Ｓｉｎｏ－ＡＳＥＡＮ Ｆｒｅｅ Ｔｒａｄｅ Ａｒｅａ：Ｍｏｒｅ Ｃｏｎｖｅｎｉｅｎｃｅ ｏｎ Ｔｒａｄｅ Ｌｉｂｅｒａｌｉｚａｔｉｏｎ

The Goods Trade Agreement ofThe Framework Agreement onComprehensive Economic Co-operation between The People'sRepublic of China and The Association ofSouth East Asian Nations which was signedin 2004 has been implemented on July 1，marking the start of a substantial phase ofSino-ASEAN Free Trade Area.

According to the statistics released bythe People's Daily， with 1.7 billion consum-ers to be contained in the Sino-ASEAN FreeTrade Area， it is called the largest free tradearea in the world. With two factors consid-ered including the Gross Regional Produc-tion expected to be US$2-3 trillion， and theRegional Gross Trade Volume to be USS 1.2tillion， it is called a free trade area with larg-est market potential in the world.

Meanwhile， according to the currenteconomic scale， the Sino-ASEAN FreeTrade Area will be just the next to the North-em American Free Trade Area and the Eu-ropean Union， and take the honor of the larg-est trade entity in the developing countries.

As for the newest changes on the mu-tual market opening between China andASEAN countries that people are alwaysconcemed about， China's Foreign Trade in-terviewed Xu Ningning， Chinese Directorof China-ASEAN Business Council.More Liberalization and Convenienton Trade Pursued

\"The core principle of the Free TradeArea is the liberalization and more conve-nient on goods trade that each country inthe area can enjoy， according to the frame-work agreement between China andASEAN countries signed in 2004.\"Xu said.

Among the 307 agreements on freetrade in the global range， the frameworkagreement between China and ASEANcountries had been reached only within fouryears， retlectlng Ctnna and ASEAN coun-tries' eagerness to enhance co-operation andto realize a mutual developments.

In 2004， the bilateral trade betweenChina and ASEAN countries increased veryrapidly to USS 105.88 billion， for a growthrate of 35.3% comparing with that of 2003，consisting of US$42.9 billion of China'sexport to ASEAN countries and US$62.98billion of China's import from ASEANcountries， for respective growth rates of38.7% and 33.1%.

In the meantime， ASEAN had been thefifth trade partner of China for continuous12 years by 2004. In the first quarter of 2005，the bilateral trade volume between Chinaand ASEAN was US$27.48 billion， for agrowth rate of 25%， marking that for thefirst time ASEAN has become the fourthtrade partner of China.

According to the Goods Trade Agree-ment， from 2005 to 2010， China and the sixASEAN countries including BruneiDamssalam， Indonesia， Malaysia， Repub-lic of the Philippines， Singapore and Thai-land， will realize liberalization and moreconvenient on most of the goods trade; to2015， China and another four ASEAN coun-tries including Vietnam， Kingdom of Cam-bodia， The Lao People's Democratic Repub-lic， and The Union of Myanmar， will real-ize the same， which will perform an activerole in promoting Chinese enterprises' ex-port to the 10ASEAN countries， in lower-ing the costs of importing raw materials，machine components and equipments， ab-sorbing foreign investment， accepting theindustry transferring and seeking new de-velopment space in the Southeast Asia area.More Favorable Tariffs Expected

On the other hand， Xu analyzes that dueto the mutual market open， a lot of productsand services made by ASEAN countries willbe imported to China as well， which willmean more competition in China and somechallenges for Chinese enterprises.

When Sino-ASEAN Free Trade Arealaunched， it will change not only China'smarket size， but also the production andbusiness operation of Chinese enterprises，and even the business operative culture ofChinese enterprises. Thus， the enterprisesin both domestic and ASEAN countriesshould not only seek new operation， but alsoimprove the international brand competition.

The Goods Trade Agreement consistsof 23 clauses and three accessories. The thirdclause \"The cut down and abrogation of tar-iffs'' is an indication of mutual market openbetween ASEAN countries.

Yin Zonghua， vice president of the In-temational Economic and Trade Departmentof the Ministry of Commerce has put for-ward several instances to illustrate:

E.g 1， The tariff rate of Thailand orangejuice was 60% before July 1，2005.But ithas been cut down to 20%， according to thescheduled tariff cut-down in the Sino-ASEAN Free Trade Area， and it will be cutdown to 12% by January 1，2007， to be cutdown to zero by January 1，2010. China hasnever exported oranges juice to Thailand，but now， due to the sharp tariff cut-down，the competitiveness of China-made orangejuice has been improved very much and theexport to Thailand has become possible.

E.g2， The tariff rate of Indonesia-madeauto parts(tariff code 870899) was 15% be-fore July 1，2005. According to the sched-uled tariff cut-down of Sino-ASEAN， it willbe cut down to 8% by January 1，2007， cutdown to 5% by January 1，2009， be cut downto zero by January 1，2012. In 2003， China'sexport of auto parts to Indonesia were onlyUS$12 million， but now， thanks to the tariffcut-down of auto parts by Indonesia， thecompetitiveness of China's auto parts willbe improved very much and the profit spacewill be enlarged， the export to Indonesia isexpected to grow very conspicuously.

