Oct 20

China-ASEAN Free Trade Area on schedule

Written by dewang on Tuesday, October 20th, 2009 at 9:19 pm
Filed under:Asian Union, economy, News | Tags:, , , ,
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According to a Xinhua report, the 6th China-ASEAN Expo is being held in Nanning, Guangxi province, Oct 20 – Oct 24th.

I have mentioned in the past, that Asia is underway to form its own free trade zone like the E.U.. (For material goods,) the article says China-ASEAN Free Trade will commence in 2010 – which is on schedule. More details: China-ASEAN FTA to be completed in 2010, ASEAN envoy.

The E.U. took many treaties between member states to culminate in the union that exists today and then the single currency, Euro. See, E.U. Timeline for details. I see what is happening in Asia mirroring what happened in Europe.

In my Sept 1st post, “Yukio Hatoyama, Japan’s new Prime Minister: “A New Path for Japan””, I brought to your attention Hatoyama’s support of an Asian Union.  In this Xinhua article, we hear Asian leaders continue the push towards this direction. It’s all slowly adding up.

Also worth pointing out is the experiment underway to settle trade using RMB between China and some ASEAN members:

“In July of this year, China implemented pilot scheme for cross-border RMB trade settlement in Shanghai. Currently, China has sealed cooperation agreements of bilateral trade settlement with the central banks of Laos and Vietnam in ASEAN.”

This is a healthy experiment and learning towards establishing a single Asian currency.  I think this bodes well for the peace and stability of the Asia region.

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26 Responses to “China-ASEAN Free Trade Area on schedule”

  1. Rhan Says:

    Most Asean country prefers to see a less US domination of this region except Philippines and Singapore due to historical reason. Malaysia PM Mahathir used to propose a East Asian Economic Caucus (EAEC) that was rejected by Japan, Singapore and US. I personally not that optimistic toward a single Asian currency. The wary of China is no less than US though most wish to see a more balances of power within this region.


    The Native here use to cite America and Australia as the proven facts of immigration dominance that disregard the “aborigines”, and the “sarcastic” part is that the non-Native have to quote US political / merit system to justify our rights. Hence Chinese like me always has two face.

  2. Steve Says:

    Hi Rhan~ For some reason the spam filter caught these two posts. If you submit a post and it doesn’t show up right away, give it time and we’ll approve it once one of the editors sees it. Thanks!

  3. Rhan Says:

    Thanks Steve, I didn’t know that. Perhaps you could help delete the first post.

  4. Steve Says:

    @ Rhan~ Out of curiosity, what do you think of Mahathir these days? Do you see a big difference in what he says today as compared to what he said when he ran Malaysia as a younger man? Do you think he’s still on target with his political pronouncements or more like Lee Kwan Yew and Lee Tenghui who seem to have lost it lately?

    Because the two posts were slightly different, I wasn’t sure which one to delete so thanks for letting me know.

  5. dewang Says:

    Hi Rhan,

    First of all, ASEAN was formed probably to counter the weight of China and Japan. So, the article you linked to – those “sentiments” were already accounted for. If you look at E.U., they were all killing each other like there was no tomorrow during WW2. From that hell, they manage to inch towards the E.U. So, arguably, the Europeans managed to pull this off with exponentially greater odds.

    China thus far has passed her trade surplus to a lot of the ASEAN countries – and taking the heat for it. If China is not serious about this Asia Union idea, she’d keep a lot of the trade surplus for herself.

  6. Rhan Says:

    Hi Steve,
    I think Mahathir is still as astute and sharp regardless of his old age, his style don’t change much and grab every opportunity to criticize the West. But as happen to most politicians, they seldom walk what they preach. On the world stage, Mahathir voice up for the developing and Muslim country against the so-called powerful West but act in a different manner on many domestic issue. He is still very active in the local political scene and influential as well. I would says Mahathir view on many issue is still precise and balance.

    Btw, it was a surprise to me regarding your view on LKY. I believe most Singaporean wouldn’t agree with that.

  7. Rhan Says:

    Hi Dewang,
    I have no doubt China is serious, my question is what is US stance on this and I don’t think many country can compete with US in term of their “kindness” on trade surplus.

