China-ASEAN FTA set for key upgrade

A "substantial upgrade" of the China-ASEAN Free Trade Area (CAFTA) may be announced during an upcoming summit in Laos, said Kao Kim Hourn, secretary-general of the Association of Southeast Asian Nations, on Wednesday.

Noting that China and member economies of ASEAN have been working actively to accelerate negotiations for the CAFTA 3.0, Kao said the announcement is likely to be made in October during the ASEAN-China Summit.

"This is going to be a very substantial upgrade of the CAFTA because we want to see this free trade area (FTA) become more relevant for business," said Kao on the sidelines of the 21st China-ASEAN Expo (CAEXPO) in Nanning, Guangxi Zhuang autonomous region.

CAFTA came into force in 2010, with zero tariffs covering more than 90 percent of the imported items from both parties. The pact was upgraded to CAFTA 2.0 in 2019.

Negotiations for CAFTA 3.0 began in November 2022, focusing on fields such as reducing nontariff barriers, increasing connectivity, and promoting both digital and green economies.

China has been ASEAN's largest trading partner for 15 consecutive years, and ASEAN became China's top trading partner in 2020. In the first seven months of this year, trade value in US dollar terms between ASEAN and China reached a total of $552 billion, up 7.7 percent year-on-year.

Together with the Regional Comprehensive Economic Partnership agreement, Kao said he believes that the two free trade agreements will bring new dynamics to the trade relations between ASEAN and China.

The RCEP agreement, which entered into force in 2022, covers all 10 ASEAN member economies and ASEAN's five major trading partners, including China.

Kao said he hopes to see wider and deeper cooperation between China and ASEAN, not only in trade, but also in people-to-people exchanges.

"In 2024, for the very first time, the number of flights connecting ASEAN and China, on average, was about 2,300 flights per week, and the number is set to increase," he said.

Increased two-way travel is not only about tourists since interactions between businesspeople, students and others are also significant in terms of having more dynamic people-to-people exchanges, Kao added.

China and ASEAN have designated 2024 as the China-ASEAN Year of People-to-People Exchanges and Kao expects it to be extended by another year to further encourage exchanges and communication between people from both sides.

Noting that this is the second time he has attended the CAEXPO, Kao said he is excited to see that the expo is moving forward by covering more fields and engaging a wider range of stakeholders, expanding from the traditional areas to new sectors such as digital trade.

He also appreciates the innovative programs such as the China-ASEAN young leaders' growth program that reaches out to the younger generation and hopes CAEXPO will contribute more to the cooperation between ASEAN and China, since both sides have the shared interest of bringing greater prosperity to their people.