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China-ASEAN Free Trade Area Quarterly Report (Q1-5)

Post Time:2014-08-25 11:07:00

Suggestions for China-ASEAN Economic and Trade Cooperation

ASEAN is the priority in China’s Neighborhood Diplomacy and economic cooperation. Faced with complex changes in the world economy, reinforcing the collaboration between China and ASEAN countries will be conducive to the economic development of all the countries in the China-ASEAN Free Trade Area (CAFTA). Creating an upgraded version of the CAFTA not only has positive practical significance, but also promotes the realization of ASEAN Economic Community and RCEP establishment, and even makes contributions to global economic growth.

3.1 Strengthening communication and coordination, joining hands to create an upgraded version of the China-ASEAN FTA

Facts proved that the establishment of China-ASEAN FTA brought more opportunities, a bigger market and more optimized resource allocation conditions for both sides to achieve mutual benefit and common development. Creating an upgraded version of China-ASEAN FTA and further opening markets to each other reflect the intents of the two sides to boost bilateral economic and trade cooperation and will help create new growth force in the region. Both sides shall initiate negotiations on such aspect to achieve mutual benefits and win-win results, consolidate and push forward sound economic relations. In the process of establishing an upgraded version of China-ASEAN FTA, we shall recognize that both sides need to make adjustments accordingly, which in itself good for the competitiveness of the countries and greater and better development.

Both sides shall strengthen coordination and communication of RCEP negotiation to create more opportunities to expand economic cooperation and development. China has proposed to build the 21st Century Maritime Silk Road. In this regard, two sides need to increase exchanges and discussions.

3.2 Vigorously promoting China-ASEAN industrial cooperation and connection

At present, both China and ASEAN countries take industrial structure adjustment and upgrading as an important policy to develop their own economy. Their own comparative advantages and differences in natural resources, industrial structure and production capacity produced complementarities within as well as among industry sections. Industrial cooperation and connection is beneficial for both sides to explore, develop and innovate complementary characteristics. By enhancing industrial cooperation and connection, rational division of labor can be achieved. Creating an industrial chain complementing each other helps the two sides to form new productive force and enhance external competitiveness, which concerns to the development and vitality of the cooperation.

To promote China-ASEAN industrial cooperation and connection: first, governments of both sides shall enhance the communications and coordination of industrial policies; second, commerce chambers and industrial associations of both sides shall increase connections. The flexibility of commerce chambers and industrial associations make it easy to be connected and can lay a foundation for industrial connection and cooperation between the governments of both sides.

The effective format for making connections of commerce chambers and industrial associations of both sides is to set up industry cooperation committee. Over the recent years, China-ASEAN Business Council (CABC) has done much in promoting China-ASEAN industrial cooperation and connections, and made researches in theory and practice in advance. CABC has taken the lead in establishing China-ASEAN Coffee Industry Cooperation Committee, Food Industry Cooperation Committee and Footwear Industry Cooperation Committee. The establishment of the industry cooperation mechanism promotes exchanges and cooperation between the industrial associations and enterprises of the two sides. The founding of the industry cooperation committee is an effective approach to promote innovative cooperation and pragmatic cooperation in this region. CABC is planning to set up a series of China-ASEAN industry cooperation committees to highlight the cooperation on furniture, rubber, electronic devices, building materials, business consultation, logistics and project contracting.

3.3 Promoting healthy and rapid two-way trade development

Both sides should further expand bilateral trade scale, accelerate the flow of various production factors by developing trade, promote better industrial distributions, optimize regional supply chain and value chain system, and facilitate industrial structural upgrading. It is proposed to improve policy measures conducive to trade facilitation, push forward connectivities between infrastructures such as roads, railways, waterways and telecommunication, continue to advance advancing regional transportation facilitation and standardization, swap cross-border transport jurisdiction, unify transport standards and rules, establish a Single Window system and providing One Stop Joint Inspection service at ports, make it available for neighboring countries to transport goods,personnel directly to the destination, and create a more favorable trade environment for enterprises. Much effort will be devoted to achieving more commercial deals and promoting investment and industrial vitality through trade. Trade facilitation will continue to be promoted in terms of Certificate of Origin China-ASEAN FTA operating review. A mechanism will be established to monitor the execution of China-ASEAN FTA.

