China Asean Free Trade Agreement

In November 2001, China and the Association of Southeast Asian Nations (ASEAN) began negotiations for the creation of a free trade area. Japanese Prime Minister Yoshihide Suga on Saturday reaffirmed his government`s support for “the expansion of a free and fair economic zone, including the possibility of India`s future return to the agreement, and hopes to win the support of other countries.” In addition, a new section on customs procedures and trade facilitation has been added, which specifies operational certification procedures for the application and obtaining of preferential tariffs. The “Form E” established by the protocol verifies the admissibility of products exported for preferential processing. Read also: Joe Biden is hardly the free trader that Asia hopes. For ASEAN, 2018 was also the ninth consecutive year in which China was ASEAN`s largest trading partner, in part because of China`s geographical proximity and the multilateral trade partnership that began in 2004. The policy around the China-ASEAN agreement is delicate, as ASEAN countries want to avoid China`s dominance while building their economies by interacting with China, especially in the face of slowing demand from US and European markets. At the same time, China is moving up the manufacturing value chain and losing its need for primary products produced by ASEAN countries, while its search for raw materials, such as minerals and oil, has rapidly become global. Finally, the entry into force in the ASEAN world of zero-right agricultural trade with China from 2010 has raised many concerns. Since ACFTA came into force, China`s share of total ASEAN merchandise trade has increased from 8% in 2004 to 21% in 2018. The ASEAN region, with its total population and strong growth potential, continues to offer many opportunities for businesses. A key feature of the agreement is the non-maintenance of quantitative restrictions and the removal of non-tariff barriers. [5] Removing these trade barriers will reduce the costs of trade transactions, further increase ASEAN-China trade and improve economic efficiency.

Because, under the free trade agreement, low-priced imports go from one member to another, production specializes, which increases real incomes in both ASEAN and China, with resources allocated to sectors where they can be used more efficiently and productively. “The economic benefits of the agreement may be marginal for Southeast Asia, but there are some interesting trade and customs dynamics for Southeast Asia,” said Nick Marro of the Economist Intelligence Unit (EIU).