China to start cutting tariffs on ASEAN imports by next year
China to start cutting tariffs on ASEAN imports by next year
Martin Abbugao, Agence France-Presse, Bandar Seri Begawan
China is to start cutting tariffs on selected ASEAN imports next year under an "early harvest" package in its future free trade agreement (FTA) with the 10-nation regional bloc, economic ministers said Friday.
The move is expected to give momentum to forming the world's biggest free trade zone -- based on a population of more than 1.7 billion people -- within 10 years.
Association of Southeast Asian Nations (ASEAN) economic ministers, who met China's Minister of Foreign Trade and Economic Cooperation Shi Guang Sheng, here Friday said they welcomed "progress in developing the early harvest package" to be implemented by Jan. 1, 2004.
The package "is an integral part of the ASEAN-China Free Trade Area and would provide incentives to accelerate the establishment" of the zone, the ministers said in a statement.
"Negotiation of specific agreements for the liberalization of trade in goods, services and investments will commence in 2003."
Early harvest provides that China slashes tariffs on selected ASEAN goods well before the full implementation of the FTA within 10 years.
The ministers said early harvest will be implemented for a period of three years for ASEAN's core members Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand.
A longer time frame will be accorded to ASEAN's newer and less developed members Cambodia, Laos, Myanmar and Vietnam.
China levies higher tariffs on some imports from Southeast Asia and the package is designed as a goodwill gesture by Beijing.
Reports from Manila have said China imposes between 30-54 percent on sauces and mixes from the Philippines, compared to only seven percent levied by Manila on imports for these items.
Beijing slaps a 29 percent tariff on fresh papaya and 15 percent on cabbage lettuce. The Philippines levies only 10 percent for fresh papaya imports and 7.0 percent for cabbage lettuce, the Philippine Star reported.
However, the ministers said a "few issues remain unresolved" to finalize a draft framework agreement on the planned comprehensive economic cooperation with China, in which the FTA is the key component.
While declining to identify the issues, ministers have acknowledged an agreement has yet to be reached on the products to be included in the early harvest package.
China has proposed mainly agricultural products, while ASEAN wants non-farm goods to be part of the deal.
ASEAN Secretary General Rodolfo Severino said he hoped outstanding issues would be resolved when senior officials from ASEAN and China meet in Singapore next month.
Brunei's Minister of Industry and Primary Resources Abdul Rahman Taib said the ministers "have considered the draft and we are confident that the framework agreement with all its components will be ready for signing at the ASEAN-China summit in Cambodia" in November.
Severino said: "In a sense with the early harvest, the process (toward an ASEAN-China free trade zone) will have begun. But the date of completion will be 10 years."
There are also differences on when the 10-year period required for the completion of an FTA would end.
But the ministers said they agreed the FTA will cover both trade in goods, services and investments and that poorer ASEAN members will be given special and differential treatment.
The early harvest package will be "undertaken or implemented on an accelerated basis" and while it will initially cover goods, the feasibility of including the services sector should be explored, the ministers said.
"The framework agreement is more detailed than I anticipated so they are moving faster than I thought they would," Severino said.
China's Shi described the establishment of an ASEAN-China FTA as a "historical move" that would result in greater Asian economic and political stability.