    1) Philippines, Singapore and Japan is deemed as very close to US
    2) Many Asean Muslim are now keeps quiet on XinJang issue. As soon as American finished their business in Afghanistan and Iraq, you would see the turnaround.
    3) There are buzzing around for the past many years that overseas Chinese control 70% of the local economy, Communist activity and independent of Singapore to establish a Chinese control state is always a traumatic experience that haunt the so-called native.

    View from some native on Middle Kingdom :

    When you look at it from the geopolitical perspective, it is highly plausible to assert there is a lot truth in those reports as to China’s actual intention cos:

    a. Their belligerent behaviour in the Spratlys is one indication.Their massive military buildup is reminiscient of Japan in the 1930s: http://www.washingtonpost.com/wp-dyn/content/article/2008/03/04/AR2008030401345.html and http://www.washingtonpost.com/wpdyn/content/article/2006/05/24/AR2006052402431.html

    even Australia is preparing contigency plans http://apo.org.au/sites/default/files/defence_white_paper_2009.pdf

    that are summarised here: : http://www.brisbanetimes.com.au/national/america-will-not-protect-us-warns-rudd-20090501-aq6c.html

    b. their meddling in the affairs of the countries on India’s borders is evident enough of their manouvering to reach their eventual goal. 2 examples .: http://www.tamilnet.com/art.html?catid=79&artid=29799 and http://www.tamilnet.com/art.html?catid=79&artid=29633

    By breaking up India, China would be the titular Asian power if we discard the Asian portion of Russia, both in terms of size and population. What would stop the Chinese establishing their own take of the Japanese Great Asia prosperity thingy as espoused in WWII . Whatever it is China’s quest for hegemony is a manifestaation of an incessant collective need plus their people’s acceptance of others as equals is a troubling concern:
    Shades of the civilised vs barbarian narrative of yore rearing its head again?u know the Middle Kingdom myth! I don’t have the space to elaborate further suffice to say that one ignores the machinations China nation state motivated by insecurities embeded in the Chinese psyche at one’s own peril.

  8. Steve Says:

    Hi Rhan~

    Thanks for your synopsis on Mahathir. I’ve been to Singapore many times but never made it to KL or anywhere in Malaysia.

    Our office in Singapore was pretty large so I had a lot of Singaporean colleagues. Their feelings about LKW were that he did a fantastic job to create the Singapore as we know it today, He did that by treating the Singaporeans as you’d treat children, lots of strongly enforced rules with an authoritarian government, etc. and my colleagues saw the value in that approach since no one can dispute the success of the city/state. But they looked at Singaporeans as a people that went from being a child to an adult but still gets treated like a child. They felt Lee was out of touch with the new Singapore and they particularly DIDN’T like his son running the country… felt it was nepotism and that the son had the authoritarian nature of his father but without the smarts. They also felt the government should open up, become less authoritarian and more democratic. Being I worked in the semiconductor industry, these were mostly highly educated professionals so they weren’t a typical cross section of Singaporean citizens, but that was the world I knew over there.

    Personally, I believe that both authoritarian and democratic leaders have a certain time limit they can successfully run a country and then hubris sets in. It goes back to the “absolute power corrupts absolutely” theorem but beyond that, I think people just get worn out over time and harden their opinions, losing the flexibility needed to make the proper changes and both times and circumstances do change. I don’t think LKW or even Mahathir is an exception to that rule. In the past, Jed Yoong (who lives in KL and is Chinese Malaysian) has kept the blog informed on the political situation in Malaysia and I’m very glad we’ve added your voice to the conversation.

    What do you think of Anwar Ibrahim?

  9. dewang Says:

    Hi Rhan,

    Honestly, I think the U.S. is supportive. If Asia becomes a union like the E.U., it could mean the pull back of tens of thousands of troops stationed in Asia – at an incredible savings to the U.S. taxpayers.

    Why wasn’t the U.S. opposed to the formation of an E.U.?

    The perspective (and links) you put forth probably jives with some of the narrow views in India, because India is not going to be part of it, at least initially.

    Don’t forget, the reason small European states joined E.U. is because E.U. is a type of guarantee against another rise of a Nazi Germany. So, if countries in Asia is afraid of a China that is becoming too strong, then an Asian Union makes even more sense.

