A Chinese official confirmed yesterday that China and the Association of Southeast Asian Nations (ASEAN) are to sign a landmark agreement next Monday on the establishment of a free-trade agreement (FTA).

The trade liberalization project is widely expected to get under way next year, beginning with agricultural products.

A Vietnamese trade newspaper reported yesterday that China has agreed to lower tariffs on agricultural imports from ASEAN to zero in three years in order to facilitate the establishment of the FTA.

The agreement will be handed in to the Sixth China-ASEAN summit in Phnom Penh, Cambodia, for approval in November, said the newspaper.

The newspaper went on to say the agreement will bring huge benefits to Thailand, the world's largest rice exporter, as well as Viet Nam.

But the Chinese official said the newspaper story was inaccurate.

"The agreement includes more substantial trade liberalization measures than that," he told China Daily.

He declined to disclose details of the agreement, saying it will be formally released on November 4.

The upcoming Sixth China-ASEAN summit is expected to achieve significant results in negotiations for the China-ASEAN free-trade area, cooperation in developing the Mekong River Basin.

Premier Zhu Rongji is scheduled to attend this summit which runs from November 1 to 4.

The two sides are expected to sign a framework agreement on comprehensive economic co-operation during the summit.

The agreement will outline areas for China-ASEAN economic cooperation and officially initiate processes for the establishment of the free-trade area by prescribing guiding principles, a framework and a timetable.

The free-trade area will help create a free market encompassing 1.7 billion people, the largest market of its kind in the world.

The trade volume between China and ASEAN reached US$41.6 billion last year, making China the sixth largest trading partner of ASEAN and ASEAN the fifth largest of China. Two-way trade volume hit US$33.3 billion in the first half of this year.

The establishment of a free-trade area is expected to result in a surge of nearly 50 percent in exports from both sides.

The Chinese premier is expected to introduce a comprehensive plan for China's participation in the development of the Mekong River Basin when he attends the first Greater Mekong Sub-region (GMS) Summit, to be held before the China-ASEAN summit.

Besides addressing reductions in tariffs, non-tariff measures and restrictions on service trade, the framework agreement is expected to include provisions for technical assistance.

(China Daily October 30, 2002)