8 - ASEAN-China Economic Relations: Moving Towards Services

Summary

INTRODUCTION

A discernable move towards greater services trade and investment on a global scale has been detected in the past decade. Increasingly, ASEAN and China are beginning to recognize the pivotal role that services could play. The ASEAN Framework Agreement on Services (AFAS) and China's commitments under the General Agreements on Trade in Services (GATS) are examples of the efforts being made to liberalize and promote the services trade and investment in this regard. How would these developments bear out? What progress has been made on services liberalization under the AFAS, and in particular, China's GATS commitments? What is the outlook for ASEAN-China's services trade and investment, and where are the key areas for cooperation? These are some questions the chapter seeks to shed light on. Admittedly, given the wide-ranging nature of the study and nascent developments to date, there are no easy answers. What this chapter aims to do is thus to work towards a more comprehensive understanding of ASEAN and China's move towards services, which has hitherto been lacking, so as to serve as a practical starting point for further research on this increasingly vital subject.

The chapter begins with an assessment of the global trend in services trade and investment. This is followed by an examination of the growing focus on services within ASEAN and China. Developments in services liberalization under the AFAS and in particular, progress on China's commitments under the GATS would be assessed. The chapter next explores the potential for ASEAN-China services trade and highlights selected key ASEAN-China service deals before concluding.

GLOBAL TREND IN SERVICE TRADE

“A service is traded when the supplier and the customer are from different countries, regardless of the location of the transaction”

— The World Trade Organization

According to the GATS, trade in services can be classified under four modes: 1) cross border services, which are independent of supplier or consumer, 2) consumption abroad, where the consumer of the services is non-resident in the country where the services is consumed, 3) commercial, where the supplier of the service is an affiliate or branch of a foreign supplier, and 4) movement of natural persons, where the supplier is a non-resident of the country in which he is working on a temporary basis.