11.29.2004 The Straits Times
China, Asean sign landmark free trade pact
VIENTIANE (Laos) - Southeast Asian nations and China signed an accord on Monday to create the world's biggest free trade area by removing tariffs for their 2 billion people by decade's end - a key step in their vision of a trade bloc to rival Europe and North America.
Similar free trade areas are being planned with Japan and South Korea.
Leaders in the 10-member Association of Southeast Asian Nations also signed a Vientiane Action Programme to flesh out their agreement last year to create an Asean Community along the lines of a unified Europe by 2020. It aims to create a common market with common security goals.
The China FTA agreement, which aims to remove all tariffs by 2010, is part of a wider plan of action to cooperate in politics, security, military affairs, transportation, information technology and tourism.
The agreement also creates a three-person panel of independent experts to resolve trade disputes between Asean and China.
The vaguely worded action plan also calls for cooperation in military training, agreements on cyber security, tourism promotion and the creation of early-warning systems for illnesses like Sars, Aids and bird flu.
The plan says that a highway between Bangkok, Thailand, and the southwestern Chinese city of Kunming should be completed by 2007. It calls for railways linking Kunming and Myanmar's capital of Yangon.
The agreement also includes a preliminary study on building rail links that would connect Singapore with Kunming. The line would run through parts of Malaysia, Thailand and Myanmar.
Removing tariffs between those countries and China would build on two-way trade expected to surpass US$100 billion (S$164 billion) this year. Their accord sets up arbitration of trade disputes.
Asean will sign a pact on Tuesday with India on cooperation in trade, culture and politics but a free trade area between the two regions is still many years away.
India is keen to attract investment in tourism, infrastructure and agriculture after dismantling its socialist-style economy 10 years ago. Southeast Asia has not fully exploited the opportunities, with its foreign direct investment in India US$4 billion in 2003 - only 3.4 per cent of the global total. -- AP
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