FTA in General
Why FTA
Members form free trade areas basically in order to eliminate tariffs and nontariff barriers and permit the products of FTA partners easier access to one another’s markets, as well as with the economic and political reasons. Developed countries have also formed FTAs with developing countries to encourage them toward trade and investment liberalization in the globalization process, ex. NAFTA.
What FTA
FTA is a general trade arrangements under which members grant one another preferential treatment in trade based on the principles of WTO. Preferential trade arrangements are included, but each country still maintains its own trade policies, including tariffs on trade outside the region.
FTA in Asia
Though FTA started in Asia is relatively late, but it is growing fast. To Jan. 2010, economies in Asia have FTA:
ž 88 implemented
ž 24 signed
ž 60 under negotiation for frameworks
ž 49 studied for feasibility.
It is 221 all together(92 internal vs 129 with outsiders), comparing with only 33 in total in 2000.
FTA in CHINA
Starting from the early this Century, currently China has various arrangements:
• 10 Agreements have been already signed with 19 FTA partners;
• 6 are under negotiation with 15 partners ;
• 3 are under consideration with 4 nations.
China's Free Trade Agreements
• China-ASEAN
• China-Pakistan
• China-Chile
• China-New Zealand
• China-Singapore
• China-Peru
• China-Costa Rica
And FTA with the Economics within China
• Mainland and Hong Kong Closer Economic and Partnership Arrangement (Hong Kong CEPA)
• Mainland and Macau Closer Economic and Partnership Arrangement (MACAU CEPA)
• Cross-Straits Economic Cooperation Framework Agreement(ECFA) between the Mainland and Taiwan
Free Trade Agreements under Negotiation
ž China-Australia
ž China-Iceland
ž China-Norway
ž China-Switzerland
ž China-Gulf Cooperation Council (GCC)
ž China-Southern African Customs Union (SACU)
Free Trade Agreements under Consideration
ž China-India Regional Trade Arrangement Joint Feasibility Study
ž China-Korea FTA Joint Feasibility Study
ž China-Japan-Korea Joint Study
ž
China FTA Achievement
Till the end of 2010, China have 27 national or economic members with 14 FTAs. With these FTAs, Chinese trade has been enjoying a very positive promotion. For example, the FTA members’ trade with China has already reached USD521.3 billion, accounting for 24% of Chinese total trade from Jan.-Sept. 2010. Excluding Taiwan, Hong Kong and Macau, the trade with FTA members has increased 43.7%, much higher than 37.9% in the same period the year before.
In addition, FTA is helping China in upgrading trade structure. Now, within Chinese export to ASEAN, the machinery products has increased to 50% from less than 40% in 2003.
China-ASEAN FTA as a example：
o 30% growth on average annually for the bilateral trade from 2003-07 ;
o the Sino-ASEAN trade has reached USD230 billion in 2009 even during the crisis.
At the beginning of year 2000，it is the time for realization of CHINA-ASEAN FTA. The bilateral trade is over USD136.5 billion from Jan. to June, 2010, increased 54.7% over the same period in 2009。the two sides have become the 3rd largest trade partners each other now.
Chinese FTA Policy
A comprehensive national strategy：
ž At 17th CPC National Congress: We will implement a strategy of free trade areas and expand bilateral and multilateral trade and economic cooperation”.
(by Hu Jintao’s Report to the 17th CPC National Congress on Oct. 15, 2007)
ž At 5th Section of the 17th CPC National Congress: realize the strategy for mutual benefit and take a part in the global economic management and regional cooperation(2010).
ž CPC’s Proposal for 12th 5-year National Plan: Promoting the regional cooperation process and speeding up the FTA implementation and building.
Background
ž FTA’s tendency after WTO’s stagnancy;
ž FTA’s dynamic in East Asia;
ž Big Power’s competition: TPP, APC, EAC…;
ž Post-Crisis’ regional trade structure
Arrangement
Chinese FTA building will give the priority to the following nations and areas:
ž Surrounding area;
ž Resource-rich nation and area;
ž Uprising of Emerging Great Power;
ž Nation or area with crucial interests to China
Purpose
ž by 2015, A FTA network around China;
ž more than 30% trade in FTA (now it is about only 1/5-1/4) and the half of key trade partners in FTA;
ž Optimize national trade structure;
ž Turning a big to a strong trade nation.
Character
ž Small members and developing groups
ž Free trade requirement with much political and social elements: ex, market economic status, hi-tech restriction, internal reform, etc.
ž Level is not high and standard with more flexible, considering the regional reality and Chinese domestic capability.
FTA in Chinese Future
Challenge:
ž Trade has been over depended by Chinese GDP;
ž RMB appreciation;
ž Labor cost growth.
Trade Role
ž Resources and energy requirement
ž Industrial Structure-resources and labor intensive
ž Science and high tech
Conclusion
The Chinese Government deems Free Trade Agreements (FTAs) as:
ž a new platform to further opening up to the outside and speeding up domestic reforms;
ž an effective approach to integrate into global economy and strengthen economic cooperation with other economies;
ž an important supplement to the multilateral trading system.
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