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A new influential player has been introduced to the global economic arena as China and the 10-country Association of South-East Asian Nations (ASEAN) launched on January 1, 2010, the world's biggest regional trade agreement.
The China-ASEAN Free Trade Agreement covers nearly 1.9 billion people. It is the first union of the kind comprising only developing nations with big economic potential. Experts say members of the new trade agreement might improve their indicators with time. China is an obvious leader of the new association. The ASEAN nations expect Beijing to help them with the implementation of their economic projects. Free interchange of goods, services and investments will allow the nations to focus on the industries in which they are most likely to be successful.
Relaxing of tax burden appears to be right on time to boost mutual trade turnover. China and six ASEAN nations- Brunei, the Philippines, Indonesia, Malaysia, Thailand and Singapore, have agreed to trade over 90% of goods under the zero duty regime. Vietnam, Laos, Cambodia and Myanma are expected to join the deal by 2015.
Members of the free trade zone will benefit in several ways. According to Mr. Wang Jinzhen, Vice Chairman of the Chinese Council for the Promotion of International Trade, apart from lower prices for goods and services, the nations will enjoy a more rapid trade turnover and an increase in demand for their goods. Expansion of home market in Asia will reduce expenses on import. This all will boost the region's economies which had seen a drop in exports to the US and Europe.
Of course, China and the ASEAN nations will continue their traditional cooperation with the West but now they do not have to rely on it as much as before. And what is especially important for Beijing, trade issues will no longer be used by the West as political leverage.
The China-ASEAN Free Trade Agreement offers Russia greater opportunities for integration in the Asia-Pacific region, says Andrei Ostrovsky from the Russian Institute of the Far East.
"China and the ASEAN were less affected by the global economic crisis and currently are developing very fast. So, cooperation with them will help Russia boost economic development of its Far East and Eastern Siberia regions".
Obviously, the new free trade agreement is going to become such an economic entity other world leaders won`t be able to ignore. Japan and South Korea have already voiced their interest in joining the China-ASEAN agreement.
The place of the United States in the newly formed economic association is yet to be determined. Washington probably would like to join the union but only as a leader, which Beijing will never approve. Experts say the US should avoid dictatorship in bilateral cooperation with China and the ASEAN nations and admit there is competitiveness in the region.
Source: Ruvr |
