Programme paves way for free trade deal

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Last updated at: (Beijing Time) Thursday, April 08, 2004

Programme paves way for free trade deal

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The early harvest programme between China and the Association of Southeast Asian Nations (ASEAN), which paves the way for realizing the China-ASEAN free trade agreement (FTA) in 2010, has activated bilateral trade in the past months.

Analysts say this has laid a solid foundation for taking the next step under the FTA framework.

According to the China General Administration of Customs, two-way trade volume between China and ASEAN's 10 members reached US$6.4 billion in January, up 15.4 per cent year-on-year.

China's exports to ASEAN members surged a year-on-year 15.8 per cent to US$2.36 billion.

In the same period, ASEAN exported a total of US$4.05 billion to China.

"The rapid growth of bilateral trade is a result of the early harvest programme," said Fan Ying, a trade expert at the Foreign Affairs College in Beijing.

"The free-trade agreement is in the interest of both China and its Southeast neighbours," she added.

Under the programme, which was implemented on January 1, the two sides have cut tariffs on about 600 agricultural imports to 2 to 15 per cent, and agreed to scrap these tariffs in 2006.

Thailand leads ASEAN members in initiating FTA programmes as it signed an agreement with China to phase out all taxes on 188 fruits and vegetables starting last October.

The two countries witnessed a flood of produce onto each other's market with the first zero-tariff agreement in place.

From October to December, three months after the free-trade pact was carried out, Thailand exported US$33.25 million in vegetables and US$26.7 million in fruits to China, up 133.1 per cent and 41.74 per cent year-on-year respectively, Thailand's data showed.

"All these figures show that the programme brings a win-win situation to both sides," said Lu Jinyong, professor with the Beijing-based University of International Business and Economics.

"They also soothed some early worries that China will be the major beneficiary of the agreement," he added.

The large amount of exports from ASEAN members to China is conducive to promoting their export-oriented economies, said Fan.

"And the Chinese exports are generally inexpensive and of good-quality," she said.

"This is welcomed by ASEAN customers."

For example, Fan explained, Chinese cabbage is priced at 13 Thai baht, or 33 US cents, in Thailand, which is 76 baht (US$1.95) lower than those imported from the United States and the European Union.

Chinese customers will also be able to enjoy tropical fruits and vegetables at a lower price in a few months due to lower tariffs, she said.

Aside from an increase in trade, the odds of reaching a free trade deal are improving, Lu said.

"It is historic for China and ASEAN to build such an FTA at a time when regional co-operation and integration are gaining pace across the globe," Lu told China Daily.

"The experience and lessons we learned from the early harvest programme will help the two sides better carry out the FTA schedule on industrial co-operation and investment facilitation," he said.

However, the professor also cautioned that challenges still lie ahead in fueling further Sino-ASEAN FTA programmes.

"ASEAN members are not at the same development level," he said.

"This diversifies their expectations and brings some difficulties in reaching agreement."

In addition, Fan believes competition between China and ASEAN in some industries such as textiles will also hamper promoting FTA programmes in industrial sectors.

Source: China Daily

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