The Asean-China Free Trade Agreement

This trade volume is expected to continue to increase by mid-2005, with the implementation of the previous ACFTA programme in January 2004 and the implementation of the tariff reduction programme under the TIG Agreement. In July 2004, the value of Early Harvest products[4] traded between ASEAN and China reached $1.11 billion, an increase of 42.3% over the same period in 2003, with ASEAN exports to China amounting to $0.68 billion, an increase of 49.8% over the same period. In August 2019, changes to the ASEAN-China Free Trade Agreement came into force, simplifying rules governing trade in goods, services and investment in the ASEAN-China Economic Zone, which has a population of more than 1.8 billion. And like any other free trade agreement, ACFTA will strengthen ASEAN-China trade, which has increased significantly, undersing the growing economic interdependence of ASEAN and China, as shown in Table 1 below. Since the entry into force of the ACFTA, China`s share of ASEAN`s total merchandise trade has increased from 8% in 2004 to 21% in 2018. With its large combined population and high growth potential, the ASEAN region continues to offer many opportunities for businesses. In total, this ACFTA will create an economic region of 1.7 billion consumers, a regional gross domestic product (GDP) of approximately $2 trillion and an estimated total trade of $1.23 trillion. It is therefore the largest free trade agreement in the world in terms of demographic size. The ASEAN-China Investment Agreement was signed on 15 August 2009 and entered into force on 1 January 2010.

It aims to create an enabling environment for investors and their investments from ASEAN and China, and therefore sets out important elements of protection that ensure fair and equitable treatment of investors, non-discriminatory treatment in the event of nationalised or expropriating measures and compensation for losses. It contains provisions allowing investors to transfer and recover profits freely and in freely usable currency, as well as a provision to settle investor-state disputes allowing investors to have recourse to arbitration. As of January 1, 2010, the average rate of duty on Chinese products sold in ASEAN countries increased from 12.8% to 0.6% until the implementation of the free trade area by other ASEAN members. Meanwhile, the average tariff rate on ASEAN products sold in China fell from 9.8% to 0.1%. [13] Through 2015, total ASEAN trade in goods with China reached $346.5 billion (15.2% of ASEAN trade) and the ACFTA accelerated the growth of direct investment from China and trade cooperation. [6] At the sixth China-ASEAN Summit in November 2002, the Heads of State and Government of China and ASEAN signed the Framework Agreement on Comprehensive Economic Cooperation between China and ASEAN. In November 2004, Chinese Premier Wen Jiabao and AMS leaders witnessed the signing of the Agreement on Trade in Goods of the Sino-ASEAN Free Trade Agreement, which entered into force in July 2005. In January 2007, the two sides signed the Agreement on Trade in Services, which entered into force in July 2007. In August 2009, both sides signed the investment agreement. The establishment of the China-ASEAN Free Trade Area strengthens the close economic and trade relations between the two sides and also contributes to the economic development of Asia and the world as a whole. The free trade agreement reduced tariffs on 7,881 product categories, or 90% of imported goods to zero. [15] This reduction entered into force in China and the six original ASEAN members, Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand.

The other four countries are expected to follow in 2015. [16] In line with the current regional and global economic landscape, on 22 November 2015, at the 27th ASEAN Summit, the Protocol amending the Framework Agreement for Comprehensive Economic Cooperation between ASEAN and China was signed. . . .