The 2nd ASEAN Reader

88. China-ASEAN Free Trade Area

440 Sheng Lijun By: ROS Size: 7.5" x 10.25" J/No: 03-14474 Fonts: New Baskerville 88. CHINA–ASEAN FREE TRADE AREA SHENG LIJUN Excerpted from Sheng Lijun, “China-ASEAN Free Trade Area: Origins, Developments and Strategic Motivations”, ISEAS Working Papers on International Politics and Security Issues no. 1, (Singapore: Institute of Southeast Asian Studies, 2003), by permission of the author and the publisher. THE DEVELOPMENT OF THE CHINAASEAN RELATIONS SINCE THE 1990S Before the 1990s, there was no official relationship between the ASEAN as a grouping and China, although China had official relations with certain individual ASEAN member states on a bilateral basis. From the late 1980s, China intensified its efforts to establish diplomatic relationship with all the remaining ASEAN states as the final step, leading to its eventual official relationship with the ASEAN grouping. In his visit to Thailand in November 1988, Chinese Premier Li Peng announced four principles in establishing, restoring and developing relations with all the ASEAN states. After establishing diplomatic relations with the last ASEAN country — Singapore — in late 1990, China pushed for official ties with the ASEAN grouping. On 19 July 1991, Chinese Foreign Minister Qian Qichen attended the opening session of the 24th ASEAN Ministerial Meeting (AMM) in Kuala Lumpur as a guest of the Malaysian Government, where he expressed China’s interest in cooperating with ASEAN, particularly in the field of science and technology . The latter responded positively. In September 1993, ASEAN Secretary-General Dato’ Ajit Singh visited Beijing and agreed to establish two joint committees, one on co-operation in science and technology, and the other on economic and trade cooperation . An exchange of letters between the ASEAN secretary-general and the Chinese Foreign Minister on 23 July 1994 in Bangkok formalised the establishment of the two committees. At the same time, ASEAN and China agreed to engage in consultations on political and security issues at senior officials level. In July 1996, ASEAN accorded China full Dialogue Partner status at the 29th AMM in Jakarta, moving China from a Consultative Partner, which it had been since 1991. By early 1997, there were already five parallel frameworks for dialogue between China and ASEAN. China participated in a 088 AR Ch 88 22/9/03, 12:59 PM 440 China–ASEAN Free Trade Area 441 By: ROS Size: 7.5" x 10.25" J/No: 03-14474 Fonts: New Baskerville series of consultative meetings with ASEAN. In December 1997, Chinese President Jiang Zemin and all the ASEAN leaders had their first informal summit (ASEAN Plus One) and issued a joint statement to establish a partnership of good neighbourliness and mutual trust oriented towards the 21st century. ASEAN-China trade has expanded rapidly, at an annual growth rate of about 15 per cent since 1995, and it jumped by 31.7 per cent in 2002 to US$54.77 billion. ASEAN is now the fifth largest trade partner of China while China is the sixth of ASEAN. CHINA PROPOSED AN FTA China’s open push for the formation of a free trade area (FTA) embracing China and all the ten ASEAN members came at the ASEAN Plus Three Summit1 in November 2000, where Chinese Premier Zhu Rongji proposed: “In the long term, China and the ASEAN countries can also further explore the establishment of a free trade relationship.”2 He also proposed the creation of an expert group under the framework of the China-ASEAN Joint Committee of Economic and Trade Cooperation to study the feasibility of the FTA. At a meeting of senior ASEAN and Chinese economic officials in Brunei in midAugust 2001, China made a strong push, proposing tariff reduction and other measures to be phased in over seven years from 2003–09. ASEAN responded cautiously, proposing a 10-year phase-in period without specifying a starting date.3 At the ASEAN-China summit in November 2001, Premier Zhu formally made the proposal for the formation of a China-ASEAN FTA (CAFTA) in ten years. China offered to open its own market in some key sectors to the ASEAN countries five years before they reciprocate. It would also grant special preferential tariff treatment for some goods from those less developed ASEAN states, i.e., Cambodia, Laos and Myanmar. ASEAN accepted this proposal and held several rounds of consultations with China on the CAFTA before they jointly announced, at the ASEAN-China Summit in Cambodia in November 2002, the Framework Agreement on ASEAN-China Comprehensive Economic Co-Operation as a legal...