Free trade draft set for late 2002

Free trade draft set for late 2002

Peter Harmsen, Agence France-Presse, Beijing

China and 10 Southeast Asian countries aim to conclude an
outline accord on the establishment of a huge free trade zone by
the end of this year, officials said Wednesday.

Trade delegates from the Association of Southeast Asian
Nations (ASEAN) and their Chinese counterparts have agreed to set
up a joint working committee to thrash out details of the
proposed accord.

"(This way) the agreement could be concluded by the end of the
year 2002 at the ASEAN-China Summit in Cambodia," the two sides
said in a joint press release issued during a meeting in Beijing.

Leaders of ASEAN and China agreed in November to establish a
free trade area within the next 10 years, a move that could
result in an integrated market of some 1.7 billion people.

Delegates said Wednesday they were "optimistic" the framework
agreement could be completed within the next seven months and
that regionwide free trade could be a reality a decade from now.

"Ten years is a long time. Just look back 10 years and see how
much has happened since then in terms of trade liberalization,"
said a delegate, who asked not to be identified. "Never say
never."

Delegates said that "ideally" the framework agreement would
include a timetable for implementing the grand plan and outline
mechanisms to bridge inevitable differences on the road towards
free trade.

The agreement might also include provisions on investment
among members of the area, according to delegates.

"It will help draw Chinese investment to the ASEAN area," said
Chan Beng Seng, a Singaporean trade official.

The free trade initiative has been launched against a
background of concern among ASEAN countries about investment
being diverted to China as multinational companies seek to tap
the country's potential market.

In the past, Southeast Asia received 80 percent of all foreign
investment going to East Asia, but now China has taken over as
the destination of 80 percent of foreign investment in the
region.

The joint press release said the framework accord would take
into account the different levels of development between ASEAN
countries and China.

This is in line with a previous pledge by China and ASEAN to
give preferential treatment to the most disadvantaged countries
in the region, Cambodia, Laos and Myanmar.

Despite these provisos, not all ASEAN members are equally
interested in the free trade area, and some are too occupied with
domestic political trouble to pay too much attention, according
to analysts.

"The most enthusiastic are Singapore and Thailand, who already
have the lowest tariff barriers in the region," said Sheng Lijun,
a Singapore-based China watcher.

Over the longer term, a major fear among countries in the
region is that China might use the free trade area as a tool to
dominate its neighbors.

Japan is especially worried, and in a bid to catch up with
Beijing's rapid approaches to the region, it signed a free-trade
agreement with Singapore in January.

In a trip to the region during the same month, Japanese Prime
Minister Junichiro Koizumi pledged stronger ties with the rest of
ASEAN, including support to speed up economic reform in its
member countries.

Concerns about Chinese clout were not very much on top of the
delegates' mind as they met on Wednesday, they claimed.

"We're all friends, all one big family. We're optimistic,"
said an Indonesian official.