    Japan is also concerned with a super strong China. Guess what they think the long term solution is? Read what Hatoyama has to say about an Asian community.

    To my knowledge, China has been consistently trying to normalize relations with her neighbors and the world. For example, recently, China just completed border demarcation with Vietnam.

    Just between you and me – I think it is extremely unwise to try to get India and China to pit against each other. The two countries must find ways to continue to normalize their relations.

  10. Rhan Says:

    Hi Dewang,

    “Honestly, I think the U.S. is supportive.” – Perhaps the US is being forced to support at this point of time.

    “So, if countries in Asia is afraid of a China that is becoming too strong, then an Asian Union makes even more sense.” – I hope all will share the same thought.

    “narrow views in India + I think it is extremely unwise to try to get India and China to pit against each other.” – Agree. But I think we have to know some other contrast view.

    “Just between you and me” – we look forward a strong China. 🙂

  11. Rhan Says:

    Hi Steve,
    Ah, I forgot that you are a American. Due to historical reason, we would not find a single Singaporean that will tell Malaysian the same as what they have told you. Stereotype a bit, Singaporean would insist that everything their government/LKY did is right, and Malaysia is wrong, a dog cat relationship. Singaporean love to complain but the PAP under LKY not losing even a 5% of the total seats in almost every election. Hence if the highly educated professionals (I would presume Singaporean is mostly quite educated) want to be a child, what can LKY and the rest do?

    “Personally, I believe that both authoritarian and democratic leaders have a certain time limit they can successfully run a country and then hubris sets in.” – Well said.

    Anwar Ibrahim? – Can’t tell much as I am his supporter. Anwar keep on evolved so honestly I lack trust in him. As long as he upholds the concept of fair and justice, I am fine. He is one of the most charismatic leaders among Asean country, seem better than Mahathir. But in term of intelligence and politic astute, Mahathir is a sure winner.

  12. Josef Says:

    Hi Dewang,

    At the very beginning of the European Community, they were aiming to control steel and coal production, as most important ingredient for weapons production, but this argument was rather important for France and Italy than the small countries. So actually it was a binding contract between equal sized and equal strong countries (Germany France Italy).

    The European Union later on, actually is something very different, and I question your statement about small countries versus Nazi Germany. However, if you really think an Asian Union, similar to this European Union could be created, strong countries like Japan or Korea could take that as an guarantee that China is not becoming to strong,- but would China ever allow that?

    It depends a little bit what exactly this Asian Union would or should look like:
    You want that this Asian Union has influence into “internal” matters – China would absolutely reject that,
    and it would not even been the most fierce against it, seeing that Myanmar would be also part of it. If you want to have a common currency you already have more interference into internal matters than simple free-trade contracts would do. I guess you mean that the Asian Union should be more than China and others joining ASEAN.

    A question which I can formulate but not answer: does it need democratic countries to join a Union?
    (the Europeans had some criteria, a Myanmar government would never be accepted in the E.U.)

    I would say America did not have direct pro or con influence to the foundation of the E.U. (not E.C.) –
    there were, and still are some private people trying to manipulate or influence some governments but essentially the official America stepped out. They probably appreciated their cost reduction due to less troops stationed in Europe (like you wrote in your first statement on savings for tax payers). Now, I would assume America’s position to an Asian Union would strongly depend how this Union would look like, too.
    If it is an autocratic China, dominating their neighbors I would expect some reaction from America.
    If it is in the style of the European union, everyone would welcome that, but seeing the internal structures, I doubt that this can happen in a foreseeable future.

  13. dewang Says:

    Hi Josef,

    Thx for chiming in. You raised quite a few interesting questions.

    I think this Asia Union idea will start off purely on economics first. ASEAN+China as a free trade bloc first. ASEAN+3 (China, Korea, and Japan) is after that.

    I don’t think E.U. tries to constrain Germany or France for growing faster than other members. But if one of them grows faster, I think implicitly others get to benefit more automatically. So, if there is anything in an Asian Union that would constraint the growth of any member, then no one would join.