Both sides shall respectively optimize trade structure, enhance cooperation with brand-name enterprises, facilitate enterprises and customers of China and ASEAN countries to understand each other’s brand-name products and achieve rapid and healthy trade development of both sides. With the aim of realizing the trade target of USD1 trillion by 2020, CABC initiated the China-ASEAN Two-way Recommending Famous Brands Activity, which received wide appreciation of related parties including the ASEAN Secretariat. In 2014, CABC will continue to conduct this activity in order to further promote China-ASEAN brands cooperation,

3.4 Intensifying efforts to support and promote two-way investment

Investment cooperation shall be treated by both sides as a new engine for China-ASEAN economic growth. All the nations in the region shall earnestly implement the ACFTA Investment Agreement, further open markets to each other, promote investment facilitation and trade liberalization, create a convenient, transparent and fair investment environment, accelerate improvement of China-ASEAN investment promotion systems, and expedite the cooperation of major programs. The China-ASEAN Investment Corporation Fund and China’s loans to ASEAN countries shall be taken to full advantages. ASEAN countries shall strengthen the work of attracting Chinese investment, apply incentive policies, and involve more Chinese enterprises’ in ASEAN’s regional infrastructure construction and sub-regional economic cooperation. Both sides shall work together to build China’s foreign Economic and Trade Cooperation Zone in ASEAN, and actively explore new ways of establishing cross-border economic zones.

3.5 Chambers of commerce shall play a bigger role as a bridge in promoting cooperation

It is proposed to fully arouse the initiatives and creativity of NGOs to engage in FTA establishment, which is favorable to lay a more solid economic and social foundation.

Chambers of commerce of both sides shall exchange information on economy, trade, finance, investment, technology and market to facilitate cooperation among the enterprises; take an initiative part in organizing activities to promote exchanges of industrial and commercial delegation, project investigation groups, training groups and personages from economic and trade circles, offer services for holding investment promotion conferences and activities to each other, and conduct active cooperation in organizing exhibitions, high level forums, professional exhibitions, seminars and one-to-one symposiums; play its role as a bridge to provide services of commercial consulting on cooperation between enterprises from the two sides, recommend cooperative programs and partners, and offer training of management talents on developing FTA market for enterprises.

It is suggested that in conducting FTA negotiations, chambers of commerce of both sides shall discuss beforehand to lay a good foundation for government negotiations. The inter-governmental economic and trade negotiations require governments to more often take opinions of business circles from different countries after discussion rather than merely domestic business circles.

Chambers of commerce shall play an active role in encouraging cooperation between small and medium-sized enterprises of both sides. Efforts shall be made to enable the vast number of small and medium-sized enterprises to share the benefits of opening markets to each other.

3.6 Enterprise shall make full use of FTA’s favorable policies and actively conduct trade and investment cooperation

Enterprises of the two sides shall make full use of FTA’s favorable policies. For export of products, enterprises shall complete a CERTIFICATE OF ORIGIN China-ASEAN FTA. They shall also vigorously develop a market with tariffs reduced and exempted, and prepare themselves for the duty free access of products of each other to local market. By January 1, 2015, according to the agreement, customs duties on most products of China and four new members of ASEAN (Vietnam, Laos, Cambodia and Myanmar) will be abolished. From now on, it is necessary for enterprises to prepare for further opening market to each other.

Enterprises shall proactively improve the ability of expanding each other’s market. A report released by the US-ASEAN Business Council (USABC) found that over half of American companies in ASEAN have developed an ASEAN regional strategy based on the blueprint of the ASEAN Economic Community. Chinese and ASEAN enterprises shall pay enough attention to new situation of regional cooperation, including the establishments of the upgraded version of CAFTA, ASEAN Economic Community and RCEP. They shall timely develop and adjust market development strategies based on the new changes of regional cooperation, actively participate in regional economic integration to seize new opportunities brought by opening markets and share the benefits of regional economic cooperation.

Enterprises of both sides shall attach great importance to the feasibility analysis of entering into each other’s markets and the economic policy changes of the other to increase investment returns. Efforts shall be made to lift the profile of local enterprises in the new market, expand commercial channels to each other’s markets and select the right business partners.

When developing each other’s market, enterprises of the two sides shall take integrity of management as their code of conduct, understand the laws and regulations, economic cycle, industrial structure, market size, resource allocation and consumption habits of all countries in the FTA, constantly explore new space for cooperation and improve cooperation effectiveness.

When opening markets to each other in the region, entrepreneurs shall innovate their business ideas, organizational models and production technologies and speed up the pace of cooperation in innovation development.

Under the great environment of complicated and volatile international economic situation, as emerging economies, China and ASEAN countries are facing with both new opportunities and new challenges. The two sides shall work together to promote wide-ranging, in-depth, high-level and all-round economic cooperation, expand new space as well as create more active environment for cooperation and realize new economic development.

To be continued

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