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.