ASEAN, China agree on free trade

By Amit Baruah

BANDAR SERI BEGAWAN (BRUNEI), NOV. 6. The Association of South- East Asian Nations (ASEAN) and China have agreed to set up a free trade area (FTA) within 10 years. The agreement came at a meeting between ASEAN leaders and the Chinese Premier, Mr. Zhu Rongji, at an ``ASEAN +1'' meeting this morning.

The Brunei Sultan Hassanal Bolkiah, who chaired the session, said in a statement that the leaders had endorsed a proposal for a ``framework on economic co-operation'' which would establish an ASEAN-China FTA in 10 years with deferential treatment to newer and less-developed ASEAN members like Cambodia, Myanmar, Laos and Vietnam. ``The agreement should also provide for an early harvest in which the lists of products and services will be determined by mutual consultation. With a combined market of 1.7 billion people, a free trade area between ASEAN and China would have a gross democratic product of $2 trillion and two-way trade of $1.23 trillion. We agreed to instruct our Ministers and senior officials to start negotiations with a view to conclude the agreement as soon as possible,'' the chairman's statement said.

The statement said ASEAN and China identified agriculture, information technology, human resources development, investment and the Mekong river basin development as five ``priority'' areas for co-operation in the early part of the new century. On the infrastructure front, a key area of co-operation, Beijing will construct an 80km road in Laos as part of the Kunming-Bangkok section of the Trans-Asian Highway, the Chinese Vice-Foreign Minister, Mr. Wang Yi, said at a press conference. China will also provide $5 million for the dredging of the Mekong river in Laos, Myanmar and Thailand.

Answering questions on the ASEAN-China FTA, Mr. Wang conceded that negotiating the agreement would face ``many challenges''. The specifics of the agreement, he said, would be decided during the course of the negotiations. The Chinese Vice- Minister announced that after acceding to the World Trade Organisation (WTO) at Doha in the next few days, Beijing would announce the extension of the most-favoured nation (MFN) status to the nine WTO members of ASEAN.

Mr. Wang was all praise for the political will demonstrated by ASEAN and China in coming to an agreement on a ``goal'' for concluding the FTA within a 10-year period. Asked to comment on the possibility of an ASEAN-East Asia free trade area (which would include China, Japan and South Korea), Mr. Wang seemed to downplay the idea: ``It is still a notion that has not been raised to a government level.''

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Section  : International
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