E.g3， China has imported the coconutoil from ASEAN countries for a long pe-riod to make cosmetics. In 2003， China im-ported US$680 million of coconut oil fromASEAN countries. Before July 1， 2005，China imposed 10% of import tariffs oncoconut oil， but according to the scheduledtariff cut-down in the Sino-ASEAN FreeTrade Area， it will be cut down to 8% byJanuary 1，2007， be cut down to 5% by Janu-ary 12009， be cut down to zero by January1，2010. By doing so， the costs of raw mate-rials of producing cosmetics in Chinawill be lowered and the profits space willbe enlarged.

More Favorable than WTOCommitment

According to the agreement， the taxcategories to be cut down and abrogatedshould be categorized into normal groupand sensitive group.

\"Compared with WTO rules， theSino-ASEAN Free Trade Area will of-fer more favorable tariffs， and more lib-eralization， more convenience and moreopening on trade，\"said ZhangMingsong， Director Senior Econo-mist， CCPIT.

\"China will implement more favor-able tariffs policy for ASEAN countriesin a very short period，\" said ZhangYunling， economist of China Academyof Social Science.

Xu Ningning gives a further intro-duction that in accordance with theGoods Trade Agreement， China and thesix ASEAN countries including BruneiDamssalam， Indonesia， Malaysia， Repub-lic of the Philippines， Singapore and Thai-land， should cut down the tariffs 40% of thenormal group to 0-5% not later than July 1，2005， to cut down 60% of the normal groupto 0-5% not later than July 1，2007， and ab-rogate all of the tariffs in the normal groupnot later than January 1，2010. Each treaty-member should abrogate all of the tariffs inthe normal group not later than January 1，2012.

Sensitive group means those which willaffect the national economy and the people'slivelihood and will cause strong lashes tothe products of the other side after the mu-tual market open between China andASEAN countries， Xu said.

The sensitive products will be catego-rized as average sensitive and high sensi-tive， according to which the timetable oftariff cut down and the ceiling of the tariffrate are different respectively.

Xu introduces that in order to promotethe market open， the Goods Trade Agree-ment has imposed ceilings on the numberof tariffs in the sensitive group for eachtreaty-member and the number of tariffscontained in the high sensitive group. Forinstance， according to the agreement， the six-digit tariffs that China and ASEAN coun-tries apply for the sensitive group will notbe allowed to exceed 400 and not more than10% of the total import volume.

The Goods Trade Agreement has regu-lated the timetable on the implementationof most-favorable treatment and the tariffcut-down in the sensitive group by eachtreaty-member， the six ASEAN countriesand China should cut down the tariffs to 20%not later than January 1，2012， cut down thetariffs to 0-5% not later than January 1，2018.

More Important Role in EnhancingRegional Economic Development

Many Chinese government officials andeconomists take the view that China willperform a more important role in enhanc-ing the regional economic development inthe Southeast Asia Area when the Sino-ASEAN Free Trade Area is launched be-cause China is becoming one of the mostimportant market in this area， according toa comments of Fat' Eastern Economic Re-view magazine.

\"We hope that by means of some prag-matic actions such as the establishment ofthe Sino-ASEAN Free Trade Area， we canprove that China's economic developmentand opening will be favorable not only tothe developed countries， but also to theneighbor developing countries.\"said LongYongtu， the former chief representative ofChinese WTO negotiation group.

\"China Council for the Promotionof International Trade(CCPIT) will do alot of pragmatic job in order to promotethe development of domestic enterprisesin the Sino-ASEAN Free TradeArea，\"said Zhang Mingsong， Director Senior Economist， CCPIT.

At first， in order to promote the mu-tual communications and understood ofthe enterprises in China and other treaty-members， CCPIT will hold all kinds ofexhibitions and expos， and help domes-tic enterprises register their trademarksin other treaty-members， Zhang said.

Also， in 2002， CCPIT and theASEAN Chamber of Industry and Com-merce jointly announced the establish-ment of China-ASEAN Business Coun-cil， in order to promote the economic andtrade cooperation between China andASEAN countries in wide ranges.

In the meantime， CCPIT and theMinistry of Commerce will jointly holdthe Sino-ASEAN Expo in Nanning city，Guangxi Zhuang Autonomous Regionin October， in order to promote the mutualcommunication between China and theASEAN countries.

On the other hand， due to the similarculture background， similar living consue-tude and consumption habits， as well asclose geographic relations， the regional eco-nomic integration will be easier to realize，which will be enjoyable for people living inthe region.

The agreement which has taken effectfrom July 1 will take an active role in en-hance the procedure of regional economicintegration in many aspects， such as auto-mobiles manufacture， ship building， energy，agriculture， home appliance and so on，Zhang said.