FTA opens new horizon for China’s economic growth

China View | 9 January 2005

FTA opens new horizon for China’s economic growth

BEIJING, Jan. 9 (Xinhuanet) — China has started talks with 23 countries across the world in a bid to build free trade areas (FTA) that experts say will open new horizon for China’s economic growth.

China and the 10-member Association of Southeast Asian Nations (ASEAN) have agreed to build an FTA by the year 2010. It has also begun negotiations with the six-member Gulf Cooperation Council and the five-member South African Customs Union, Chile and New Zealand.

"The FTA will offer more preferential treatment for members than the World Trade Organization," an official with the International Department of the Ministry of Commerce, who refused to be identified, told Xinhua. "Within FTA, members will enjoy lower tariffs, less non-tariffs barriers and better market access to goods, services and capital. Cost of trade will therefore be lowered."

The official said FTA will help Chinese firms to obtain raw materials and equipment at a lower cost and better services. Chinese customers will also have better access to cheaper and high-quality goods and services.

China initiated its first FTA in 2001 with ASEAN. Two major documents cementing the process of the China-ASEAN free trade area became active from the New Year’s Day of 2005. China and ASEAN will start to trim and eliminate tariffs of more than 7,000 kinds of products from July 1 this year.

Although China and six members of the ASEAN, namely Indonesia, Malaysia, the Philippines, Singapore, Thailand and Brunei, will establish an FTA in 2010, and in 2015 with the remaining four members of the ASEAN, namely Vietnam, the Laos, Myanmar and Cambodia, they have benefited from initial agreements.

Figures from the Ministry of Commerce show that during the 11 months after the initial agreements between China and ASEAN was implemented in January 2004, goods trade covered by the agreementsreached 1.7 billion US dollars, up 41 percent from the same perioda year ago.

Trade of 188 kinds of vegetables and fruits between China and Thailand in the 11 months of 2004 reached 527 million US dollars, up 120 percent. The 188 kinds became tariffs-free from October 2003.

Besides the 23 countries that China has already started FTA talks, China and Australia and Pakistan have also begun respective feasibility study for FTA. Feasibility study for an East Asian FTAhas also begun.

"FTA is an insurmountable stage in regional economic integration," said Chinese Premier Wen Jiabao last November while addressing the summit meeting between ASEAN and China, Japan and the Republic of Korea.

China’s keen interest in FTA may be a long-term strategic consideration, some Chinese experts say.

World economic growth has been slow and world price is rising. The competition for direct foreign investment has been tense worldwide and the world is seeing a sky-rocketing oil price, noticed experts from the Ministry of Commerce.

On the other hand, China is facing an increasing number of trade disputes as its foreign trade doubled three years after its accession to the World Trade Organization. It needs a stable and secure environment for its foreign trade.

It has been a trend across the world for regional economic integration, exerts say. There were a total of 305 regional economic arrangements by September last year, and internal trade within the arrangement areas have accounted for 50 percent of world trade.

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source: Xinhua