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China-ASEAN Free-Trade Plan to Creat Double Win
http://www.sina.com.cn 2002/11/15 15:00  中国周刊


  The first meeting between Southeast Asian and Chinese senior officials on the proposed China-ASEAN free trade area opened on April 1 in Kunming.

  The meeting was dividedsintostwo parts - one is to start negotiations on the free trade area, secondly to deliberate on specific measures to extend economic and trade cooperation among ASEAN and China.

  In November of last year, China and ASEAN (the Association of Southeast Asian Nations) agreed to create the world's most populous free trade bloc within 10 years, covering two billion consumers. ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Thailand, Singapore and Vietnam. Both sides intend to make a ministerial declaration on the issue and framework for negotiations by the end of the year.

  Last year, trade volume between China and ASEAN countries totalled US.6 billion, rising 5 per cent over the previous year despite the worldwide economic recession.

  Highly reliant on exports, ASEAN countries view China's 1.3 billion population and its fast developing economy as one of the most important markets in the world.

  Last year, ASEAN members exported commodities worth US.2 billion to China, representing a growth of 4.7 per cent over the previous year and resulting in a trade surplus of US.8 billion.

  China, eager to ease its neighbours"worries on the country's strengthening economic power, is eyeing ASEAN countries for both their markets and supplies of raw materials, especially oil. During Indonesian President Megawati Sukarnoputri's recent visit to China, the two countries witnessed five deals signed, including one for a partnership between PetroChina and Indonesia's State oil firm Pertamina.

  By 2010, average duty within the China-ASEAN FTA, if realized, will vary between zero and 5 per cent, and internal trade and investment barriers will be eliminated. The free trade area will then possess 40 per cent of the world's foreign exchange reserves and more than US trillion in gross domestic product, 10 per cent of the world's total.

  The political implications of the China-ASEAN FTA should not be overlooked. Closer economic ties with China could alleviate pressures some ASEAN countries are feeling from the United States to extend the anti-terrorism warsintosASEAN, which is strongly opposed by ASEAN's Muslim population.

  Despite the trade surplus and political advantages ASEAN members enjoy, however, many of them still complain that a rising China has attracted a large pool of foreign investment which previously would have pouredsintostheir countries.

  The free trade area between China and ASEAN is just an efficient way of solving the problem. With the establishment of the free trade area, the problem becomes how to rationally allot investments within one region, thus greatly easing the pressure of foreign investment outflow from ASEAN countries.

  A free-trade area between the Association of Southeast Asian Nations (ASEAN) and China will bring about mutual wealth, partially by diverting ASEAN's trade away from the western economic powers to China.

  There will be greater exchange of raw materials, immediate and finished goods between the 10-member bloc and China.

  ASEAN would gain rather than lose from closer ties with China. ASEAN countries will also likely increase exports to China when import duties are reduced on rice, sugar, vegetable oil, garments, leatherware, paper and printing materials, chemicals, rubber and steel.

  In return, Chinese products benefiting from ASEAN's tariff reductions will include transport equipment, food, beverages and tobacco, petroleum products and coal, chemicals, rubber, mineral products and vehicles.

  Moreover, the free-trade scheme will reduce ASEAN's heavy reliance on markets in the United States, Japan and the European Union (EU), with China becoming a prominent buyer.

  The plan also has benefits in other areas, e.g. promoting Japan to seek closer ties with the ASEAN.

  As China's economy strengthens, Chinese investors will also invest in ASEAN countries more freely.

  Though still modest in absolute terms, Chinese investment is growing at a rapid pace. In 2000, the Chinese Government approved US million in new investment to the ASEAN region, a 50 per cent jump from 1999, and actual Chinese investment totals are certainly higher as many Chinese companies try to circumvent official foreign currency controls by investing through offshore entities.

  While the free trade area will grant ASEAN a breather from foreign investment outflow, China will have to forgo some of the foreign investment it desires for its poorer inland regions.

  Within the free trade area, some ASEAN members, such as Vietnam, Laos and Cambodia, have cheaper labor costs than China to lure foreign investment. Richer countries like Malaysia could also attract some foreign money away from China. The free trade area would force China to further reform its regulation and goods circulation system so that it could compete with other members within the area.

  There has been many misconceptions about China being a threat to Southeast Asian countries as it was viewed as a major manufacturer and exporter.

