Upgrading China-ASEAN FTA version to boost greater trade, investment ties

Cambodian academics said Monday that the upgrade of the China-ASEAN Free Trade Area (CAFTA) version would help promote greater trade and investment relations between the two blocs.

At the 16th China-ASEAN leaders' meeting in Brunei on Oct. 9, Chinese Premier Li Keqiang and ASEAN leaders pledged to start talks at an early date over the upgrade of the version of the CAFTA, which came into effect on Jan. 1, 2010. "China and ASEAN have not yet realized its full potential in fostering trade and investment under the framework of CAFTA," Chheang Vannarith, a lecturer of Asia Pacific Studies at University of Leeds in Britain, wrote to Xinhua in an e-mail on Monday."Upgrading the CAFTA version will give a greater chance for economic and trade expansion."

He said to upgrade the version, both sides needed to expand the areas of trade and investment cooperation by strengthening regional production networks and supply chains. "It is important for both sides to simplify the rules of origin, eliminate non-tariff trade barriers and support the export capacity of the less developed economies in the region,"he said.

Vannarith said that deepening the CAFTA would make China and ASEAN no longer totally rely on the traditional export market such as the United States and Europe. "Moreover, a stronger economic interdependence through trade and investment contributes to building strategic trust, peace and development in the region,"he said.

The CAFTA is the largest free trade area in the world in terms of population and third largest in terms of nominal GDP, trailing the European Economic Area and North American Free Trade Area.

Under the free trade agreement, tariffs will be reduced to zero on 7,881 product categories, or 90 percent of imported goods. This reduction already took effect in China and the six original members of ASEAN: Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand. The remaining four countries: Vietnam, Cambodia, Laos and Myanmar will follow suit in 2015.

In respect to bilateral trade, the two sides are on target to meet the goal of lifting total trade to 500 billion U.S. dollars by 2015. In 2012, bilateral trade value reached 400 billion U.S. dollars, 7.3 times as much as that of 2002, according to China's Ministry of Commerce.

China is the largest trade partner for ASEAN, and ASEAN is the third-largest trade partner for China.

Ros Chantraboth, advisor to Cambodian Prime Minister Hun Sen, said Monday that China should encourage more investors to small countries in the Southeast Asian Nations so that that they would have bigger possibilities to make products for exports. "In my point of view, if China invests more in less developed countries in ASEAN, they will have larger capacity to produce for exports, so they can keep up with other developed ASEAN member states,"he told Xinhua."This is a good way for the two blocs to prosper together."

Commenting on the absence of the United States President Barack Obama from the Asia Pacific Economic Cooperation Summit in Indonesia early this month that some analysts said the absence gave a dominant force to China, Chheang Vannarith said China and the U.S. are two most important actors in the region. "A stable and healthy bilateral relationship between the two countries definitely is the cornerstone of peace and development in the Asia-Pacific region,"he said.

Chap Sotharith, chief researcher of the Cambodian Institute for Cooperation and Peace, said"China's greater presence in ASEAN and Asia-Pacific is good for the region as China has always showed its peaceful development policy, which could bring more prosperity to the whole region and the world."