China and the Association of Southeast Asian Nations began the process of building a free trade area on Monday with the signing of an agreement on trading in goods. The deal is a part of the framework agreement on comprehensive economic cooperation between ASEAN and China.

With Premier Wen Jiabao and leaders of the 10-member ASEAN as witnesses, Minister of Commerce Bo Xilai signed the agreement with 10 economic ministers of the ASEAN countries.

According to the agreement, starting from July 1, 2005, China and ASEAN countries will begin their tariff-reducing process. Tariffs on 7,000 products will gradually be reduced or eliminated.

The free trade area will be fully functional for China and the six original ASEAN members (Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand) by 2010, while the other four newer members (Cambodia, Laos, Myanmar and Vietnam) will have an additional five-year transitional period.

ASEAN recognizes China's market economy status in the agreement.

A China-ASEAN agreement on dispute resolution was also signed on Monday.

China and ASEAN countries are complementary in goods production, and trade and investment them is expected to grow substantially with the signing of the agreement.

The agreements are groundbreaking in that they cement economic and trade relations between a country and a group.

China-ASEAN's "early harvest" method has been widely accepted in the international community and is followed by a number of other countries. "Early harvest" indicates that the trade partners may agree to accelerate tariff reductions on selected products.

China has already signed a zero-tariff agreement on fruits with Thailand that will be implemented this year.

China has recorded trade deficits with the ASEAN countries in the past few years.

China and ASEAN are expected to sign agreements on service trade and investment following the agreement on goods trade.

ASEAN Secretary-General Ong Keng Yong said at a press conference on Monday that trade between China and ASEAN reached US$84.6 billion in the first 10 months this year, up 35 percent year-on-year. He believes bilateral trade may reach US$100 billion next year.

He said free trade negotiations between ASEAN and China are good and "we are happy with the process."

(Xinhua News Agency November 30, 2004)