China and ASEAN started their process for building a free trade area with the signing of the "Agreement on Trading in Goods of the Framework Agreement on Comprehensive Economic Cooperation between ASEAN and China."
Witnessed by Chinese Premier Wen Jiabao and leaders of the 10-member ASEAN (Association of Southeast Asian Nations), Chinese Minister of Commerce Bo Xilai signed the agreement with 10 economic ministers of the ASEAN countries.
According to the agreement, starting from July 1, 2005, China and ASEAN countries will start their tariff-reducing process. The two sides will gradually reduce or cancel tariff on 7,000 kinds of products.
Under the agreement, China and six of "old" ASEAN members will complete the building of the free trade area by the year of 2010 while the other four "new" members will enjoy another five years of "transitional period" and complete the building of the free trade area in 2015.
ASEAN recognizes China's market economy status in the agreement.
A China-ASEAN agreement on dispute solving mechanism was also signed Monday.
A high ranking official of the Ministry of Commerce said in an exclusive interview with Xinhua that the signing of the agreement is a milestone for the development of the China-ASEAN relations and is expected to create a win-win situation, as China and ASEAN countries are complementary in goods production.
With the official implementation of the newly signed agreement, the bilateral goods, service trade and investment between China and ASEAN countries will increase by a big margin, the official said.
He said that closer economic and trade ties between China and ASEAN countries will not only benefit the economic development of China and ASEAN countries, but also play a positive role in the economic development of Asia and the rest of the world.
The "old" ASEAN members are Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand, while the "new" ASEAN members are Cambodia, Laos, Myanmar and Vietnam.
A tariff expert who had attended the 17 rounds of formal China-ASEAN talks and two special meetings for reaching the agreement told Xinhua that the new agreement is a pioneer in forging economic and trade relations between a country and a group.
China-ASEAN's "early harvest" mode has been widely accepted in the international community and is followed by quite a number of countries.
"Early harvest" indicates that if the two cooperative partners agree with a certain kind of tariff reducing product among many other products, tariff-reducing agreement on the product could be implemented first.
China has already signed a zero-tariff agreement on fruits with Thailand and the agreement is implemented this year.
China has recorded trade deficits with the ASEAN countries in the past few years.
Jing Lingbo, expert on Asian-Pacific studies at the China Institute of International Studies, predicted that China and ASEAN may sign agreements in service and investment following the signing of the agreement on trade.
Ong Keng Yong, ASEAN secretary general, said at a press conference Monday that the trade volume between China and ASEAN reached US&84.6 billion in the first 10 months this year, up 35 percent year-on-year.
He expected that the bilateral trade volume may reach US$100 billion next year.
Commenting on the new China-ASEAN agreement, he said free trade negotiations between ASEAN and China are good and "we are happy with the process."
(Xinhua News Agency November 30, 2004)
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