experts, who predict the China-ASEAN free trade zone would be a successful model for cooperation among developing countries, believe the latest development in China-ASEAN relations would enable the two sides to make joint efforts to reduce the risks brought about by economic globalization and strengthen the position of Asian countries in international trade and economic affairs.

Enhance competitiveness in face of challenge
The Association of Southeast Asian Nations (ASEAN) leaders have urged their member countries to enhance competitiveness amid increasing global integration, a statement by ASEAN Chairman Hun Sen said Monday.

"Sustained socio-economic development in the face of rapid globalization is the most important challenge facing ASEAN. Our strategy to address this challenge is regional integration," said the statement.

ASEAN must seize and build on opportunities for closer cooperation and mutual benefits with their partners, especially through enhanced trade and investment links and bold, unified strategies for growth, said the statement.

As globalization intensifies, a fully integrated ASEAN will make Southeast Asia more competitive, the statement added.

The statement reaffirmed ASEAN's commitment to enhance partnership with China, Japan and the Republic of Korea (ROK).

It noted that the ASEAN + 3 process has matured and expanded to include regional political and security issues.

The statement said ASEAN pledged to deepen its cooperation with China, and acknowledged the important and growing role of China in regional and world affairs.

Chinese Premier Zhu Rongji outlined China's vision for strengthened ties with ASEAN, emphasizing the goal of establishing an ASEAN-China Free Trade Area within the next decade, the statement said.

The ASEAN and Chinese leaders signed the Framework Agreement on ASEAN-China Economic Cooperation late Monday, which will serve as the fulcrum for establishing the free-trade area by 2010.

ASEAN concluded its summit meeting with China, Japan and the ROK in Phnom Penh earlier in the day. It also held a separate summit with China for closer cooperation between the two parties.


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