  But China is also a major importer, demonstrated by China's total imports last year standing at US billion.

  China will become a center of sourcing components for its neighbors. Foreign direct investment in China will also benefit its neighbors, especially Southeast Asia.

  ASSOCIATION OF SOUTHEAST ASIAN NATIONS:

  "Today, ASEAN is not only a well-functioning, indispensable reality in the region, it is a real force to be reckoned with far beyond the region. It is also a trusted partner of the United Nations in the field of development."Kofi Annan, Secretary-General of the United Nations 16 February 2000.)

  The Association of Southeast Asian Nations or ASEAN was established on August 8, 1967 in Bangkok by the five original Member Countries, namely, Indonesia, Malaysia, Philippines, Singapore, and Thailand. Brunei Darussalam joined on January 8, 1984, Vietnam on July 28, 1995, Laos and Myanmar on July 23, 1997, and Cambodia on April 30, 1999.

  The ASEAN region has a population of about 500 million, a total area of 4.5 million square kilometers, a combined gross domestic product of US billion, and a total trade of US billion.

  OBJECTIVES

  - to accelerate the economic growth, social progress and cultural development in the region through joint endeavours in the spirit of equality and partnership insgroupsto strengthen the foundation for a prosperous and peaceful community of Southeast Asian nations, and to promote regional peace and stability through abiding respect for justice and the rule of law in the relationship among countries in the region and adherence to the principles of the United Nations Charter.

  FUNDAMENTAL PRINCIPLES

  The Treaty of Amity and Cooperation (TAC) in Southeast Asia, signed at the First ASEAN Summit on February 24, 1976, declared that in their relations with one another, the High Contracting Parties should be guided by the following fundamental principles:

  -Mutual respect for the independence, sovereignty, equality, territorial integrity, and national identity of all nations;

  -The right of every State to lead its national existence free from external interference, subversion or coercion;

  -Non-interference in the internal affairs of one another;

  -Settlement of differences or disputes by peaceful manner;

  -Renunciation of the threat or use of force; and

  -Effective cooperation among themselves.

  POLITICAL COOPERATION

  The TAC stated that ASEAN political and security dialogue and cooperation should aim to promote regional peace and stability by enhancing regional resilience. Regional resilience shall be achieved by cooperating in all fields based on the principles of self-confidence, self-reliance, mutual respect, cooperation, and solidarity, which shall constitute the foundation for a strong and viable community of nations in Southeast Asia.

  Some of the major political accords of ASEAN are as follows:

  - ASEAN Declaration, Bangkok, August 8, 1967;

  - Zone of Peace, Freedom and Neutrality Declaration, Kuala Lumpur, November 27, 1971;

  - Declaration of ASEAN Concord, Bali, February 24, 1976;

  - Treaty of Amity and Cooperation in Southeast Asia, Bali, February 24, 1976;

  - ASEAN Declaration on the South China Sea, Manila, July 22, 1992;

  - Treaty on the Southeast Asia Nuclear Weapon-Free Zone, Bangkok, December 15, 1997; and

  - ASEAN Vision 2020, Kuala Lumpur, December 15, 1997.

  In 1992, the ASEAN Heads of State and Government declared that ASEAN should intensify its external dialogues in political and security matters as a means of building cooperative ties with states in the Asia-Pacific region. Two years later, the ASEAN Regional Forum or ARF was established. The ARF aims to promote confidence-building, preventive diplomacy and conflict resolution in the region. The present participants in the ARF include: Australia, Brunei Darussalam, Cambodia, Canada, China, European Union, India, Indonesia, Japan, Republic of Korea, Laos, Malaysia, Myanmar, Mongolia, New Zealand, Papua New Guinea, Philippines, the Russian Federation, Singapore, Thailand, the United States, Vietnam.

  Through political dialogue and confidence building, no tension has escalatedsintosarmed confrontation among ASEAN members since its establishment more than three decades ago.

  ECONOMIC AND FUNCTIONAL COOPERATION

  When ASEAN was established, trade among the Member Countries was insignificant. Estimates between 1967 and the early 1970s showed that the share of intra-ASEAN trade from the total trade of the Member Countries was between 12 and 15 percent. Thus, some of the earliest economic cooperation schemes of ASEAN were aimed at addressing this situation. One of these was the Preferential Trading Arrangement of 1977, which accorded tariff preferences for trade among ASEAN economies. Ten years later, an Enhanced PTA Programme was adopted at the Third ASEAN Summit in Manila further increasing intra-ASEAN trade.

