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China-Asean Free Trade Area Quarterly Report (Q1-4)

Post Time:2014-08-25 11:06:00

2.3 Regional economic cooperation

2.3.1 ASEAN Economic Community (AEC)

AEC is one of three major pillars for ASEAN Community. According to the ASEAN Charter, the target of AEC is to build a single market and production base, an economic region with strong competitiveness and balanced economic development and an economic region connected to the global economy. These are also the four major objectives of AEC. ASEAN plans to complete the construction of AEC by 2015.

The survey report released by the US-ASEAN Business Council (US-ABC) indicates that 77% respondents who have made investments in ASEAN believe that the ASEAN integration is conducive to their company’s business expansion in this region, and besides promoting economic development of all ASEAN countries and regional economic cooperation, ASEAN Community will also bring benefits to the integration process of the whole region.

The accomplishment of AEC construction by the end of 2015 is the hinge for ASEAN Community construction, and will also determine whether ASEAN will play an important role in international and regional affairs. Therefore, completing the construction of AEC as scheduled has become the primary concern of ASEAN presently. ASEAN and its member countries are proactively adopting actions to achieve this objective, including the implementation of the  the Master Plan on ASEAN Connectivity.

However, the construction of AEC is still confronted with severe challenges. The major difficulty for ASEAN economic integration is that the ten ASEAN countries differs greatly in terms of economic strength, and share imbalanced development procedures. According to the afore-mentioned survey report of US-ABC, 52% respondents believe that the target of AEC can’t be achieved in 2015, and only 32% respondents believe that this can be achieved on time.

The year 2014 marks the important year for the construction of ASEAN Community, and its progress will be directly related to whether the ten ASEAN countries can achieve the target of completing the construction of the community. In general, the situations of AESEAN have been relative stable, but major ASEAN countries may suffer from political crisis, or will face general election, or be perplexed with hard issues of constitutional amendment, and the increase of political uncertainty will be bound to exert impact on economic development. In February 2014, the 25th Senior Task Force Session on ASEAN Economic Integration was held, on which the target of completing the construction of AEC by the end of 2015 as well as the development vision after 2015 and current tasks of AEC were discussed. So far, over 86% of tasks as scheduled have been completed for the construction of AEC.

2.3.2 Regional Comprehensive Economic Partnership (RCEP)

RCEP is regional economic integration cooperation proposed and headed by ASEAN, and its member nations include the ten ASEAN countries as well as countries which have signed free trade agreement (i.e.: China, Japan, Korea, Australia, New Zealand and India) with ASEAN. The target of RCEP is to remove internal trade barriers, create and perfect free investment environment, expand trade in service, and will involve intellectual property protection, competition policies and many other fields, and the liberalization degree will be higher than the free trade agreements already concluded by ASEAN with these six countries. If RCEP is to established, it will become the largest regional trade agreement of this region, with population accounting for nearly 50% of the world’s total, and its GDP and value of trade both account for 30% of world’s total.

RCEP negotiations were officially initiated in 2013, and are expected to be completed by 2015 according to the plan. Over the last year since the initiation, RCEP negotiations have achieved certain progress: negotiations on market access liberalization mode and texts of various fields have entered substantial stages, with all parties preliminarily reaching consensus on tariff concession mode, rule of origin, customs procedures, trade facilitation and construction of rule field mechanism; seven working groups have been established which focus on trade in goods, services, investment, economic and technological cooperation, intellectual property, competition policies and disputes settlement respectively, two working groups on rule of origin and customs procedures respectively have been set up under trade in goods, and panel discussions have been conducted in the two fields of standards, technical regulations as well as conformity assessment procedures and sanitary and phytosanitary measures. On March 31, 2014, the fourth round of negotiations was conducted in China. Based on the previous three rounds of negotiations, the 16 parties including the ten ASEAN countries, China, Australia, India, Japan, Korea and New Zealand continued to intensively negotiate on a series of issues involving RCEP, and positive progress has been made in terms of general issues such as goods, services, investment and agreement framework. With respect to trade in goods, the discussions focused on tariff, non-tariff measures, conformity assessment procedures for standard technical regulations, sanitary and phytosanitary measures, customs procedures, trade facilitation, rule of origin, etc. In terms of trade in service, opinions were fully exchanged on such issues as negotiation scope and market access fields. With respect to investment, investment mode document and elements of investment chapters were discussed profoundly. The newly-formed working groups on intellectual property, competition policy and economic and technological cooperation also conducted discussions on relevant issues. Positive results have been made at the session. However, due to the differences existing in the development level and negotiation standpoint, the future RCEP negotiations will still have a long way to go, which need to be successfully completed by overcoming challenges by the 16 nations with firm decisions and creative wisdom. Upon conclusion of the Agreement, it will bring benefits to all members, optimize the regional production network and value chain within the region, promote regional prosperity and development and make contribution to the sustained growth of the global economy.

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