6 - Ongoing ASEAN-wide FTA Initiatives: China, Australia/New Zealand, Japan, and India

Summary

Besides individual ASEAN countries continuing to negotiate on FTA deals with their emerging trading partners, there is also a surging interest among the ASEAN members to negotiate bilateral FTAs with their major trading partners as a single grouping during the past two years. To date, ASEAN as a grouping is negotiating bilateral FTAs with China and India; a Closer Economic Relations (CER) grouping consisting of Australia and New Zealand; and a comprehensive Economic Partnership with Japan. Each of these initiatives and their significance are discussed in this chapter.

ASEAN-CHINA FTA (ACFTA)

The ASEAN–China Free Trade Agreement (ACFTA) is the first such agreement that China has entered into after becoming a WTO member. It is very significant for regionalism in Asia as it is to be one of the largest FTAs ever negotiated, involving about 1.7 billion people, with a combined GDP of US$2 trillion, spanning across eleven diverse and heterogeneous economies, both in terms of their size and levels of development.

The idea of an ACFTA was first mooted by Chinese Premier Zhu Rongji during the ASEAN–China Summit in November 2001. The Framework Agreement for this FTA was given concrete shape during the ASEAN Summit in Cambodia in November 2002. One of the key features of the ACFTA agreement is the “early harvest” clause. This clause commits ASEAN and China to reduce their tariffs for certain products (mainly agricultural products) within a span of three years, in order to demonstrate a reflection of their commitment to tariff reduction. The early harvest products belong to the following categories, viz. live animals, meat and edible meat offal, fish, dairy produce, other animal products, live trees, edible vegetables, and edible fruits and nuts. Tariff reduction or elimination for goods that are not included under this clause are to be negotiated through the ACFTA, scheduled to be completed by 30 June 2004. The timetable indicates the formation of the ACFTA in goods for the older ASEAN members (Brunei, Indonesia, Malaysia, the Philippines, Singapore, and Thailand, or ASEAN-6) by 2010, and that for the newer members (Cambodia, Laos, Myanmar, and Vietnam, or CLMV) is scheduled to be by 2015, thus providing newer members more time to adjust to the requirements of the ACFTA.