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China-ASEAN

In November 2001, China and the 10-member Association of South East Asia Nations (ASEAN) began negotiations to set up a free trade area.

One year later, a framework agreement for the planned FTA was signed. The FTA, a zero-tariff market of more than 1.7 billion people, has been targeted to come into force in 2010 for the six original ASEAN members (Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand) and in 2015 for the other four (Burma, Cambodia, Laos and Vietnam). Implementation of the framework agreement would occur in stages. For instance:

- An early harvest programme covering trade in goods came into force in July 2005.
- Negotiations on a dispute settlement mechanism were finalised in 2004 for implementation in 2005.
- Negotiations on trade in services were completed and an agreement signed in January 2007, for implementation in July 2007.
- The China-ASEAN investment agreement was to be signed at the ASEAN Summit in Thailand in December 2008.

Separately, China signed a bilateral FTA with ASEAN member Singapore in October 2008. Beijing has also been hammering out a lot of separate, smaller and more specific bilateral deals with ASEAN neighbours, such as the infamous Philippine-China investment agreements (the subject of huge corruption scandals in the Philippines in 2007), harmonised food safety standards with Thailand (to facilitate agricultural trade) and numerous arrangements with the Mekong Delta countries.

Politics around the China-ASEAN deal are delicate as ASEAN states want to avoid China’s domination and yet build their economies by interacting with China, especially given the slowdown in demand from the US and European markets. At the same time, China is moving up the manufacturing value-chain losing need for primary products that ASEAN states produce while its search for raw materials such as minerals and oil has rapidly gone global. Finally, the coming into force of full-scale zero-tariff farm trade with China from 2010 onward has raised many fears in the ASEAN world.

(Picture: Workers unions in Indonesia protest against the ASEAN-China FTA)

last update: May 2012


China plans S-E Asia rail links
China will, in coming months, accelerate plans for high-speed rail links with Myanmar, Cambodia, Thailand and Laos, as part of a wider effort to deepen engagement with its Southeast Asian neighbours, officials said this week
Indonesia and China both claim trade deficit
Nine months into the full implementation of the free trade agreement between China and the Association of South East Asian Nations (ASEAN), of which Indonesia is a member, data provided by Indonesia and China show both of them suffering a trade deficit against each other.
Imports of F&B products begin to hurt local producers
Imported food and beverage products have begun to flood the Indonesian market following the implementation free trade agreements between ASEAN and China early this year, a business executive have said.
Blaming China: Indonesian garment makers say free trade pact leaves them on brink of collapse
Mufardi Rusli’s neighbors hunch over tables covered in brightly colored fabric, the whirring of their sewing machines echoing across his Jakarta neighborhood. For Rusli, the sound is a bitter reminder of the $2 line of jackets that bankrupted him, costing him a garment business it took 15 years to build.
Corporations Told To Exploit Opportunities From Asean-China FTA
Corporations should try to pragmatically capitalise on the opportunities of the Asean-China Free Trade Area (ACFTA), instead of having reservations about it, says Deputy Prime Minister Tan Sri Muhyiddin Yassin.
Unlevel Playing Field Under Asean-China FTA, Say Aluminium Makers
An unlevel playing field exists under the Asean-China free trade agreement (FTA), according to the Federation of Malaysian Manufacturers Aluminium Manufacturers Group (FMM AMGM).
China promises Indonesia $2b in loans for infrastructure projects as part of ACFTA
China will provide Indonesida with $1.8 billion in export credits to finance the import of Chinese goods for infrastructure projects such as toll roads, bridges and coal-fired power plants.
Will ASEAN-China FTA boost Indonesia’s agricultural export?
Tariff elimination under the ACFTA will not automatically boost Indonesia’s agricultural export but is an entry point to increase market share in China
Thai tangerine producers affected by ASEAN-China FTA
Thailand’s 4,000 small tangerine farmers are expected to reduce their output almost by half, as they cannot compete with the tariff-free Chinese imports.
Malaysia govt will address concerns over surge in imports from China
Many Malaysian manufacturers are struggling to survive the influx of Chinese goods since the China-ASEAN FTA came into effect on 1 January 2010.