ASEAN, China Agree to Cut Barriers to Services

Posted 15 January 2007 @ 05:08 pm EET     Print     Reprint     E-Mail     Comments

CEBU (Reuters) - China and Southeast Asian countries agreed on Sunday to cut barriers to trade in services such as telecoms, transport and tourism as a key step to the world's most populous free trade zone.

Chinese Premier Wen Jiabao told the 10-member Association of South East Asian Nations (ASEAN) that the agreement on services, "signifies that the development of a China-ASEAN free trade zone has taken a crucial step forward."

Both sides expect the agreement, signed at a regional summit in the central Philippines, to trigger increased levels of trade and investment after its implementation in July. In talks on the resort island of Cebu, Southeast Asian countries called for "a major leap" in Chinese investments into the region this year.

China is ASEAN's fourth largest trade partner, and bilateral trade between them rose by nearly a quarter last year to $161 billion, Chinese figures show. But this trade has not been even. China has a multi-billion dollar trade deficit with the group as it sucks in minerals, timber and other goods to feed its resource-hungry economy.

Both sides aim to have the foundation of a full free trade area laid by 2010, with China, Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand hoping to drop tariffs on most normal products by then. China and the remaining four ASEAN members Cambodia, Laos, Myanmar and Vietnam will target that goal five years later.

With its surging financial might, Beijing's influence in Southeast Asia is growing and Wen said that, in the coming year, both sides would "advance bilateral cooperation to an even higher level." At a wider summit on Monday, the leaders of China, Japan, South Korea, India, Australia and New Zealand as well as presidents and prime ministers from ASEAN are to meet to discuss trade, security and how to reduce their reliance on expensive imported oil.