| Sports |
by VERNA YU
World’s biggest free trade zone comes another step closer
CEBU, Philippines: Filipino Melanie
Fernandez sources nearly half the merchandise in her fashion
accessories shop from China these days, because it makes good
business sense.
“Lipsticks, stockings, combs ... these are all made in China and
they are much cheaper than goods we stocked previously from Japan,
which were quite expensive,” Fernandez said at her shop in a
trendy downtown shopping centre.
“We want more cheap goods. They satisfy our customers’ demand.”
Shopping centres in this resort island of Cebu stock Chinese
products ranging from toys to televisions and clothes to
calculators after a surge in trade between China and the
Association of Southeast Asian Nations (Asean) in recent years.
Trade totalled US$160.8 billion last year, a 23% increase over
2005, according to Chinese premier Wen Jiabao yesterday.
The full-year 2005 figure of US$130.4 billion was roughly 16 times
that of 1991.
Wen was speaking at a summit with Asean in which the two sides
signed an agreement set to give another boost to economic
exchanges.
From July, China will open its lucrative services sector to
Southeast Asian firms in sectors including energy,
telecommunications, real estate and information technology.
“This marks a key step forward for the establishment of a China-Asean
free-trade area,” Wen told Asean leaders before the signing.
The free trade zone – which would be the world’s biggest, covering
nearly two billion people – is set to come into force in 2010.
“This should round out the liberalisation of the trade between
Asean and China,” Rodolfo C. Severino, former Asean
secretary-general and now senior research fellow at the Institute
of Southeast Asian Studies in Singapore, said.
“I think opening up the services sector would facilitate trade in
general ... so this is quite an important agreement,” he told AFP.
As a first step towards a free trade area, Asean and China signed
an agreement on trade in goods in November 2004.
Liao Shaolian, deputy director of the Southeast Asia research
centre at China’s Xiamen University, said these deals were
important for the eventual integration of Asian markets.
“China and Asean would have a better framework for the protection
of trade ... the economies would be more integrated and the
service industries could grow more stably too,” he said.
With China now attracting much of the foreign investment that used
to flow into Asean economies, there are some fears that closer
trade links could be more of a threat than an opportunity.
But Severino said Asean countries had much to gain.
“The rise of China is not a zero-sum game and China is beginning
to invest in Asean countries too,” Severino said.
“Some complain about the influx of Chinese goods ... but they
mustn’t forget that Southeast Asia has a surplus with China. The
balance of trade is in Southeast Asia’s favour.”
Asean’s top exports to China include electrical equipment,
machinery, fuel and oil, plastics and rubber – mostly intermediate
materials for China’s exports of manufactured goods to third
countries.
With China’s economic expansion and the free trade zone in place,
the country is expected to import more of these products from
Asean as its manufacturing continues to grow, experts say.
Regional leaders have also sought to ease worries.
“What we always believe (is) that China has not been a threat ...
We have always regarded China as an opportunity,” Malaysian prime
minister Abdullah Ahmad Badawi told reporters last October at a
China-Asean summit.
Under a US$25-billion deal announced at that summit, Malaysian
state energy firm Petronas will supply some three million tonnes
of natural gas annually to Shanghai over the next 25 years.
For many manufacturers in the Philippines, the impending free
trade pact means they must rise to the challenge of cheaper
Chinese competition.
“The happy days are over,” Richard Tiu, chairman of industries at
the Philippine Chamber of Commerce and Industry, said. “They have
to be more creative and efficient ... each entrepreneur has to
know how to find a niche.” – AFP
 
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