China and the Association of Southeast Asian Nations (ASEAN) have signed a new agreement. The conclusion of this new agreement, namely, the Investment Agreement, together with already-signed China-ASEAN agreement of the trade in goods and services, completed the negotiation process of the China-ASEAN Free Trade Area (FTA).
The China-ASEAN FTA Investment Agreement was signed in Bangkok, Thailand on Thursday, August 20 at the Eighth China-ASEAN Economic and Trade Ministers' Meeting (CAEM). It marked the conclusion of procedures for establishing the China-ASEAN FTA and, therefore, signifies that the free trade area would be completed on schedule.
The China-ASEAN FTA would be the first free trade area China is to form through its joint efforts with other countries and also the first free trade area for the 10-member ASEAN as an integrated whole, and so it is of vital importance to both sides.
Chinese Premier Zhu Rongji and ASEAN leaders signed the Framework Agreement on China-ASEAN Comprehensive Economic Cooperation in November 2002; both sides began to carry out the "early harvest" plan under FTA creatively in 2003; the two sides inked the agreements on trade in goods and services and on a mechanism of dispute solution in 2004 and subsequently the Service Trade Agreement in January 2007; and the China-ASEAN Investment Agreement has now been concluded. To date, the main legal framework for the China-ASEAN FTA has thus all been laid.
Although it is a "South-South" type trade zone composed of developing countries, the China-ASEAN FTA will cover an extensive area of 13 million square kilometers with a population of 1.98 billion and involve about 6 trillion US dollars in gross domestic product (GDP) upon its inception in January 2010. Such an immense scale cannot be overlooked indeed.
The Investment Agreement, 27 clauses included, tried to provide a free, transparent and equitable investment mechanism for investors from both sides. The two most crucial clauses concern the national treatment and the Most-Favored-Nation (MFN) treatment respectively. And these two core clauses provide a legal protection or guarantee that investors of both sides enjoy the fair and equitable treatment and non-discrimination.
Following the signing and implementation of the Investment Agreement, the investment environment of the China-ASEAN FTA will turn more stable and open, thus greatly reducing the irrational limitations and restrictions. This will undoubtedly promote the mutual investment of enterprises of both sides and spur their related industries to go on developing. It would also provide Chinese firms with a good opportunity to implement the strategy of "going overseas" to invest or to do trade.
Nevertheless, it is worthy of attention that the conclusion of the Investment Agreement comes at a time when trade and investment protectionism has turned up worldwide amid the "haze" of global financial crisis. Against this background, the signing of the China-ASEAN Free Trade Investment Agreement is a clear-cut, positive signal sent to the entire world: The current global financial crisis has not hindered the pace of China and ASEAN with their trade and investment liberalization and market accessing process.
The signing of the Investment Agreement has further enhanced the mutual trust or confidence of China and the ASEAN in working together to cope with the global financial crisis and will play a vital, positive role in economic recovery in the East Asia region and the world at large.
The establishment of the China-ASEAN Free Trade Area (CAFTA) marks a final milestone in the development of the CAFTA, which will provide a rare, unprecedented business opportunity for China and the 10 ASEAN member nations. With the onset of the forthcoming 2010, people in both China and ASEAN countries would share substantial benefits to derive from the China-ASEAN Free Trade Area.
By People’s Daily Online and contributed by Prof. Lu Jianren, a senior research fellow and executive member of the prestigious Institute of Asia-Pacific Studies, Chinese Academy of Social Sciences
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