Trade push in the right direction
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Trade between ASEAN economies and China has flourished since the late 1970s. Now, the China-ASEAN Free Trade Area (CAFTA), which became operational from Jan 1, is bound to make trade and investment a greater mutually beneficial experience between China and the 10 member states of the Association of Southeast Asian Nations (ASEAN).
CAFTA's aim is to enhance economic cooperation between China and ASEAN to facilitate the region's collective development and raise its people's living standards. Here's an example how that can be achieved.
The average tariff on ASEAN goods imported by China is only 0.1 percent, while that on other WTO members, except countries such as Peru that have signed free trade agreements with China, is at 9.8 percent. This means ASEAN goods have more competitive power in China.
Besides, under CAFTA's Early Harvest program, China will import agricultural products from ASEAN economies on very lenient terms, a move that will benefit their farmers.
On the other hand, six of the ASEAN member states - Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand - will drop the average tariff on goods imported from China to 0.06 percent. The other four members - Cambodia, Laos, Myanmar and Vietnam - will do so in 2015. This will make Chinese goods cheaper in those countries and help their consumers save on expenses.
There are 766 daily flights between major cities in China and ASEAN member states. This number is bound to increase, especially after the agreement on investment under CAFTA is implemented, and make travel and transport of goods more convenient. Hence, apart from trade, CAFTA will also increase people-to-people interaction between China and the ASEAN member states.
If people in China are already savoring durians, mangosteens, and pitayas (or dragon fruits) imported from the ASEAN member states, their counterparts in the 10 have developed a taste for Chinese apples, oranges and peaches. This was a dream even a couple of decades ago, and CAFTA will make more such dreams come true.
Bilateral trade between China and ASEAN trebled in six years, from $78.2 billion in 2003 to $231.1 billion in 2008 - an average annual growth of 24.2 percent. During the same period, ASEAN's investments in China rose from $2.93 billion to $5.46 billion, whereas Chinese investment in ASEAN member states swelled from $230 million to $2.18 billion. CAFTA has the potential to take bilateral trade and investment to even greater heights.
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