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.