China Pushes for FTAs w/ ASEAN

Talk about noodle bowl arrangements galore between China and the ASEAN member countries. Not only is China seeking individual pacts with various ASEAN members, but it is also seeking a regional FTA with ASEAN. With the stalling of the WTO Doha Round, can we expect to see more of these bilateral and regional deals? It seems many countries are still keen on establishing trading ties despite pessimism on a global deal. WTO, we hardly knew ye? From Radio Singapore International:

China and ASEAN, should continue to step up dialogue on investment policies and work towards an early conclusion on establishing a free-trade area investment agreement. Chinese Vice-Premier Zeng Pei Yan made the call at the start of the Fourth China-ASEAN Business and Investment Summit yesterday. Trade between China and its southern neighbours grew to almost US$160 billion last year. China is expected to establish free trade pacts with Singapore, Brunei, Malaysia, Indonesia, Thailand and the Philippines by 2010.

Dr Sarah Tong, an economist from the National University of Singapore’s East Asia Institute, tells Michael Tan that a major shipping hub like Singapore will benefit from greater China -Asean economic cooperation.

ST: I think Singapore is a very efficient and important shipping hub and it does have a very important role to play in this respect. Particularly, I think this is one of the most obvious and strong comparative advantages of Singapore among ASEAN members and in the relationship with China, that will be a very important part because China - ASEAN trade within the region has become very significant. For example, components and parts, maturity of the import and export of the region are from the region so a trading hub will be essential for these closer economic relations between China and ASEAN.

China is expected to establish free trade pacts with several ASEAN countries in 2010. How is a free trade pact with China expected to benefit South-east Asian nations like Singapore?

ST: Well, I think among the ASEAN members, each member is very different in terms of their structure, industrial structure, economic structure, so they’re going to benefit in different aspects. For a country like Singapore, which is, in terms of manufacturing, playing a relatively small part in the over-all economy, and also the manufacturers are a bit more up-scale, more technologically sophisticated, in which case it doesn’t have as much direct competition with the Chinese industries, so in which case there is a lot more complementarities between the two in terms of manufacturing. And Singapore also has strengths in research and development and in high-tech products, in which case, closer relations or more trade and cross-over investments between the two countries will benefit tremendously for both.


And what would you say needs to be done to ensure a profitable partner-ship here?

ST: Well, I think the countries and the members on both parts have been pushing forward in increasingly positive aspects which is important for anything to be profitable and beneficial. Both parties, ASEAN and China, I think it’s more important to have a positive and long-term prospect and also having more dialogue which increases the understanding of both the strengths and the advantages and disadvantages of each party, understanding, and mutually respecting. I think that’s the way to go.

Chinese Vice-Premier Zeng Pei Yan has called for an early conclusion of talks on a China - ASEAN free trade area investment agreement. What is the likelihood that dialogue of this nature reaches fruition?

ST: I think relative to the free trade area, investment agreements probably vary more widely in terms of involving more broad areas, so it’s probably a little bit more difficult, relative to just product trade. I think the important thing is not the speed of how fast you can complete something, but rather to have more transparent, deeper understanding and more meaningful and effective dialogue and agreements. I’m not sure how long that will take, but I think it’s probably more difficult for an investment agreement to be reached because it does involve a lot more parties and areas.

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