PHNOM PENH, June 19: Plans for a free trade area linking the world’s most populous nation and Southeast Asia by 2010 are on track, with China confident tariffs on a range of products will be dismantled long before then.
There should be no problems (reaching that target date), Chinese foreign ministry spokeswoman Zhang Qiyue said in the Cambodian capital, where the 10-member Association of Southeast Asian Nations (Asean) is hosting a series of regional meetings.
Initially, Asean had some misgivings, but now they feel this is very beneficial to Asean.
The pact, proposed by China’s former economic czar ex-premier Zhu Rongji and endorsed by Asean in 2001, will create the world’s largest free trade area (FTA) covering 1.7 billion people.
Tariff-slashing details under the FTA plan featured highly in discussions when Asean foreign ministers met their Chinese counterpart Li Zhaoxing Thursday.
Cambodia’s Foreign Minister Hor Namhong, speaking on behalf of Asean, said the free trade deal affirms Asean’s view of the Chinese economy as a vast opportunity and not only as a competitive challenge.
He said Asean appreciated in particular China’s decision in October last year to grant preferential tariff-treatment to its imports from the least-developed members of Asean and to write off their debts to China
Zhang said China was keeping its word on allowing an “early harvest” — early reduction of tariffs on products from Southeast Asian countries even before the FTA is set up.
China has already agreed to cut tariffs on a range of goods from Thailand and Cambodia, Zhang told reporters.
China and Thailand have agreed to reduce tariffs on fruits and vegetables traded between the two countries to zero from October with similar cuts planned for other products as well.
Thai Prime Minister Thaksin Shinawatra and his Chinese counterpart Wen Jiabao met on the sidelines of an Asean-China emergency SARS summit in Bangkok in April to discuss the lowering of tariffs, the Thai government said.
A bilateral agreement on this is expected to be signed during the visit to China by Thai deputy prime minister Somkid Jatusripitak on June 15-19, the Thai government said last week.
It added that the agreement to reduce tariffs on fruit and vegetables will pave the way for more free trade between the two countries and negotiations to expand the coverage to other sectors as well.
Zhang said the “early harvest” agreements showed China’s commitment to setting up what China maintains will be a “mutually beneficial” free trade area. “Asean’s attitude is also very active,” she added.
China has agreed to lower tariffs on agricultural imports from Asean to zero in three years from the signing of the agreement in 2001 and indicated it wants electrical appliances included in the first round of cuts expected to be completed by the end of this year.
With a combined market of 1.7 billion people, an Asean-China free trade area would have a gross domestic product of two trillion dollars and two-way trade of $1.23 trillion, according to estimates from Asean and China.
The establishment of an FTA is expected to result in a surge of nearly 50 per cent in exports from both sides.
The average duty within an Asean-China FTA by 2010 would vary between zero and five per cent. Most investment barriers would also be eliminated.
Asean comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
Japan, China’s economic competitor in the region, is meanwhile trying to ink free trade pacts with Southeast Asian countries but is faced with opposition from its domestic farm interests.
Still, an official with the Japanese delegation in Phnom Penh said Tokyo was starting bilateral talks for free trade deals with the Philippines and Thailand, which it hopes will be completed by the end of this year.—AFP