  The Framework Agreement on Enhancing Economic Cooperation was adopted at the Fourth ASEAN Summit in Singapore in 1992, which included the launching of a scheme toward an ASEAN Free Trade Area or AFTA. The strategic objective of AFTA is to increase the ASEAN region's competitive advantage as a single production unit. The elimination of tariff and non-tariff barriers among the member countries is expected to promote greater economic efficiency, productivity, and competitiveness. The Fifth ASEAN Summit held in Bangkok in 1995 adopted the Agenda for Greater Economic Integration, which included the acceleration of the timetable for the realization of AFTA from the original 15-year timeframe to 10 years.In 1997, the ASEAN leaders adopted the ASEAN Vision 2020, which called for ASEAN Partnership in Dynamic Development aimed at forging closer economic integration within the region. The vision statement also resolved to create a stable, prosperous and highly competitive ASEAN Economic Region, in which there is a free flow of goods, services, investments, capital, and equitable economic development and reduced poverty and socio-economic disparities. The Hanoi Plan of Action, adopted in 1998, serves as the first in a series of plans of action leading up to the realization of the ASEAN vision.

  In addition to trade and investment liberalization, regional economic integration is being pursued through the development of Trans-ASEAN transportation network consisting of major inter-state highway and railway networks, principal ports and sea lanes for maritime traffic, inland waterway transport, and major civil aviation links. ASEAN is promoting the interoperability and interconnectivity of the national telecommunications equipment and services. Building of Trans-ASEAN energy networks, which consist of the ASEAN Power Grid and the Trans-ASEAN Gas Pipeline Projects are also being developed.

  ASEAN cooperation has resulted in greater regional integration. Within three years from the launching of AFTA, exports among ASEAN countries grew from US.26 billion in 1993 to almost US billion in 1996, an average yearly growth rate of 28.3 percent. In the process, the share of intra-regional trade from ASEAN's total trade rose from 20 percent to almost 25 percent. Tourists from ASEAN countries themselves have been representing an increasingly important share of tourism in the region. In 1996, of the 28.6 million tourist arrivals in ASEAN, 11.2 million or almost 40 percent, came from within ASEAN itself.

  Today, ASEAN economic cooperation covers the following areas: trade, investment, industry, services, finance, agriculture, forestry, energy, transportation and communication, intellectual property, small and medium enterprises, and tourism.

  Desiring to build a community of caring societies, the ASEAN leaders resolved in 1995 to elevate functional cooperation to a higher plane to bring shared prosperity to all its members. The Framework for Elevating Functional Cooperation to a Higher Plane was adopted in 1996 with a theme: "Shared prosperity through human development, technological competitiveness, and social cohesiveness."Functional cooperation is guided by the following plans:

  - ASEAN Plan of Action on Social Development;

  - ASEAN Plan of Action on Culture and Information;

  - ASEAN Plan of Action on Science and Technology;

  - ASEAN Strategic Plan of Action on the Environment;

  - ASEAN Plan of Action on Drug Abuse Control; and

  - ASEAN Plan of Action in Combating Transnational Crime

  EXTERNAL RELATIONS

  The ASEAN Vision 2020 affirmed an outward-looking ASEAN playing a pivotal role in the international community and advancing ASEAN's common interests.

  ASEAN has made major strides in building cooperative ties with states in the Asia-Pacific region and shall continue to accord them a high priority. Cooperation with other East Asian countries has accelerated with the holding of an annual dialogue among the leaders of ASEAN, China, Japan, and the Republic of Korea. In 1997, a joint statement between ASEAN and each of them was signed providing for framework for cooperation towards the 21st century. In November 1999, the leaders of ASEAN, China, Japan and the Republic of Korea issued a Joint Statement on East Asia Cooperation outlining the areas of cooperation among them.

