Free Trade Takes Effect Between China and ASEAN Nations

The China-ASEAN Free Trade Area (ACFTA) took effect Friday, January 1, 2010. The free trade agreement between the 11 nations targets to reduce tariff rates to zero.ASEAN–China-Free-Trade-Area

A tariff is a duty imposed on goods when they are moved across a political boundary.

The free trade area became the world’s largest free trade area in terms of population and the third largest in terms of products. It will reduce tariff rates on 7,881 product categories, or 90% of imported goods to zero. It was approved last November 4, 2002 by the heads of government of the 11 nations at that time.

The ASEAN, or Association of South East Asian Nations, is composed of Brunei Darussalam, Indonesia, Malaysia, the Philippines, Singapore, Thailand, Cambodia, Laos, Myanmar and Vietnam. The first six nations were the original members. It has two candidate states (observer status) namely, Timor-Leste and Papua New Guinea.

The reduction, however, comes in steps. The newest four members are required to reduce tariffs by 2015. It will only be by then that the zero tariff rates take full effect. As of the moment, the following took effect instead:

  • tariff rates of Chinese goods sold in ASEAN countries were reduced from 12.8% to 0.6%
  • average tariff rates of ASEAN goods sold in China decreased from 9.8% to 0.1%
  • Zero tariff on 99.11% of imported goods among the original six member nations.