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29 December 2009

China-Asean trade deal seen as step towards broader integration 

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A free trade agreement (FTA) between China and the bloc of ten Southeast Asian countries, the first of its kind, will serve as a stepping stone for the diverse Asian community to further integrate and might give birth to a broader multilateralized trading pact across the region, Chinese news agency Xinhua quoted a senior economist of the Philippines-based Asian Development Bank as saying.

"There is a lot of expectation of this FTA," Jayant Menon, principal economist of ADB's Office of Regional Economic Integration, told Xinhua in an interview on the eve of the establishment of the China-Asean (the Association of Southeast Asian Nations) free trade area on Jan. 1, 2010.

"Big bang" effects can't be expected because China and the Asean have come a long way in the past eight years and they are quite open economies already, Menon said.

"But this FTA can be seen as a stepping-stone towards a broader agreement, and eventually, hopefully, a multilateralised trading arrangement whereby the achievements are offered to non-members in a non-discriminate manner," he added.

Menon said other regional economic powers such as Japan, South Korea and the United States are expected to join once this FTA expands.

The China- Asean free trade area covered a population of 1.9 billion and a combined gross domestic product close to $6 trillion. It is the world's largest trading bloc in terms of population covered and the third largest in terms of trading volume.

Trade between China and Asean countries have picked up rapidly in the past decade. Official statistics indicated that trade between China and the Asean bloc expanded to a total worth of $231.1 billion in 2008, from $19.5 billion in 1995. Trade has especially doubled in the past four years.

Agreements on the trade of goods and services and a pact to encourage inter-regional investment have been separately signed. The slash of duties has begun since 2005 and more than 7,000 trading items covered by the agreements will be tariff-free products by Jan. 1, 2010.


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