China-ASEAN Free Trade Zone
The ASEAN Free Trade Area (AFTA) is a free trade agreement among the ten members of the Association of Southeast Asian Nations (ASEAN): Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. It was established on January 31, 1993, when the original three members signed the ASEAN Free Trade Agreement (AFTA) in Singapore. AFTA is the most comprehensive free trade agreement in Asia and is seen as an important step towards economic integration in the region.
AFTA is designed to liberalize and expand trade between ASEAN countries by progressively eliminating tariffs and other various restrictions. It involves the creation of a common market with the purposes of strengthening economic relations among the countries of the region, increasing investment, stimulating industrial development and generating employment. AFTA has proven itself to be a successful undertaking since its implementation.
China-ASEAN Free Trade Zone (CAFTA) is an effort by ASEAN and China to generate more economic interaction in the region. The CAFTA initiative was conceived in 2010 and officially launched in 2011 with the signing of the CAFTA Framework Agreement. The Framework Agreement called for both political and economic cooperation between the signatories.
The main goals of CAFTA are to facilitate trade in goods and services between China and ASEAN and to create an atmosphere of investment facilitation. In order to accomplish these goals, specific measures have been put in place, such as tariff cuts, elimination of non-tariff barriers, the harmonization of customs and trading procedures and the promotion of investment in each others markets. The ultimate goal is to create a single market for goods and services between China and ASEAN.
One of the most significant aspects of CAFTA is the agreement on zero tariff on all goods traded between China and ASEAN countries. This means that goods will be traded between the two sides at zero tariff rate, thus eliminating the most significant barrier to trade and doing away with the need to pay customs duty on goods entering the Chinese and ASEAN markets. This will result in drastically reduced costs of doing business in the two markets and is expected to open up a new area of growth and investment opportunities.
Another notable aspect of CAFTA is the commitment of the two sides to eliminate non-tariff barriers to trade. These include technical and sanitary requirements, product standards, pricing protocols and other such requirements. This will allow for more uniform standards of quality and safety among products in the China and ASEAN markets, ensuring better quality and lower prices for consumers.
Overall, the China-ASEAN Free Trade Zone is a major step towards economic integration between the two sides. CAFTA has the potential to create significant economic opportunities for the two regions by providing greater access to each others markets. The benefits from CAFTA are expected to be far-reaching and will help create sustained economic growth in both China and ASEAN.
