Free trade deal lifts business

0 CommentsPrint E-mail China Daily, November 15, 2010
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The ASEAN bloc's figures showed that exports are equal to 54 percent of the 10 nations' collective GDP. Further, the bloc has grown to become China's fourth-largest trading partner since the launch of CAFTA, with bilateral two-way commerce standing at $211.3 billion in the first nine months of 2010, up 44 percent from the previous year.

"The overall view (of CAFTA) is active. Our government supports our enterprises to do business with China. What we need to do is to improve our products and increase our production capacity," said Mangkorn Dhanasarnsil, vice-chairman of the Federation of Thai Industries.

However, because the bloc's 10 nations are developing at different economic levels, trade imbalances have resulted. This means smaller businesses in the region's less developed nations find it hard to gain shares in the Chinese market because they lack a competitive edge and have less preferential government policies to support them.

Experts point out these gaps will hinder the progress of regional economic integration.

"Although bilateral trade between China and ASEAN economies developed rapidly, trade with Singapore and Malaysia alone makes up more than half. Trade volume between China and ASEAN's new members remains very small," said Xu Ningning, deputy secretary-general of China-ASEAN Business Council.

Because the four newest members of ASEAN - Cambodia, Laos, Vietnam and Myanmar - maintain relatively high tariffs, the entry barrier for doing business in China has yet to be removed.

Huang Shifu, a Vietnam-born Chinese man who exports Vietnamese yellow rosewood for furniture to China, said that he hasn't benefited at all from the much-talked-about CAFTA.

Instead, the rising cost of yellow rosewood caused by the Vietnamese government's stringent export polices, including higher tariffs, to protect its raw materials has almost erased any benefits from the rising prices of his products.

"Tariffs on our products are 8.5 yuan a kilogram now," Huang said, pointing out that it used to be 7.5 yuan a kilogram. He said high demand pushed prices of rosewood up, and the higher prices for rosewood led to higher tariffs.

Under CAFTA, tariffs on Asean's latest four members will be gradually reduced and entirely removed by 2015. The original six members will totally eliminate tariffs by the end of this year.

Experts say entrepreneurs from the newest members, such as Huang, have to wait for the arrival of the tariff reduction for quite a while.

Only 45 percent of enterprises in the CAFTA zone have adopted the facilitation measures under the agreement, said Angel Lam, senior representative of the ASEAN secretariat, citing figures from Asian Development Bank.

The new zone is only 10 months old. China and the 10 ASEAN economies have to strive to propel the implementation of all the measures under the agreement to benefit all people in the area, Lam said.

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