Upgrade of ASEAN-China FTA to be Negotiated
At the 13th AEM-MOFCOM conference held earlier this week in Naypyidaw, Myanmar, it was agreed to upgrade the ASEAN-China Free Trade Area (ACTFA) in order to ensure that it remains relevant in today’s economic climate. The AEM-MOFCOM (ASEAN Economic Ministers-Ministry of Commerce People’s Republic of China) meetings formed part of the broader 46th ASEAN Economic Minister Meeting. The topic of Custom Procedures and Trade Facilitation (CPTF) negotiations was also raised, as well as the need to review the Sensitive Track and Rules of Origin, with a progress report to be made at the next AEM-MOFCOM consultation.
Statistics reveal that China remains ASEAN’s biggest trading partner, with total trade reaching US$350.5 billion. Trade with China makes up 14% of ASEAN’s total trade and reflects an increase of 7.7% year-on-year. ASEAN was the recipient of US$ 8.6 billion in foreign direct investment from China, being an increase of 60.8% year-on-year, and totaling 7.1% of total foreign direct investment in ASEAN member countries – Indonesia, Philippines, Malaysia, Thailand, Singapore, Brunei, Laos, Cambodia, Myanmar and Vietnam.
The initial concept of the ASEAN-China Free Trade Area (also known as China-ASEAN Free Trade Area – CAFTA) was signed in November 2002 and came into effect in January 2010. ACFTA is the world’s largest free trade area measured in population, and the third largest in nominal GDP. With China’s continued development as an economic power in the 21st century, it is anticipated that ASEAN-China trade will grow substantially. The proposed Asian Infrastructure Investment Bank (AIIB), which aims to rival the World Bank, Asian Development Bank and IMF, will no doubt play a major role in trade growth. While the AIIB is still in the founding process, in June 2014, China proposed increasing the bank’s registered capital to US$ 100 billion, doubling the original amount of US$ 50 billion.