China, ASEAN eye world's largest FTA

P. Parameswaran, Agence France Presse, Bandar Seri Begawan

China's Premier Zhu Rongji and the leaders of Southeast Asia's 10 nations are expected to agree on an ambitious plan to create the world's largest free-trade zone, officials said Friday.

The decision to give the go-ahead for the ASEAN-China free trade area (FTA) at a summit meeting here in Brunei next week "is going to be extremely significant," a Southeast Asian foreign ministry official told AFP.

"If this is realized, maybe in about 10 years, it will be the largest FTA in the world with a combined market of nearly two billion people," he said, speaking on condition of anonymity.

Leaders of the Association of Southeast Asian Nations (ASEAN) will have their annual meeting in Brunei's capital on Monday before meeting their counterparts from China, Japan and South Korea the next day.

Most of ASEAN, comprising Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam, will already be part of a free market by 2003 under the grouping's own liberalization plan.

At the last ASEAN-China summit meeting held in Singapore in 2000, Premier Zhu raised the likelihood of a ASEAN-China free trade zone as a means to strengthen trade and investment links.

Following the proposal, ASEAN and China, the world's most populous nation, set up an expert group to study the broader aspect of their economic relations into the 21st century, officials said.

The expert group compiled a report which was reviewed by senior officials of the two sides ahead of the summit.

They recommended the setting up of the ASEAN-China FTA, covering a market of about 1.7 billion people -- comprising China's 1.2 billion population and the 500 million inhabitants of ASEAN's 10 member states, the officials said.

As of 2000, ASEAN and China have a combined gross domestic product (GDP) of almost US$1.7 trillion and a total external trade value of nearly $1.3 trillion.

The assistant director of external relations at the Jakarta- based ASEAN secretariat, S. Pushpanathan, said the proposed free trade plan reflected the importance China gave to its economic links with ASEAN.

"ASEAN is the first entity that China wants to have an FTA with and this augurs well for their economic relations, especially with China's entry into the World Trade Organization (WTO)," he told AFP.

Pushpanathan said if the plan went through, it would "inject confidence in East Asia during this current global economic slowdown, help to boost trade and investments and improve ASEAN's economic competitiveness."