Southeast Asian economic ministers will meet here from Thursday to finalise a framework agreement with China on how to create the world’s biggest free trade area of nearly two billion people, officials said.
They are expected to endorse the framework for signing by leaders of the 10-member Association of Southeast Asian Nations (ASEAN) and China during a summit in Cambodia in November.
The ASEAN economic ministers are also expected to receive a report by an experts’ group on a proposal for broader ASEAN-Japan ties as well as sign a declaration for closer economic relations with Australia and New Zealand.
Japan proposed wide-ranging economic ties with ASEAN earlier this year, in what was seen as an attempt to counter China’s rising influence in the region.
During their four-day meeting, the ASEAN ministers will also hold discussions with business groups operating in the region, and for the first time hold a dialogue with India, represented by the Minister of Commerce and Industry Murasoli Maran.
They already hold annual dialogues with their counterparts from China, Japan and South Korea, as well as Pacific neighbours Australia and New Zealand.
But, the proposed ASEAN-China free trade agreement (FTA) ”will be one of the key agenda items”, a representative for the Singapore trade ministry said in a written reply to AFP.
”At their meeting in Brunei, ministers can be expected to give guidance to progress the text, so that it may be ready in time for signing by the leaders at the ASEAN-China Summit in November.”
While the FTA itself may sound straightforward, the preparatory talks ”had been bloody,” one official said of the hardnosed bargaining during the five rounds of negotiations on a draft text of the framework agreement.
When the leaders of ASEAN and China agreed in 2000 to work out an FTA within 10 years, they left it to senior officials to hammer out the details.
Such a free trade zone would cover China’s
1,2-billion people and 500-million consumers in ASEAN. The economic region will also have a combined gross domestic product of two trillion dollars, with total trade projected at $1,23-trillion.
But preparatory talks have been marked by disputes, especially over the so-called ”early harvest” principle, officials familiar with the talks said.
This calls for China to cut import tariffs on certain Southeast Asian products before the implementation of the FTA.
ASEAN has already slashed tariffs on most products traded within the region to a maximum five percent under the ASEAN Free Trade Area, or AFTA, from this year.
Any liberalisation by China is viewed by ASEAN as a goodwill gesture, but Beijing wants ”early harvest” as part of the formal agreement, the officials said.
There have also been differences on the tariff rates and on the sectors to be liberalised.
One proposal is for products with 15% tariffs to have the rates cut to 10% by July 2003, five percent by 2004 and zero by 2005.
One ASEAN trade official said the regional bloc disagreed with a proposal by China to focus early tariff liberalisation mostly on farm products and processed agricultural items as it would favour their giant neighbour.
ASEAN wants coverage for non-farm products which form the bulk of its exports.
Officials also said there are varying interpretations on the starting point for the 10-year period when the FTA is to be completed.
The framework agreement now being prepared will define the parameters for negotiations such as the product coverage, the timing and tariff cut rates.
A senior ASEAN diplomat familiar with the preparatory talks said the ministers may issue a declaration in Brunei on the launching of free trade negotiations with China.
ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. – Sapa-AFP