Asean China Free Trade Agreement
Introduction
The Association of South East Asian Nations (ASEAN) was formed by Indonesia, Malaysia, Philippines, Thailand and Singapore in 1967. In 1980s, Brunei decided to join the organization, making it become well known as the ASEAN-6. Following Brunei, in 1990s, Cambodia, Laos, Myanmar and Vietnam (CMLV) also joined the bloc (Chia, 2004).
In 1992, a free trade agreement, namely ASEAN Free Trade Area (AFTA) was introduced. According to the agreement, tariffs are reduced to zero percent by 2010 for ASEAN-6 and by 2015 for CMLV (Chia, 2004).
China is one of the largest emerging economies in the world today. Its entry to the World Trade Organization (WTO) in 2001 contributed to the cooperation between the ASEAN countries later in 2010. Entering the WTO proves that China’s economy has become an open economy which involves trading with other countries across the globe. Therefore, ASEAN realized that it is a good opportunity for the bloc to start trading with China. As a result, in January 2010, a free trade agreement between China and ASEAN (ACFTA) was established.
China and ASEAN created this Free Trade Agreement because of several reasons that lead to economic enhancement. By combining the two areas, China and ASEAN will form the biggest FTA in the world in term of population. ACFTA is considered as the world’s third largest free trade area, which consists of a total population of 1.9 billion and a combined domestic product (GDP) close to 6 trillion US dollar (Han, 2009). In other words, this trading bloc will substantially increase market size of both parties. By having bigger market, it also means bigger business opportunities for the people, and eventually can lead to the increase of people’s welfare. Besides that, tariffs removal within this FTA will boost up the export and import activity for the members. The countries themselves and their people will gain benefit from this. The citizen can get cheaper and more variety of products available
The Association of South East Asian Nations (ASEAN) was formed by Indonesia, Malaysia, Philippines, Thailand and Singapore in 1967. In 1980s, Brunei decided to join the organization, making it become well known as the ASEAN-6. Following Brunei, in 1990s, Cambodia, Laos, Myanmar and Vietnam (CMLV) also joined the bloc (Chia, 2004).
In 1992, a free trade agreement, namely ASEAN Free Trade Area (AFTA) was introduced. According to the agreement, tariffs are reduced to zero percent by 2010 for ASEAN-6 and by 2015 for CMLV (Chia, 2004).
China is one of the largest emerging economies in the world today. Its entry to the World Trade Organization (WTO) in 2001 contributed to the cooperation between the ASEAN countries later in 2010. Entering the WTO proves that China’s economy has become an open economy which involves trading with other countries across the globe. Therefore, ASEAN realized that it is a good opportunity for the bloc to start trading with China. As a result, in January 2010, a free trade agreement between China and ASEAN (ACFTA) was established.
China and ASEAN created this Free Trade Agreement because of several reasons that lead to economic enhancement. By combining the two areas, China and ASEAN will form the biggest FTA in the world in term of population. ACFTA is considered as the world’s third largest free trade area, which consists of a total population of 1.9 billion and a combined domestic product (GDP) close to 6 trillion US dollar (Han, 2009). In other words, this trading bloc will substantially increase market size of both parties. By having bigger market, it also means bigger business opportunities for the people, and eventually can lead to the increase of people’s welfare. Besides that, tariffs removal within this FTA will boost up the export and import activity for the members. The countries themselves and their people will gain benefit from this. The citizen can get cheaper and more variety of products available
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