    When China talks about interference in internal matters, I think the country means those outside of international treaties. For example, China has to honor her WTO agreements and subject herself to WTO member rules. This is influence into “internal” matters. Same when any country sign up to be a part of U.N.. Contention usually surrounds what is actually governed by such treaties, but that’s a different point.

    Why would an economic trade bloc need democracy as a pre-requisite? U.N. is full of non-democratic countries. U.N. is full of very different democracies. Maybe you could elaborate on this one a bit more.

    Regarding your last paragraph – I would agree. If an Asian Union is set up to confront the U.S., then I can see resistance from outside the region. Japan, Korea, or any other Asian country is not going to agree to membership if its going to be a puppet entity controlled by China. Don’t forget that for E.U., the same types of concerns about Germany controlling it must have been raised.

    Maybe Japan is a better example, since the country tried to swallow Asia not that long ago. 🙂

  14. Josef Says:

    Hi Dawang,

    For a first step, economic trade bloc, democracies, due to their slow and complicated reactions, might be even a disadvantage. But the E.U. as it is now, or will be soon has much more benefits, and some of them would be extremely healthy for Asia:
    While the leading countries still continue to grow their wealth, the poorer countries pick up and the tension between them lowers due to increasing similarity of their levels.
    Similar helps the same passport, the same currencies and the freedom to go and work wherever you want (at least to a high level).
    We can assume that there will be no short-term war between members.

    For this long term goal, similar constitutions of the members might be mandatory, as the members interfere much more with each other. Example the currently last missing signature of the Czech president Klaus is postponed due to his fears, that German WW2 refugees might asks for their rights and ownership. So he asks for some protection. What I want so say: the E.U. has much more constraints than the U.N. but also more influence at their members. I don’t say democracy is a must, just simple difficult to see, example, Burma would accept some ASEAN resolution on Aung San Suu Kyi.

    In today’s BBC news we can already read that plans beyond economics are made: http://news.bbc.co.uk/2/hi/asia-pacific/8321690.stm
    This new “human rights watchdog” might be a teeth less tiger, at the beginning, but we should give this guys a chance.

  15. dewang Says:

    Hi Josef,


    Interesting point – “similar constitutions of the members might be mandatory” – but I am not sure. Diplomat’s professions are to help iron out these messy details and make things work. If members of the union trust each other enough in the long run, I suppose that could happen. But in my mind that wouldn’t be a stumbling block in forming this union.

  16. Steve Says:

    There is one aspect of the EU that I don’t think would ever fly in any Asian union and that would be open borders, especially concerning emigration. I can’t see any of the major countries allowing that, though each country would have different reasons for not doing so.

  17. dewang Says:

    Hi Steve,

    Yeah, it’s tough to imagine that one, especially today. But I wonder if these types of difficulties existed leading up to formation of E.U.. I should do some homework. Population density wise per sq. km, E.U. member states can’t compare to China, Japan, etc. for sure.

  18. Steve Says:

    Hi DeWang~

    The biggest concerns in the E.U. were about things like “Polish plumbers” invading western Europe. In general, western Europe worried about an immigration invasion from Eastern Europe since the right to work anywhere in the E.U. was allowed. That’s also one of the big hangups with admitting Turkey to the E.U. I’m sure our E.U. bloggers can fill you in a lot more than I can concerning this particular subject.

    In Asia, countries like Japan, Taiwan and Korea are VERY restrictive in terms of immigration policy. China seems to have pretty open expat rules, though they toughened them up before the Olympics. I don’t know enough about SE Asia to comment. I think the biggest worry would be that workers from overpopulated countries would flood average or underpopulated ones. Asia is far more overpopulated than Europe with a much lower living standard. Only Japan can compare to western Europe’s general living standard, especially in the countryside.

  19. dewang Says:

    Hi Steve,

    Anyways, I think this free movement of workers is a very important component in the long run – that has a lot of benefits. In the short run, just complete free trade would be an awesome achievement.

  20. dewang Says:

    Wen and Hatoyama are basically singing the same tunes about an East Asian Community.

    More info at the 4th East Asian Summit in Thailand Oct 24th:

    “Asian leaders explore regional co-op at 4th East Asia Summit”

    “Premier Wen delivers strong message for East Asian cooperation”

  21. Rhan Says:

    dewang / Josef + Steve (sorry in Mandarin)


    Want to learn from EU, but lack European maturity and inner wisdom, merely a shanzhai (imitation) copy of EU.


