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China-ASEAN free trade ahead

(China Daily)
Updated: 2008-06-23 14:56

The MOFCOM also emphasizes in a recent statements that building FTAs enhances China's entry into the WTO, and it provides China with new opportunities to gain advantages amid the process of globalization.

But negotiations are always the hard side of any FTA, as both sides struggle to get the best from the FTA. And as each FTA is unique and there is no universal template to work from.

As a nation more powerful in agriculture but weaker in some service sectors, China and its FTA partners always encounter friction when tackling the two sectors.

China-Australia talks that started in May 2005 were bogged down over discussions over the two issues. The 11th round of talks were scheduled to be held in the first half of this year in Beijing.

Officials from South Korea have said agriculture will be the major stumbling block if China-South Korea FTA talks cannot begin within the next few years, although both a two-year preliminary study and a feasibility study conducted by the two economies say such an FTA would benefit them.

Regarding the China-ASEAN FTA, Xu Ningning, deputy secretary-general of the China-ASEAN Business Council, says the next two years will be harder than ever as the two sides will be squabbling over to what extent they open service sectors and investment.

Still not mainstream

But an FTA cannot take the place of the WTO or play a leading role in the world economy, say experts.

Take China for example. China usually gives priority to developing nations when it comes to considering an FTA partner. But the nation's major trade partners like the US, EU, Japan and South Korea have not taken part in the China FTA game.

China is not alone. Observers say the pattern is repeated worldwide except for the US-South Korea FTA signed in April 2007.

There are many things that can be dealt with under the WTO, but not within the framework of an FTA, says Long.

"WTO draws up the rules and regulations concerning global trade activities, under which nations could exchange business in a fair way, and it also forms a mature system in solving global trade conflicts. But a FTA can do neither of these," he explains.

There is only one aspect that FTA is better than the WTO: it is efficient in opening markets and reducing tariffs, but under the WTO, this cannot be achieved until the 150-odd members reach consensus.

More than that, the Doha Round, whose stalled talks stimulated the FTA talks restarted in early 2007. The WTO Director-general Pascal Lamy admitted the parties are closer to their ultimate goal and this January the US and EU jointly said they would like to conclude the Doha talks by the end of 2008.

"China will be riding ahead on both wheels (WTO and FTA), but absolutely the WTO is more important from a long-term perspective," says Long.

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