Free trade pacts to benefit all
By Yan Yang (China Daily)
Updated: 2004-08-23 09:15

China is actively participating in regional economic co-operation. New progress has been made in the FTA negotiation between China and ASEAN, and China has also initiated FTA talks with SACU (Southern African Customs Union) and GCC (Gulf Countries Council). Stable development has also been achieved in the feasibility study of FTA possibilities with Australia, New Zealand and Chile.

Some industrial groups in these countries have voiced concerns that they will suffer from the possible FTA deals and China will benefit more.

But officials and analysts say free trade agreements should be judged broadly and they are signed after feasibility studies which assess possible gains and losses.

Australian Foreign Minister Alexander Downer, who visited China early last week, said that "a free trade agreement with China should be part of our national vision."

Although it would inevitably arouse sensitivity and controversy, Downer said an FTA with China would be enormously beneficial to Australia, "just as free trade agreements we have entered into with a number of other countries, in particular the US," he said.

"Once you start to negotiate a few economies start to wonder what are the costs of their being left out."

Wang Youli, an expert from the Chinese Academy of International trade and Economic Co-operation, said any country conducts a feasibility study before signing a free trade agreement.

The study often explores benefits and losses to exporters and service suppliers from removing or reducing trade barriers, Wang said.

"The study examines any challenges or costs that an FTA might involve," she said, "so the FTA deal will balance interests of both sides and no one will sign a deal where they lose more."

For example, if the Sino-Australia and Sino-New Zealand FTA are signed, economic ties between China and the Oceania will be more concrete and diversified, she says.

The economies of China and Australia are complementary, Wang said.

Chinese demand will grow for Australia's iron ore, natural gas, unwrought aluminium, copper, wool and wheat. Meanwhile, Australian consumers will benefit from inexpensive Chinese exports - including computers, clothing, video and digital cameras, mobile phones and sporting items, she said.

The situation between China and New Zealand is similar, Wang said.

China needs forestry products, pulp, meat and other agricultural products from New Zealand and sells apparel, toys, machinery and furniture.

Li Guanghui, an expert on China's trade relations with ASEAN countries, said an early-harvest programme proves that the possible China-ASEAN FTA will benefit both sides.

Under the programme, which was implemented on January 1, the two sides have cut tariffs on about 600 agricultural imports between 2 and 15 per cent, and agreed to scrap these tariffs in 2006.

According to China General Administration of Customs, China imported a total of US$330 million worth of fruit and vegetables from ASEAN in the first half of the year, reflecting an increase of 38.7 per cent year-on-year.

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