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.