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
Trade between China and the Association of Southeast Asian Nations reached a record high of $400.9 billion in 2012 and the biggest progress in trade facilitation was a consensus on the launch of the Regional Comprehensive Economic Partnership.
ASEAN and Chinese leaders are set to ink two Free Trade Agreements at a bilateral summit later this month: one on sanitary and phytosanitary (animal and plant health) standards; the other would give officials more flexibility in facilitating growth between ASEAN and China.
If Hong Kong accedes to the China-Asean Free Trade Area (CAFTA), Malaysia would find opportunities to expand its services sector through Hong Kong’s established service-based economy.
China seems to be the manufacturing base that is benefiting the most from the free-trade agreement with Asean countries, as the value of exports from China to Asean in three major industries have increased significantly over the past decade, according to the Thailand Development Research Institute (TDRI).
Chinese and Indonesian leaders are expected to sign an MoU on strengthening bilateral trade this week, one year after the ASEAN-China Free Trade Agreement (ACFTA) came into effect.
Indonesia should focus on increasing its competitiveness rather than try to renegotiate the Asean-China Free Trade Agreement, economists and business executives said.
Debate over the ASEAN-China Free Trade Agreement (ACFTA) goes on as Indonesia’s Chamber of Commerce (Kadin) calls for renegotiation to give time for Indonesia to develop its downstream industry.
Lower export barriers are spurring trade and investment from China, but local producers now worry that a flood of cheap Chinese imports will put them out of business.
’The purpose of the project is to respond to the vigorous growth of the ASEAN-China free trade area,’ said Dong Hongqi, president of the Ashima Yunnan Cultural Industry Group, a Yunnan-based state enterprise, brushing off criticism that the complex was designed to promote cheap Chinese goods on the Thai market to the detriment of local producers.
"It’s fair to say the Philippines is becoming one of the main destinations for Chinese companies to make overseas investment," says Wu Zhengping, Economic and Commercial Counsellor of the Chinese embassy in the Philippines.