    The criticism make sense, we still have a long way to go. However, as long as we are willing to start somewhere, it is fine.

  22. Steve Says:

    Hi Rhan~

    Though I can’t read the article, I agree with your premise. It’s actually not important to imitate the EU since East Asia isn’t Europe. It will end up taking its own shape and form so as you said, “as long as we are willing to start somewhere, it is fine”… my sentiments exactly!

    European maturity? Inner wisdom? Have you been keeping up with Italy’s Silvio Berlusconi? I’m not sure I’d call that maturity OR wisdom. 😛

  23. Josef Says:

    Hi Steve, Rhan,
    Berlusconi is not the top,- recently France nearly had a 23 year old student becoming leader of a Billion Dollar institution, just because his name was Sarkozy (at the end he did not accept, due to pressure from his own party).
    Maturity and wisdom are too good words – but the authors probably refer to some good forces within Europe, which push for peace and cooperation. As you have very distinct nationalities in Europe, some aspects of the E.U. might be worthwhile to copy.
    and yes, as long as we are willing… . But wait: Aren’t we (including me) thinking too positive?
    Isn’t the cooperation with Burma similar like a cooperation with old Apartheid South-Africa?
    The Asia-Union might be dominated by China with its strict “no interference to inner affairs” and with that the Asia-Union will extend this pain without end.
    I close with admitting that I only have very mainstream knowledge about Burma.

  24. dewang Says:

    China Daily has an article out:

    “Asian EU a ‘long-term’ goal”

    Chen Haosu, president of the Chinese People’s Association for Friendship with Foreign Countries, said integration in Asia has already begun. But Chen warned that full integration may take longer in Asia than it took in Europe.

    “I believe that Asian integration is beginning and, if China and Japan can join hands and take the lead in the endeavor, we can achieve the goal in the shortest possible time,” said Chen.

  25. Rhan Says:

    I think this is also the “normal” reply from China Foreign Minister.

    BEIJING – THE recent uproar among Chinese netizens over Minister Mentor Lee Kuan Yew’s call for the United States to remain engaged in Asia to balance China is ‘normal’, the Chinese Foreign Ministry said on Friday.

    It will not affect the bilateral mood ahead of President Hu Jintao’s state visit to Singapore next week, the ministry suggested.

    ‘Minister Mentor Lee Kuan Yew is a renowned statesman, and also an old friend of China’s,’ Assistant Foreign Minister Hu Zhengyue told reporters at a briefing on Mr Hu’s trips to Malaysia and Singapore, where he will also attend the Asia-Pacific Economic Cooperation (Apec) summit.

    ‘I believe he has expressed his own views on international issues regularly. It is not surprising to see all kinds of comments on his views appearing in the newspapers. That is normal.’

    Appearing to read from a script, he added: ‘The Chinese government does not have any special comment on this issue.’

    In a keynote address delivered at the US-Asean Business Council’s 25th anniversary dinner in Washington on Oct 27, MM Lee had said: ‘The size of China makes it impossible for the rest of Asia, including Japan and India, to match it in weight and capacity in about 20 to 30 years. So we need America to strike a balance.’

  26. Josef Says:

    In this BBC article about Burma
    a similar argument to explain recent developments in Burma was used, quotation:
    “This was happening amid the fear of increasing Chinese influence in the gap left by Western isolation. ”
    In this article is another link to:
    saying that:
    “South-east Asian grouping Asean has previously opposed the use of sanctions against Burma. But in response to the conviction of Aung San Suu Kyi key members of the regional trading bloc have called for an urgent meeting to discuss their stance.”
    The last link has the date August, however, even if they opposed, they (a Wikipedia quotation):
    “ASEAN will not defend the country in any international forum following the military regime’s refusal to restore democracy.”
    I really wonder if this change of mind of the Burmese generals is related to the influence of the last ASEAN meeting and the outlook for a closer cooperation.(thats why i post this links and comments here)
    This change was described by Derek Tonkin, a former British ambassador, as:
    “Given the impasse of the last 20 years, what has happened in the last three months gives us the hope there will be some movement,”

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