What are the impacts of the signing of the China ASEAN Free Trade Area 3.0 Upgrade Protocol?
On October 28th, China and ASEAN signed the China ASEAN Free Trade Area 3.0 Upgrade Protocol in Kuala Lumpur, Malaysia. The relevant person in charge of the Ministry of Commerce stated that after the signing of the protocol, both parties will fulfill their respective approval procedures to promote the early implementation of the protocol.
Upgraded Protocol
What has been upgraded? What did it affect?
What has been upgraded in the China ASEAN Free Trade Area 3.0 Upgrade Protocol? How will the upgraded protocol affect trade relations among members? What is the significance of this signing in the face of severe challenges to the global economic and trade system?
The first question: What has been upgraded to the China ASEAN Free Trade Area 3.0 Upgrade Protocol?
The 3.0 version upgrade protocol covers 9 major areas, including customs procedures and trade facilitation, standards and technical regulations and conformity assessment procedures, sanitary and phytosanitary measures, and economic and technological cooperation. It also includes 4 previously existing areas, as well as 5 emerging areas with great potential for cooperation between the two sides, namely digital economy, green economy, supply chain interconnection, competition and consumer protection, and small and medium-sized enterprises.
Yiwu, Zhejiang: ASEAN is the fastest-growing international market
Speaking of trade construction between China and ASEAN, it can be said that in recent years, it has been continuously growing and deepening. China has maintained its position as the largest trading partner of ASEAN for 16 consecutive years, while ASEAN has also been China's largest trading partner for 5 consecutive years. In Yiwu, Zhejiang, a globally renowned small commodity distribution center known for its abundant supply, affordable logistics, complete supply chain, and strong resilience, ASEAN is becoming the fastest-growing major international trade market.
ASEAN is the fastest-growing international market among Yiwu's major trading partners. In the first three quarters of this year, Yiwu's exports to ASEAN increased by 47.1%, showing strong development. Huang Ping, who deals in cultural goods, has a particularly profound feeling about this. In recent years, Yiwu cultural goods enterprises have teamed up to go global and participated in exhibitions in Indonesia, the Philippines and other places. With the new product model of "cultural and creative+stationery", they have quickly opened up the Southeast Asian market.
Huang Ping, Executive Vice President of Yiwu Cultural Supplies Industry Association:When we were three years ago, we could only make a few hundred thousand yuan a year, but now we can make several million yuan. Because we participated in two ASEAN Stationery Fairs, we experienced a growth of almost 10 times.
Liu Bo has been in the slipper business for over ten years. A few years ago, the company focused on the Japanese, Korean, European, and American markets. However, in the past two years, with the rise of live streaming e-commerce in Southeast Asia, the company has keenly seized the opportunity and successfully entered the local market by cooperating with top local institutions. Sales have doubled year after year.
Liu Bo, General Manager of Yiwu Tena Footwear Co., Ltd.:We achieved a growth rate of 140% to 150% in the Southeast Asian market in the first three quarters of this year, exceeding our target.
Upgraded Protocol
How will it affect future trade relations?
The second question: How will the signing of this upgraded protocol affect future trade exchanges among members? Watch the meticulous interpretation by researchers from the Ministry of Commerce Research Institute.
Researcher Zhou Wei from the Research Institute of the Ministry of Commerce:The signing of the China ASEAN Free Trade Area 3.0 Upgrade Protocol is a very important event. In the current economic and trade environment, there are actually different voices around the world. The upgraded protocol of China ASEAN Free Trade Area 3.0 will have significant impacts in two aspects.
The first aspect is regarding traditional economic and trade cooperation. For example, the reduction of tariffs on goods trade and the further opening up of service trade. These are all beneficial for strengthening mutual trade ties between China and ASEAN countries, and can also expand more trade opportunities.
On the other hand, there is more innovation capability. The upgraded protocol of China ASEAN Free Trade Area 3.0 mentions many new contents, such as the development of digital economy and green economy, and the strengthening of supply chain resilience. These new areas lack chapters that can be referenced in existing international trade agreements. This exploration by China and ASEAN has set a precedent. This provides a more effective and stable environment for the continuous development and mutual cooperation of related industries and economies.
The signing of the China ASEAN Free Trade Area 3.0 Upgrade Protocol does not immediately change all trade structures once the agreement is signed. However, it is more like creating a very effective environment. This environment provides more stable guarantees for enterprises willing to engage in trade and investment cooperation, and can effectively enhance their development momentum. This aspect is very important for seeing future development, especially innovation cooperation between China and ASEAN.
Entering the 21st century
China ASEAN trade relations continue to deepen
The China ASEAN Free Trade Area is the first free trade area established and negotiated by both sides. In 2002, the construction of the China ASEAN Free Trade Area began; In 2010, the 1.0 version of the China ASEAN Free Trade Area was fully established; In 2019, the 2.0 version of the upgraded protocol came into full effect and implementation; In 2022, negotiations for upgrading to version 3.0 will begin and will be fully completed by May of this year.
On October 28th, the two sides officially signed the China ASEAN Free Trade Area 3.0 Upgrade Protocol. At present, China and ASEAN are each other's largest trading partners and important investment partners. By 2024, the bilateral trade volume will reach 982.3 billion US dollars, which is 17 times higher than the initial construction of the China ASEAN Free Trade Area in 2002. In the first three quarters of this year, China's imports of agricultural products from ASEAN increased by 15.3%, including 37.8% growth in fruits entering the Chinese market through the "golden channel" of the China Laos Railway. ASEAN has been China's largest trading partner for agricultural products for 8 consecutive years.
With the continuous upgrading of the China ASEAN Free Trade Area, Southeast Asian fruits such as durian have arrived at people's dining tables at more favorable prices and faster; Traveling to Southeast Asia has become popular among Chinese tourists.
After the signing of the China ASEAN Free Trade Area 3.0 Upgrade Protocol, Guangxi and other regions are seizing the new opportunities of the 3.0 version, actively promoting high-tech empowerment, institutional innovation, and green standard docking.
Global economy and trade face challenges
What is the significance of this signing?
Last question: Against the backdrop of severe challenges facing the global economic and trade system, what is the profound significance of the signing of the China ASEAN Free Trade Area 3.0 Upgrade Protocol? See how researchers from the Research Institute of the Ministry of Commerce interpret it carefully.
Researcher Zhou Wei from the Research Institute of the Ministry of Commerce:In the current global economic and trade environment, there are many variables, among which the biggest one comes from the impact of unilateralism and protectionism. The breakthrough in rules has left many economies around the world unsure of how to adapt and choose their future development, while the bilateral economic and trade cooperation between China and ASEAN presents a completely different picture. The 3.0 version of the free trade agreement signed between China and ASEAN has further expanded their respective levels of openness and commitment, enhancing the effective impact of complementary trade structures.
China and ASEAN are also very close in geographical distance, and have a very good foundation for cooperation in industrial and supply chains. The signing of such an agreement will actually further enhance the momentum of economic and trade cooperation between China and ASEAN, provide better development space for bilateral cooperation, and promote the optimal allocation of resources, further optimizing the supply chain between China and ASEAN.
In the context of continuous adjustments in the global supply chain and facing many risks of change, such cooperation is not only very beneficial for both China and ASEAN, but also brings more development opportunities to the world and serves as a great example for all countries. By adhering to the concept of free trade and designing rules, all parties can gain greater development benefits.
Information source: CCTV website
