New Year, new ASEAN free trade bloc

09:03, December 30, 2009      

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The world's largest free trade area (FTA) in terms of population will be launched Friday by China and the Association of Southeast Asian Nations (ASEAN).

The China-ASEAN Free Trade Area (CAFTA), proposed in the Framework Agreement on Comprehensive Economic Cooperation signed in November 2002, will finally become effective January 1. The bloc will cover 13 million square kilometers and 1.9 billion people.

Over 90 percent of the commodities traded between China and the six original ASEAN countries – Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand – will have no tariffs in 2010. By then China's average tariff on goods from ASEAN countries will be cut down to 0.1 percent from 9.8 percent currently, Zhang Kening, director general of the Department of International Trade and Economic Affairs at the Ministry of Commerce (MOFCOM), said at a press conference held in Beijing Tuesday.

The zero-tariff rate for 90 percent of goods traded is expected to be extended between China and four new ASEAN member countries, Cambodia, Laos, Myanmar and Vietnam, in 2015.

There will be a single market between China and ASEAN member countries, as framework agreements on trade, service and investment have already been set up, said Warawudh Chuwiruch, minister of the Royal Thai Embassy in China, at the press conference. Thailand holds the rotating chair of ASEAN.

"From now on trade, service and investment between ASEAN member countries and China will flow freely," he said.

Trade between China and ASEAN countries went from $78.2 billion in 2003 to $231.1 billion last year at an average annual growth rate of 24.2 percent, according to the MOFCOM. China is now ASEAN's third-largest trade partner and ASEAN is now China's fourth-largest trade partner.

Trade between China and ASEAN saw a decrease in the first 11 months of this year, affected by the global financial crisis, but bilateral trade fared better compared to China's declining overseas trade globally during the same period, the MOFCOM said.

Gross domestic product (GDP) in the upcoming FTA is estimated at $2 trillion, and total trade in the region will be about $1.2 trillion, according to Chuwiruch.

While stating that most ASEAN member countries have been making efforts to make the bloc a reality, Chuwiruch also showed concern over potential competition among member countries.

Imports of goods such as fruits and vegetables from ASEAN countries will inevitably affect China's producers of these goods, the MOFCOM's Zhang also said.

But Chuwiruch said countries in the FTA won't likely face looming fears of competition, as there are diversified consumer needs in the market.

Both Zhang and Chuwiruch stated manufacturers and producers need to enhance the competitiveness of their products. More balanced trade will be expected after the launch of the FTA, Zhang said. He said that from January to November China saw a deficit of nearly $1 billion in trade with ASEAN.

Source: Global Times
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