Cafta China Asean Free Trade Agreement

After the initial 6 signatories reached their target by 2010, the CLMV countries (Cambodia, Lao People`s Democratic Republic, Myanmar, Vietnam) pursued the same customs policy with the same objective of achieving it by 2015. [6] In 2010, the ASEAN-China Free Trade Area became the largest free trade area in terms of population and the third largest in terms of nominal GDP. It was also the third largest volume of trade after the European Economic Area and the North American Free Trade Area. [12] [7] The main goods that China imports from ASEAN countries are intermediate products such as machinery, minerals and fuels, plastics, fats and oils, rubber and organic chemicals. According to Charles Freeman of the Center for Strategic and International Studies, a Washington-based public policy research institute, D.C and former U.S. assistant. Trade Representative for Chinese Affairs: “China uses these products to make low-cost products and sells them mainly to the United States and the European Union,” which have been affected by the economic slowdown. Freeman adds that the future structure of trade between China and ASEAN countries will depend mainly on “whether China could increase its role as a consumer to absorb the goods it produces.” If China continues to be vulnerable to external economic shocks in the face of limited domestic demand, “continued trade cooperation between China and ASEAN countries would become more difficult,” Freeman said. Negotiations began in 2005 and were significantly accelerated after Chinese President Xi paid a state visit to Australia in November 2014. The agreement was signed on 17 June 2015. The Free Trade Agreement (FTA) between China and South Korea officially entered into force on December 20, 2015.

Under the agreement, South Korea will remove tariffs on 92 percent of all products from China within 20 years of implementation, in exchange for China abolishing tariffs on 91 percent of all South Korean products. Schwab suggests that such regional agreements can have a negative impact on the United States and small developing countries. He predicted that American workers would suffer to the extent that U.S. multinationals with operations in the U.S. and ASEAN countries could now be forced to produce and sell goods from their factories in ASEAN countries in order to remain competitive. It also notes that small and medium-sized enterprises (SMEs) in the United States would be negatively affected, as multinational enterprises could invest behind the external tariffs of regional agreements and continue their trade with China and ASEAN countries, while SMEs could not. The two countries began negotiations on a free trade agreement in April 2007 and signed the agreement in April 2013 under the witness of Chinese Premier Li Keqiang and Icelandic Premier Johanna Sigurdardottir. The Trade Promotion Authority was a law that allowed Congress to give the U.S. president the power to negotiate free trade agreements. Once a free trade agreement is finalized by the executive branch, Congress must vote on it within a certain time frame without any changes.

The agency expired in 2007 without being renewed by Congress. Even if U.S. trade representatives could successfully negotiate a free trade agreement with other countries without them, Congress could “put the deal on the shelf” without voting forever. There is growing nervousness on the part of ASEAN countries that ASEAN countries would become China`s backyard due to China`s growing role in East Asia. According to reports, all the leaders of the ASEAN countries who sat down with President Obama on his trip to Asia asked questions about trade, and they all hope for a more active U.S. presence in the region to find a balance so that ASEAN nations are not dragged into a Chinese-dominated landscape. Under the agreement, all goods exported from China to New Zealand will be duty-free from January 1, 2016, while tariffs on most New Zealand exports to China will be abolished as of January 1, 2019. Ambassador Susan Schwab, former Trade Representative under the administration of George W.

Bush and a professor at the University of Maryland`s School of Public Policy, College Park, notes that THE CAFTA China is less interested in the Doha Round, multilateral trade negotiations within the framework of the WTO, because it is now much easier to negotiate regional free trade agreements. Trade liberalization between China and ASEAN countries is also under pressure from Japan and South Korea. Currently, the regional trade framework in East Asia – called “10+3” – is based on the establishment of free trade zones with Japan, South Korea and China. “Japan and South Korea are striving to integrate ASEAN countries into their political spheres,” said Wang of the Shanghai Academy of Social Sciences. For example, the Japanese government has always tried to integrate ASEAN countries into its production system, which is much simpler because the model of trade between Japan and ASEAN countries is mainly complementary because Japan specializes in the production of high-tech electronic products and ASEAN countries produce intermediate and low-cost production goods. With the implementation of THE CAFTA, Japan is increasingly concerned that ASEAN countries will gradually become China`s backyard. Certainly not in the high-tech space, as even the U.S. and Japan are afraid of China`s remarkable ability to enter high-tech industries very quickly, even as it consolidates its lead in labor-intensive manufacturing. Will ASEAN agriculture be a net beneficiary? But as the first harvests with the Philippines and Thailand showed, China is clearly very competitive in a variety of agricultural products, from temperate crops to semi-tropical products, and in agricultural processing. Vietnam and Thailand could hold on to rice production, Indonesia and Vietnam in coffee, and the Philippines in coconut and coconut products, but there may not be many more products to add to the list. Even if ASEAN under THE CAFTA gains or maintains its competitiveness in some areas of manufacturing, agriculture and services, it is highly doubtful that China will deviate from what Hu calls its “semi-open” model of international trade. Thailand`s experience with early harvesting highlights the effectiveness of administrative barriers that can constitute non-tariff barriers to trade in China.

What about raw materials? Yes, of course, Indonesia and Malaysia have oil, which is rare in China, and Malaysia has rubber and tin, and the Philippines has palm oil and metals. But a second look raises the question of whether the relationship with China does not reproduce the old colonial division of labor, in which low-value-added natural resources and agricultural products were shipped to the center, while Southeast Asian economies absorbed high-value-added products from Europe and the United States. In particular, the double blow of Cafta-Afta in the Philippines will contribute to the erosion of CAFTA`s manufacturing and agriculture, triggered by its hasty inclusion in the ASEAN Free Trade Area Common Effective Preferential Tariff Arrangement (AFTA-CEPT). Bilateral trade between China and Costa Rica reached $5.3 billion in 2014, a 145 percent increase from 2006. The free trade agreement lowered tariffs to zero on 7,881 product categories, or 90% of imported goods. [15] This reduction entered into force in China and the top six ASEAN members, Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand. The other four countries are expected to follow suit in 2015. [16] Chinese Commerce Minister Gao Hucheng (left) shakes hands with his South Korean counterpart Yoon Sang-jick after the agreement was signed in Seoul on June 1, 2015. [Xinhua] The Free Trade Agreement (FTA) between China and Iceland entered into force on 1 July 2014.

Iceland is the first developed European country to recognize China as a fully-fledged market economy, as well as the first European country to negotiate a free trade agreement with China. The Free Trade Agreement between China and Switzerland is the first bilateral free trade agreement signed between China and a country on the European continent and is one of the 20 largest economies in the world. China`s trade strategy is described by Hu as a “semi-open model,” that is, “open or free trade on the export side and protectionism on the import side.” ASEAN: a net beneficiary? Despite the bold words of President Arroyo and other ASEAN leaders, it is much less clear how ASEAN will benefit from ASEAN-China relations. Certainly, the benefits will not come in labor-intensive manufacturing, where China enjoys an unbeatable advantage from the constant downward pressure on wages exerted by migrants from a seemingly inexhaustible rural workforce that earns an average of $285 a year. “China, of course, hopes that the implementation of the China-ASEAN Free Trade Area could serve as a stimulus to promote regional trade liberalization, at least between China and ASEAN countries, especially since the recent multilateral trade negotiations under the auspices of the WTO – the Doha Round – are at an impasse,” Notes Zheng Hui, a professor of finance at Fudan University in Shanghai. .