ASEAN-China Free Trade Area

Ever since the formation of ASEAN-China Free Trade Area at the beginning of this year, the business enterprises in some ASEAN countries have come out with opposing voices. In response, China's Minister of Commerce Chen Deming gave an encouraging boost to formation of the ASEAN-China Free Trade Area by highlighting the fact that after the formation of ASEAN-China Free Trade Area, the trade advantages of this Agreement bought to China and ASEAN have increased drastically.

ASEAN Export to China
Addressing a press conference, held after the CPPCC (Chinese People's Political Consultative Conference) and the NPC (National People's Congress) joint sessions, China's Commerce Minister Chen Deming pointed out the fact that since the formation of ASEAN-China Free Trade Area, for the month of January alone, China's export to ASEAN has increased by 52.8 percent and ASEAN's export to China during the same month of January has increased by 117.3 percent.

He said that in fact the growth of ASEAN's export to China was much faster than China's export to ASEAN nations. China's Commerce Minister Chen Deming stressed that these statistics have proven that the ASEAN-China Free Trade Area was a win-win arrangement type of trade framework.

Annual Trade Growth Rate
In retrospect, Minister Chen Deming said China and ASEAN took ten years to negotiate and seal the ASEAN-China Free Trade Area. It was China's first negotiation for a free trade area with other countries. He said that until today, the ASEAN-China Free Trade Area is still the largest free trade area China works with developing nations. The free trade area covers a total population of close to 1.9 billion people.

Before the seal of the ASEAN-China Free Trade Area agreement, China and ASEAN have already promoted the "early harvest" bi-lateral cooperation framework between the two parties to achieve an annual trade growth rate of 18.2 percent per year. Minister Chen Deming pointed out that from such trade development; it was suffice to illustrate the strong complementary nature of the two major markets' industrial properties and trade opportunities.

Nevertheless, Minister Chen Deming also admitted that at this initial period of the formation of ASEAN-China Free Trade Area, some weaker enterprises in ASEAN countries, especially the small and medium size enterprises might be affected by the agreement. However, with the bi-lateral industrial properties within the Free Trade Area of ASEAN and China begin to boost up and with the competitiveness between the two sectors continue to expand, the benefits of ASEAN-China Free Trade Area would clearly reflect regional economic prosperity and stability.

Beyond Framework Pact
Minister Chen said that at the same time, China would, as a newly emerging developing country with vase land area and large population, also play the facilitator's role and pay close attention and look into the need of the weaker enterprises in the ASEAN countries. Minister Chen said that beyond the framework of the ASEAN-China Free Trade Area, China would also consider provide assistance and support to the weaker small and medium size enterprises in some concerned ASEAN member nations. For example, China could make arrangement for China's industries along the coastal provinces of China that have same or similar industries as in ASEAN countries to go to some of the ASEAN nations to carry out cooperation partnership and investment there. The purpose is to help improve the work process ability and level of the weaker industries in some of the ASEAN member nations.

Minister Chen Deming also disclosed that China was also prepared to help ASEAN nations to improve their basic infrastructure, the level of goods circulation and to help in the promotion and enhancement of ASEAN member nations' competitiveness in international market and trade.

Implementation of Zero Tariff Policy
After years of preparation, the ASEAN-China Free Trade Area was finally formed on 1 January 2010. However soon after its formation, the business enterprises in Indonesia, Thailand and other countries have come out with protest noises. Indonesia's business community is concerned that the low-cost imports from China will result in unfair competition with its local industries.

The Indonesian Government has sent an official letter to the ASEAN Secretariat and requested postponement of the implementation of zero tariff policy for quite a lot of its products for one more year. Indonesia wants the effectiveness of the ASEAN-China Free Trade Area Agreement to take effect only on 1 January 2011 in order to give its local businesses and enterprises to have more time to adjust to the zero tariff policy between China and ASEAN member nations.