ASEAN leaders and China announced yesterday that they would pursue plans to create the world's biggest free-trade area within 10 years.
After holding talks with Chinese Prime Minister Zhu Rongji (朱鎔基), ASEAN leaders said they would instruct their ministers to iron out details of the agreement as soon as possible.
"With a combined market of 1.7 billion people, a free-trade area between ASEAN and China would have a gross domestic product of US$2 trillion and two-way trade of US$1.23 trillion," said Brunei's Sultan Hassanal Bolkiah.
But the euphoria came with a warning that the zone was at least 10 years away and would not solve the immediate problems facing a region struggling with the global economic slump.
Indications on the eve of the summit that the Chinese proposal could be scuttled by ASEAN's golden rule of consensus proved unfounded.
"My suggestions were all accepted by them. They agreed that China will become a part of the ASEAN Free Trade Area," Zhu said.
"Today Malaysia's prime minister said it very well: `When our friends are doing well, we will do well. When we are doing well, we don't forget our friends,'" Zhu said.
But Malaysian Prime Minister Mahathir Mohamad still harbored reservations.
"The details need to be worked. If we are not careful we may lose out," he said, after earlier warning: "We must make sure the influx [from China] will not cause our industries to shut down."
But news of the deal has also led some in Taiwan to suggest that the nation will be left at an economic disadvantage.
Still, officials from the Ministry of Foreign Affairs were unconvinced, noting that ASEAN and China still have a lot of work to do before the trade barriers come down.
Lo Chih-cheng (
Lo noted that economic relations between ASEAN countries and China have grown more and more competitive.
"Taiwan, as part of the Asia-Pacific region, should closely observe these developments," he said.
Under the plan announced yesterday, ASEAN's newer, poorer members would receive "differential treatment and flexibility," and tariffs on their products could be lowered in an effort to provide a boost to their economies.
A Chinese official said the China-ASEAN free trade agreement would bring about a 50 percent increase in exports on both sides. It would add one percentage point to annual economic growth in the ASEAN countries and 0.3 percent in China.
But he conceded there would be problems.
Some officials are skeptical that the plan will work because a flood of cheap Chinese goods could devastate Southeast Asian economies.
"Of course, we will be faced with big problems and challenges because there is a need for both sides to open their markets to each other," the official said.
"What is more important is that the leaders have shown the political will. Everybody hopes to have this as early as possible."
ASEAN Secretary-general Rodolfo Severino said there was a "feeling of great urgency," to get the agreement off the ground.
"Obviously this is another long-term project, but it is worth looking at because of the reality that the big regions of the world have been working out free trade areas among themselves," Severino said.
Japan has also been mooted, but was not discussed formally at this summit.
ASEAN leaders also discussed their own regional free trade agreement, which Severino said was "on track" to reduce tariffs on many imports by 2003.
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