SE Asia, China sign landmark trade accord

SE Asia, China sign landmark trade accord

Karl Malakunas, Agence France-Presse, Phnom Penh

Chinese Prime Minister Zhu Rongji and Southeast Asian leaders signed an historic agreement here Monday to create the world's biggest free trade area embracing 1.7 billion people and two-way trade worth US$1.2 trillion.

Zhu hailed the deal, saying it would benefit the global economy and lift his nation's relations with the 10 members of the Association of Southeast Asian Nations (ASEAN) to "unprecedented heights".

The free trade area should be completed in 2010 between China and the six original ASEAN members -- Brunei, Malaysia, Indonesia, the Philippines, Singapore and Thailand and eventually create a trade area with an economy worth almost $2 trillion.

The deadline for the less developed ASEAN nations -- Cambodia, Laos, Myanmar and Vietnam -- was pushed back until 2015.

Zhu said the agreement gave a "forceful impetus" to his nation's relations with ASEAN and "exerted a positive impact in the region and the world".

"This will also contribute to faster progress of East Asia cooperation," he said. "The China-ASEAN relationship has reached unprecedented heights in history."

Tariff cuts on selected farm products under an "early harvest package" will start as early as next year, officials said.

Products covered under the early harvest package include live animals, meat, fish, dairy produce, other animal products, live trees, vegetables, fruit and nuts.

Zhu said China would faithfully deliver its commitments and implement the early harvest and other arrangements on schedule.

"We stand ready to make joint efforts with all ASEAN countries to move forward our all-round economic cooperation through the establishment of the Free Trade Area," he said.

A statement issued after the signing ceremony said ASEAN and China would progressively eliminate tariffs and non-tariff barriers on "substantially all" trade in goods while taking similar steps to free trade in services.

The two sides also agreed to establish an "open and competitive" investment regime.

Under the pact, China also accorded the most-favored nation treatment to Cambodia, Laos and Vietnam, the three ASEAN members which are not yet members of the World Trade Organization (WTO), the statement said.

China will reduce or eliminate tariffs imposed on exports from the three countries, a Chinese official told AFP.

Based on the timeframes for implementing the ASEAN-China FTA agreement, negotiations to reduce and eliminate tariffs will start early next year and be concluded by mid-2004.

For services and investment, negotiations are to start early next year and be concluded "as expeditiously as possible".

Negotiations between the two sides are to be carried out by an existing body known as the ASEAN-China Trade Negotiations Committee, which would report to the ASEAN economic ministers and China's Ministry of Foreign Trade on the progress and outcomes of negotiations.

Bilateral ASEAN-China trade totaled $41.6 billion last year, making China the sixth and ASEAN the fifth biggest trading partners to each other.

Analysts said the free trade agreement will provide an avenue for ASEAN to engage its giant neighbor as an economic partner rather than a competitor.

"It means we have freer access to the huge domestic market of China," National University of Singapore economics professor Jose Tongzon told AFP before the summit.

"This is where ASEAN should explore the possible areas where we can benefit from China's free market."

ASEAN and China also signed a pact to co-operate on non- traditional security issues that covered a range of issues including terrorism.