China and neighbours ink trade deal in bid to rival EU and US

SOUTHEAST Asian nations and China signed an accord yesterday to create the world’s biggest free trade area by removing tariffs for their two billion people by decade’s end — a key step in their vision of a trade bloc to rival Europe and North America.

Leaders in the 10-member Association of Southeast Asian Nations also signed a pact to flesh out their agreement last year to create an ASEAN Community along the lines of a unified Europe by 2020. It aims to create a common market with common security goals.

Chinese premier Wen Jiabao witnessed the signing of the landmark trade accord along with ASEAN leaders at a conference centre built on a palm-fringed swamp in Vientiane, the capital of Laos.

The ASEAN-China accord aims to remove all tariffs by 2010, drawing ASEAN’s combined economies of €800 billion closer to China’s of €900bn.

It would build on two-way trade expected to surpass €70bn this year.

The ASEAN members are Brunei, Cambodia, Indonesia, Laos, Malaysia, Burma, Philippines, Singapore, Thailand and Vietnam. China’s landmark trade agreement is the latest example of how the communist giant is claiming a growing role in a region long dominated by the United States.

The agreement will create the world’s biggest free trade zone and adopt a wide-ranging “plan of action” to boost ties in security, politics, technology, medicine and transportation.

China is seeking to protect vital sea lanes and secure a steady supply of oil and raw materials from Southeast Asia that have been feeding the booming Chinese economy.

Linking up with ASEAN also helps Beijing further isolate Taiwan, the self-ruled island China claims as its own.

The agreement calls for the two regions to begin creating a massive tariff-free market over the next five years in their combined market of two billion people.

It also creates a three-person panel of independent experts to resolve trade disputes between ASEAN and China.

The vaguely worded action plan also calls for co-operation in military training, agreements on cyber security, tourism promotion and the creation of early-warning systems for illnesses like SARS, AIDS and bird flu.