[VIENTIANE] Asean member states and China have substantially concluded negotiations to upgrade a free trade area in the areas of the digital and green economies.
Singapore Prime Minister Lawrence Wong, alongside other Asean and China leaders, announced this at the 27th Asean-China Summit on Thursday (Oct 10), after an hour-long meeting between the regional bloc and the world’s second-largest economy.
Negotiated by the Ministry of Trade and Industry (MTI), the Asean-China free trade area (ACFTA) 3.0 upgrade negotiations were launched in 2022, with the aim of ensuring the agreement remains relevant, future-ready, and responsive to global challenges, said the ministry in a press statement.
This is the ACFTA’s second upgrade since its inception in 2010.
Both sides are now working towards the full conclusion of negotiations targeted for next year, said the release.
The upgrade covers new and enhanced rules on customs procedures, non-tariff barriers including standards and technical regulations covering food, agriculture and industrial products, the digital and green economies, supply chain connectivity, competition and consumer protection, micro, small and medium-sized enterprises, as well as economic and technical cooperation.
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Said Deputy Prime Minister and Minister for Trade and Industry Gan Kim Yong: “This upgrade underscores Asean and China’s shared commitment to keep our economies open, advance trade liberalisation and multilateralism amid a complex global environment, and sets the foundation for new areas of complementarities.
“The introduction of new chapters on supply chain connectivity, digital economy and green economy – a first for Asean agreements – positions our businesses and people to leverage emerging areas, ensuring competitiveness and resilience against future challenges,” he added.
Chinese Premier Li Qiang arrived at the National Convention Centre in Lao capital Vientiane on Thursday at 8.30 am Laos time, before heading for the 27th Asean-China Summit with leaders of the 10 member states and observer Timor-Leste’s Prime Minister.
A series of firsts
This is Asean’s first FTA with an external dialogue partner, and also China’s first.
China has been Asean’s top trading partner since 2009. The association is also the country’s largest trading partner, after overtaking the European Union in 2020.
The ACFTA covers a free trade area of more than 2 billion people with a combined gross domestic product exceeding USD20 trillion.
Since its inception in 2010, Asean’s trade in goods with China has more than tripled, from US$235.5 billion to US$696.7 billion in 2023.
Last year, foreign direct investment (FDI) from China to Asean amounted to US$17.3 billion, making China Asean’s third largest source of FDI.
The Asean-China free trade pact had earlier undergone one round of upgrades that were launched in 2014, signed in 2015 and entered into force in 2018.
The first upgrade saw improvements to rules of origin, customs procedures and trade facilitation, market access for services, as well as enhanced economic and technical cooperation.
The treaty comprises three agreements: trade in goods, trade in services and investment, which were signed in 2005, 2007 and 2009, respectively. Collectively, the FTA entered into force in 2010.
With this free trade zone, 94.6 per cent of exports to China that originate from Singapore are eliminated.