  The ASEAN Summit of 1992 mandated that "ASEAN", as part of an increasingly interdependent world, should intensify cooperative relationships with its Dialogue Partners."Consultations between ASEAN and its Dialogue Partners are held at the Foreign Ministers"level on an annual basis. ASEAN's Dialogue Partners include Australia, Canada, China, the European Union, India, Japan, the Republic of Korea, New Zealand, the Russian Federation, the United States of America, and the United Nations Development Programme. ASEAN also promotes cooperation with Pakistan on certain sectors.

  Consistent with its resolve to enhance cooperation with other developing regions, ASEAN maintains contact with other inter-governmental organizations, namely, the Economic Cooperation Organization, the Gulf Cooperation Council, the Rio Group, the South Asian Association for Regional Cooperation, and the South Pacific Forum.

  Most ASEAN Member Countries also participate actively in the activities of the Asia-Pacific Economic Cooperation (APEC), the Asia-Europe Meeting (ASEM), the East Asia-Latin America Forum (EALAF).

  STRUCTURES AND MECHANISMS

  The highest decision-making organ of ASEAN is the Meeting of the ASEAN Heads of State and Government. The ASEAN Summit is convened every year. The ASEAN Ministerial Meeting (Foreign Ministers) is held on an annual basis. Ministerial meetings on several other sectors are also held: agriculture and forestry, economics, energy, environment, finance, information, investment, labour, law, regional haze, rural development and poverty alleviation, science and technology, social welfare, transnational crime, transportation, tourism, youth, the AIA Council and, the AFTA Council. Supporting these ministerial bodies are 29 committees of senior officials and 122 technical working groups.

  To support the conduct of ASEAN's external relations, ASEAN has established committees composed of heads of diplomatic missions in the following capitals: Brussels, London, Paris, Washington D.C., Tokyo, Canberra, Ottawa, Wellington, Geneva, Seoul, New Delhi, New York, Beijing, Moscow, and Islamabad.

  The Secretary-General of ASEAN is appointed on merit and accorded ministerial status. The Secretary-General of ASEAN, who has a five-year term, is mandated to initiate, advise, coordinate, and implement ASEAN activities. The members of the professional staff of the ASEAN Secretariat are appointed on the principle of open recruitment and region-wide competition.

  ASEAN has several specialized bodies and arrangements promoting inter-governmental cooperation in various fields: ASEAN University Network, ASEAN-EC Management Centre, ASEAN Centre for Energy, ASEAN Agricultural Development Planning Centre, ASEAN Earthquake Information Centre, ASEAN Poultry Research and Training Centre, ASEAN Regional Centre for Biodiversity Conservation, ASEAN Rural Youth Development Centre, ASEAN Specialized Meteorological Center, ASEAN Tourism Information Centre, and ASEAN Timber Technology Centre.

  In addition, ASEAN promotes cooperative activities with organizations with related aims and purposes: ASEAN-Chambers of Commerce and Industry, ASEAN Business Forum, ASEAN Tourism Association, ASEAN Council on Petroleum, ASEAN Ports Association, ASEAN Vegetable Oils Club, and the ASEAN-Institutes for Strategic and International Studies. Furthermore, there are 53 Non-Governmental Organizations (NGOs), which have formal affiliations with ASEAN.

  The new ASEAN logo represents a stable, peaceful, united and dynamic ASEAN. The colours of the logo "blue, red, white and yellow "represent the main colours of the crests of all the ASEAN countries.

  The blue represents peace and stability. Red depicts courage and dynamism. White shows purity and yellow symbolises prosperity.

  The ten stalks of padi represent the dream of ASEAN's Founding Fathers for an ASEAN comprising all the ten countries in Southeast Asia bound together in friendship and solidarity. The circle represents the unity of ASEAN.

  The specification of Pantone Colour adopted for the colours of the ASEAN logo are:

  Blue: Pantone/ 286

  Red: Pantone Red /032

  Yellow: Pantone Process Yellow

  For four-colour printing process, the specifications of colours will be:

  Blue: 100C/ 60/ M/ 0Y /6K

  Red: 0C /91M /87Y/ 0K

  Yellow: 0C/ 0M /100Y/ 0K

  Specifications in brackets are to be used when an arbitrary measurement of process colours is not possible.

  In Pantone Process Colour Simulator, the specifications equal to:

  Blue: Pantone 204-1

  Red: Pantone 60-1

  Yellow: Pantone 1-3

  The font used for the word "ASEAN"in the logo is lower-case Helvetica in bold.




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