ASEAN SECRETARIAT
JAKARTA
INDONESIA

NEWS RELEASE

4 NOVEMBER 2002

ASEAN and China Sign Economic Pact

PHNOM PENH ( Nov 4) – ASEAN leaders and their Chinese counterpart, Premier Zhu Rongji today signed a Framework Agreement on Comprehensive Economic Cooperation committing their countries to begin negotiations next year on the creation of an ASEAN-China Free Trade Area (FTA).

The FTA has a targeted date of realisation in 2010 for the developed ASEAN countries and 2015 for the newer members like Cambodia, Laos, Vietnam and Myanmar. The FTA is aimed at liberalizing trade in goods and services besides promoting a transparent and liberal investment regime.

"We will work to establish such an agreement within ten years,"said Cambodian Prime Minister Hun Sen, the ASEAN Summit chairman.

The Agreement, which will come into force on 1 July, 2003, will facilitate the elimination of tariffs and non-tariff barriers to trade in goods and services with special and differential treatment and flexibility offered to newer ASEAN member states like Cambodia, Laos, Myanmar and Viet Nam. The aim is to promote their economic integration and bridge the developmental gap among the member states. The Agreement also has a provision for an early harvest of goods and services, which are mainly agricultural, with reduced tariff rates within three years.

The leaders agreed that economic cooperation particularly in the areas of agriculture, information technology, human resource development, mutual investments and the Mekong River Basin development will complement the deepening of trade and investment links between the two parties and promote the formulation of action plans and programmes to implement the agreed sectors and areas of cooperation.

The leaders of ASEAN and China believe new avenues will open up for intra-regional trade and investment, with enhanced efficiency through economies of scale and the development of a larger market with more opportunities to tap capital and talent.

ASEAN exports to China reached US$8.8 billion in 1999, an increase of more than 100 per cent compared with US$4.5 billion in 1993. During the same period, ASEAN’s imports from China increased by 180 per cent from US$4.3 billion to US$12 billion. Over the last two years, China’s investment flow to ASEAN has been increasing from US$26.4 million in 2000 to US$148.2 million in 2001, marking a 400 per cent rise which accounts for 1.43 per cent of total Foreign Direct Investment (FDI) flows to the region.

The establishment of the ASEAN-China FTA will open up a market of 1.7 billion consumers with a combined gross domestic product of US$1.5 trillion to US$2 trillion and two-way trade of US$1.2 trillion.

On November 2, ASEAN and China signed a Memorandum of Understanding (MOU) on Agriculture on the sidelines of the ASEAN Summit. The MOU focuses on medium and long-term agricultural collaboration in the fields of hybrid rice, fisheries and aquaculture, biotechnology, farm products and machinery.

This was a followup to the adoption of a Terms of Reference (TOR) for ASEAN-China Cooperation on May 2 this year to improve land, maritime and river transport infrastructure and the expansion of air transport services. China has also offered to finance US$5 million to dredge the upper reaches of the Mekong River and a third of the Laos section of the Kunming-Bangkok Highway.

On the political front, ASEAN and China endorsed a Joint Declaration of ASEAN-China Cooperation in the Field of Non-Traditional Security Issues. It covers areas like terrorism, trafficking in illegal drugs, human smuggling, sea piracy, money-laundering, international economic crimes and cyber crimes that have affected regional and international security, posing new challenges to peace and stability.

Bilateral and multilateral cooperation will be deepened through the exchange of information and personnel, training and joint research on non-traditional security issues.

ENDS//
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Issued by:

GERALDINE GOH
Senior Officer
Public Information
ASEAN SECRETARIAT

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