Southeast Asian nations and China signed an accord to create the world’s biggest free-trade area, by removing tariffs by the next decade within a region that is home to two billion people, a critical step in their vision of a trade bloc to rival Europe and North America, reports The Asian Wall Street Journal.
The Asean-China accord aims to remove all tariffs by 2010, drawing Asean’s combined economies of $1 trillion closer to China’s economy of $1.4 trillion. Ong Keng Yong, Asean’s secretary-general, said that trade with China would speed up with the free-trade agreement. „So by the time this whole FTA is done, as we want [it] to by 2010, it should become quite substantial: $130 [billion] or $140 billion, perhaps,“ he said. In comparison, Asean-US trade is $120 billion a year and Asean-EU trade is $110 billion annually, Ong said.
The New York Times writes that the new trade agreement was the first concrete step toward a China-Asean free trade area by 2010, an idea China broached two years ago. The strategic declaration highlighted the dramatic turnaround in relations that until several years ago were marked by fear, and in some instances, hostility. In the declaration, China reaffirmed its support for the treaty on a zone free of nuclear weapons that is a hallmark of Asean. In a more indirect way, China won a victory when the 10 Asean leaders announced that in addition to their regular summit meeting next year, they would hold an East Asia summit meeting outside the formal auspices of Asean. That configuration would bring China closer into the eventual formation of an East Asia community, officials said Monday.
The Globe and Mail (Canada) adds China’s concerns about securing vital sea lanes and feeding its booming economy’s ravenous appetite for oil and raw materials were seen as key motivations for the trade pact with the 10-nation Association of Southeast Asian Nations at the group’s annual summit, held in Laos’s capital of Vientiane. But some analysts say the agreement shows how an increasingly bold China is forging new alliances that would reduce, and possibly eventually challenge, America’s influence in Asia.
Kyodo (Japan) adds that leaders of the 10-member Association of Southeast Asian Nations signed an agreement Monday to accelerate economic integration in the region. The plan, which moves up original target dates by three years, calls for tariff elimination in nine sectors of goods by Jan. 1, 2007, for the six more advanced members and by Jan. 1, 2012, for the four others. It also includes a commitment to liberalize services in the air travel and tourism sectors by 2010.
The idea is to transform ASEAN into a single market and a competitive production base free of tariffs and restrictions on the movement of goods, services, investment and skilled labor, and with a freer flow of capital among the 10 member states, officials said. In addition to air travel and tourism, the only two services sectors, the other priority sectors are automobiles, wood-based products, agro-based products, fisheries, rubber-based products, textiles and apparel, electronics, healthcare and information technology. Currently, the tariff level on most goods traded among ASEAN members, including the priority sectors, averages about 5 percent, according to Thai officials.
Trade in the 11 priority sectors are between 50 and 60 percent of the total intraregional trade, according to an ASEAN economic expert. The acceleration will hasten economic integration in the region which covers the long-standing ASEAN members — Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand — and the newer members — Cambodia, Laos, Myanmar and Vietnam. The agreement allows ASEAN members to exclude some merchandise goods from the acceleration plan, but only so long as they do not exceed 15 percent of the overall tariff lines.
Agence France Presse further reports Southeast Asian leaders were set Tuesday to wrap up meetings in Laos where renewed embarrassment over military-ruled Myanmar threatened to overshadow the signing of historic trade deals with China. Myanmar re-emerged as the unpredictable bete noire of the Association of Southeast Asian Nations (ASEAN) by sending out mixed signals on its commitment to reform as the 10-member group met in the Laotian capital of Vientiane. Reports from Yangon that the ruling junta had extended the house arrest of democracy leader Aung San Suu Kyi again cast a shadow over the annual summit, which has been dogged by controversy ever since Myanmar joined ASEAN in 1997. Baffled Asian leaders, some of whom had only just praised Myanmar’s decision to release more than 9,000 prisoners, sought clear answers from the military-led regime but got none.
Kyodo meanwhile notes in a separate piece that Mitchell Reiss, the State Department’s director of policy planning, expressed “concern“ Tuesday about a summit of East Asian leaders to be held in Kuala Lumpur next year as the new framework does not include the United States. “While we encourage greater integration, greater economic development, greater dialogue among all the countries of this region, we don’t want to be excluded from that conversation,“ he said. Reiss made the remarks as his “personal“ opinion in a question-and-answer session that followed his speech in Tokyo when asked about Southeast Asian leaders‘ agreement Monday to hold the first “East Asian Summit“ in Kuala Lumpur next year.
In other news, Agence France Presse notes Singapore and India are now ready to sign a wide-raging economic agreement to boost trade and investment after resolving all outstanding issues, an official statement said. Singapore Prime Minister Lee Hsien Loong and his Indian counterpart Manmohan Singh met on the sidelines of the Asian summit in Vientiane to discuss bilateral cooperation. Lee is looking forward to visiting New Delhi early next year to sign the agreement, which will pave the way for even stronger cooperation between the two countries, the statement added. Among other provisions, the agreement aims to ease barriers for Singaporean firms to invest in India’s fast-growing economy and give greater access for Indian professionals in Singapore’s services industries. India will cut tariffs on its imports from Singapore by 80 percent after the pact is signed, gradually reducing them to zero over a five-year period. The agreement also calls for liberalization of air transport between the two countries, according to previous official statements. Singapore has invested $1.5 billion in India, making it India’s biggest Asian investor and the third largest foreign investor.