China-ASEAN free trade on track

China-ASEAN free trade on track

Cindy Sui, Agence France-Presse, Phnom Penh

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 are expected to feature in discussions when ASEAN foreign ministers meet their Chinese counterpart Li Zhaoxing Thursday.

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 Severe Acute Respiratory Syndrome (SARS) summit in Bangkok in April to discuss the lowering of tariffs, the Thai government said.

"It is expected the trade-related ministers of the two countries will sign the agreement during the visit to China by (Thai deputy prime minister) Somkid Jatusripitak on June 15-19," a statement from the government said last week.

"This agreement to reduce tariffs on fruit and vegetables will pave the way for more free trade between the two countries. In the future, negotiations will expand to cover other sectors," the statement added.

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 dollars, according to estimates from ASEAN and China.

The establishment of an FTA is expected to result in a surge of nearly 50 percent in exports from both sides.

The average duty within an ASEAN-China FTA by 2010 would vary between zero and five percent. 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.

A trade pact between Japan and Singapore has already been reached.