China, ASEAN end talks on free trade

China, ASEAN end talks on free trade

Peter Harmsen, Agence France-Presse, Beijing

China and 10 Southeast Asian countries wrapped up three days
of talks in Beijing Thursday on creating the world's largest free
trade zone.

Delegates from the Association of Southeast Asian Nations
(ASEAN) and China were discussing an outline pact that would make
the zone a reality in a decade, although they said they had not
made much progress yet.

"We're still discussing various models to adopt," said a
Southeast Asian trade official towards the conclusion of the
three-day meeting. "It's still at a very early stage."

The deadline for the framework agreement is a summit in
Cambodia, tentatively set for Nov. 5, which will bring ASEAN
leaders together with their counterparts from China, Japan and
South Korea.

The end goal is an integrated market of 1.7 billion consumers,
which would make it larger than any other free trade zone in
existence.

Delegates have said that "ideally" the framework pact will
include a timetable for implementing the free trade area and
outline mechanisms to bridge inevitable differences on the road
towards free trade.

"It's to do mainly with trade, and of course, there'll be some
investment coming out of that," said the ASEAN delegate.

The ambitious plan, which was first given official status at a
summit between ASEAN and China in November last year, could
accelerate momentum in economic ties.

The importance of ASEAN in Chinese trade has grown steadily in
recent years, despite the regional financial crisis that shook
the region in the late 1990s.

ASEAN made up just 5.8 percent of China's total trade in 1991,
but is now its fifth-largest trading partner and accounted for
8.2 percent last year, according to official Chinese statistics.

China, meanwhile, is ASEAN's sixth-largest trading partner,
and its share in ASEAN's trade rose from 2.3 percent in 1991 to
five percent in 2000, ASEAN data showed.

While basic commodities such as wood and oil products took up
a large share of the trade 10 years ago, more advanced items such
as computer equipment are gradually becoming more important.

Singapore and Thailand are believed to be particularly keen on
the free trade area (FTA), because the costs to themselves would
be limited as their import tariffs are already among the lowest
in the region.

But many other ASEAN nations have their own agendas and say
they see great opportunity in China, which has been the world's
fastest growing major economy for the past decade.

"Brunei exports a lot of oil and gas," said the Brunei
delegate. "We'll have opportunities as Chinese industry develops
and needs more energy."

Analysts have said some Southeast Asian nations are worried
about China using closer economic ties to expand its political
clout in the region.

Japan, Asia's largest economy, is particularly concerned about
this prospect and has made several overtures to ASEAN in recent
months.

China indeed sees political implications of a FTA, its chief
trade negotiator Long Yongtu said in remarks on the foreign trade
ministry's website.

"As far as our country is concerned, a free trade area will
help strengthen political, diplomatic and economic ties between
China and ASEAN," Long said.

But the political ramifications of a FTA has not been a major
issue during this week's talks in Beijing, participants said.