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Published: Wednesday, 1/6/2010

China's trade advance

CHINA and 10 Southeast Asian countries ushered in the new year in Kuala Lumpur, Malaysia, by signing an important free-trade pact.

The agreement, between China and the Association of Southeast Asian Nations, created the third-largest free-trade area in the world, after the European Union and the North American Free Trade Area, in volume of trade.

China was the ASEAN countries' third-largest trading partner last year, after Japan and the EU. The population of the enlarged pact's area is 1.9 billion. Trade between China and ASEAN in 2008 amounted to $192.5 billion.

The new pact will remove all tariffs on 90 percent of the goods traded among signatory countries.

The countries in the modified ASEAN are Brunei, Cambodia, China, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.

Significant regional trading countries not in the pact are India, Japan, and South Korea, China's principal regional rivals for economic and political power.

The United States maintains what it calls "an enhanced partnership" with ASEAN and is generally represented at the organization's summits.

China's new relationship with the ASEAN nations is considered to be to its advantage, increasing Beijing's influence in Southeast Asian affairs as well as its exports.

Some ASEAN nations are made nervous by China's new increased access to their markets and are concerned that cheap Chinese imports will smother their own domestic production and take away other ASEAN markets.

The new Chinese relationship with ASEAN moves Southeast Asia one step closer, at least on the economic plane, to a possible European-style union in Asia. There is still a long way to go, with India, Japan, and South Korea outside the tent.

From the United States' point of view, the new pact is a strong argument for further strengthening America's relations with ASEAN, now with China linked to it.

If ASEAN continues to seek to expand its free-trade area, a likely strategy, such action on America's part becomes even more important so as not to suffer further trade disadvantages in this important region.

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