Bridges Weekly Trade News Digest • Volume 7 • Number 32 • 1st October 2003
From The Regions: China Intensifies Regional Trade Talks
China has recently been engaging in regional trade talks, and is set to continue during the coming months. On the agenda are talks with Mercosur — the South American Common Market comprising Argentina, Brazil, Paraguay, and Uruguay — as well as intensified cooperation with the Association of Southeast Asian Nations (ASEAN). The Shanghai Cooperation Organisation (SCO), which includes China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan, will also meet.
China and Mercosur to strengthen ties
Delegates from the Mercosur countries and China met for a fourth round of bilateral talks on 24 September in Montevideo, Uruguay. Officials at the meeting pledged to increase cooperation in agriculture and capacity building, among other areas. Brazilian Foreign Minister Celso Amorim noted that the commercial interests between Mercosur and China, and especially Brazil and China, had been growing rapidly in recent years. Ministers who attended talks issued a statement claiming that stronger China-Mercosur ties not only serve bilateral interests, but also "help maintain world peace and establish a new international order". Although experts admit that it may be difficult to reach an all-encompassing trade agreement at this time, China and Mercosur would begin with bilateral agreements in specific areas and mechanisms to increase integration and facilitate trade. This meeting was presided over by Uruguay’s Acting Foreign Minister Guillermo Valles, the current president of Mercosur, and visiting Chinese Vice Foreign Minister Zhou Wenzhong. A Mercosur trade delegation is scheduled to visit Shanghai in the first half of 2004.
ASEAN-China Free Trade Agreement
On 27-28 September, a two-day ASEAN Joint Commission meeting was held in Jakarta, to prepare for the next ASEAN Summit meeting in October. Items discussed included developing a regional regulatory framework to boost ASEAN’s competitiveness, facilitating creation of business partnerships, day-to-day business transactions and operations and cooperation with China on free trade issues. Rudi Pesik, chair of the ASEAN Business Advisory Council at the Joint Commission Meeting saw potential growth from the development of a joint free trade area between China and the ASEAN by 2010, as promising: "It is not possible for China to absorb all the foreign investment. Through cooperation with ASEAN, a lot of foreign direct investment will be channeled to the region and still it will not hurt China".
The ministers of the ASEAN countries — Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam — and China, Japan and the Republic of Korea met on 3 September in Phnom Penh, Cambodia for a consultation. At the meeting, the ministers expressed satisfaction with recent trends in the trade volume between ASEAN and China, Japan and Korea. The volume grew by 6.5 percent from USD 171.6 billion in 2001 to USD 182.8 billion in 2002. The value of trade between China and members of ASEAN continues to grow, reaching USD 34.24 billion in the first half of this year, up 45.3 percent from the same period last year, according to Pacific Business News.
China and the ASEAN countries signed a Framework Agreement on Comprehensive Economic Co-operation on November 4, 2002, marking the formal launch of the ASEAN-China Free Trade Area (ACFTA). In a first stage, tariffs will be reduced or eliminated by 2010 for ASEAN-6 (Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand), and in 2015 for the newer ASEAN countries (Cambodia, Lao PDR, Myanmar and Vietnam).
At a recent Malaysia-China Partnership Summit on September 19, Jiang Chengzong, Secretary-General for the National Committee for Pacific Economic Cooperation in China, noted that both ASEAN countries and China have a "strong political will" to push forward the ACFTA process. He stated that his country’s reform of financial and legal institutions would be accelerated as a result of the ASEAN-China Free Trade Agreement. The next ASEAN +3 (China, Republic of Korea and Japan) Summit will be held from the 7-8 October in Bali, Indonesia.
China proposes SCO free trade area
The Shanghai Cooperation Organisation, a group formulated in 1996 to improve relations between countries that border China, signed a multilateral economic cooperation Framework Agreement in Beijing on 23 September to ‘deepen’ their mutual economic connections and "improve the investment environment". At the meeting, Chinese Premier Wen Jiabao made three proposals. He wanted members to set as a long-term objective the establishment of a free trade area within the SCO; elaborate a series of more immediate measures such as improving the flow of goods across the member-states and reducing non-tariff barriers such as customs, quarantine, standards and transport services; and create large projects on economic and technological cooperation, giving priority to those in transportation, energy, telecommunication, agriculture, home appliances, light industry and textiles.
The SCO countries have agreed to transform the SCO into an international organisation by 2004. A permanent secretariat is set to be established in Beijing and regional anti-terrorism headquarters in Tashkent by the end of 2003.
"South America to negotiate FTA with China," PEOPLE’S DAILY ONLINE, 21 September 2003;"Trade agreement speeds up China’s reforms, says diplomat" THE EDGE DAILY, 23 September 2003; Joint Media Statement, The Sixth ASEAN Economic Ministers and the Ministers of People’s Republic of China, Japan and Republic of Korea Consultation (AEM +3). 3 September 2003, Phnom Penh, Cambodia; "China trade with ASEAN rises 45% in one year," PACIFIC BUSINESS NEWS, 17 August 2003; "MERCOSUR-China talks in Montevideo," MERCOPRESS, 24 September 2003; "China, MERCOSUR seek stronger trade ties," CHINESE RADIO INTERNATIONAL NEWS, 25 September 2003; "Prime ministers of China, Russia, Central Asia hold talks," ABC ASIA PACIFIC, 23 September 2003; "Shanghai Six mulls over free trade zone," THE HINDU, 25 September 2003; "China, Russia, Central Asia PMs meet on cooperation," CHINA DAILY, 23 September 2003.