2011 Aug 16
August 16, 2011

FTA consolidation proposed

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Japan proposes one deal for 16 countries

MANADO, INDONESIA : Japan proposed the consolidation of free-trade pacts with Asean into a single agreement for 16 countries, said Srirat Rastapana, director-general of the Trade Negotiations Department.

The 16 countries comprise the 10 Asean members and China, Japan, South Korea, India, Australia and New Zealand. Currently, there is a free trade agreement between Asean and each trading partner except Australia and New Zealand.However, a source from the Commerce Ministry said China would prefer to exclude India, Australia and New Zealand.

Ms Srirat said China and Japan want to have negotiations announced at the next Asean Summit in November next year to be held in Cambodia. She added Asean had not yet agreed on a proposal and a working group was studying which facets would benefit the region.

Asean economic ministers will have a special meeting in early October to consider trade proposals.

In 2010, trade between Asean members and China, Japan and South Korea rose by 28.9% to US$533.3 billion after a contraction in 2009. Asean trade with those three countries accounted for 26.1% of the region’s total trade while direct investment from these countries to Asean rose 62.4% to $14.9 billion, up from $9.2 billion in 2009.

Ms Srirat, chief of Asean negotiations with China, said about 90% of products traded between the two have no tariff under the free trade agreement. Both sides are in the process of cutting tariffs below 20% of products on the sensitive list by January next year.

Asean and China also agreed on regulations regarding phyto-sanitary and technical barriers as there will be a focal point in each country to clear problems.

Since the Asean-China free trade agreement was signed in 2005, Thailand’s trade to China has expanded continuously, and last year exports rose by 38% to $45.99 billion.

Surin Pitsuwan, the Asean secretary-general, said a study by the Asian Development Bank showed Asian GDP will rise to 51% of the global GDP in 2050, up from 27% in 2010, making Asia the dominant economic region for the first time since the Industrial Revolution.

Asia’s GDP (given current market exchange rates) would increase from $16 trillion in 2010 to $148 trillion in 2050, or half of global GDP, similar to its share of the global population.