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.