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Tuesday, 6 November, 2001, 07:59 GMT
Asian nations agree free-trade zone
Asean leaders meet - Chinese Prime Minister Zhu Rongji is the foreground
Asean had talked about a deal for some time
South East Asian nations and China have agreed to set up the world's biggest free-trade area within 10 years.

The area would cover a market of nearly two billion people.

The agreement was reached during talks in Brunei between the Chinese Prime Minister, Zhu Rongji, and the 10 leaders of the Association of South East Asian Nations (Asean).

China's economy is growing fast, and trade with South East Asia is worth $40bn a year and rising.

The Malaysian Prime Minister, Mahathir Mohamad, has expressed reservations, warning that the influx of Chinese goods into South East Asia could swamp local industries.

"China is a big producer of goods which are in direct competition with goods produced in the region, and we must make sure the influx will not cause our industries to shut down," he said, speaking before the deal was made.

New power

Japan and South Korea, not members of Asean but also at the talks, could also be involved. But that will only be considered at next year's summit in Cambodia.

Asean members
Indonesia
Thailand
Philippines
Brunei
Cambodia
Laos
Malaysia
Burma
Singapore
Vietnam
Ahead of the agreement, Tokyo was playing down the proposal for a free-trade zone.

One Japanese official said: "Only three or four countries said it was an issue to be considered but there was no in-depth argument on it."

Japan is Asean's most important trading partner, but BBC South East Asia correspondent Jonathan Head says its 50-year role as the driving force behind the region's prosperity is shrinking.

China - due to join the World Trade Organisation (WTO) - is seen as the new power in the region.

It is expected to be welcomed into the WTO at its ministerial summit in Doha, Qatar within a few days.

 WATCH/LISTEN
 ON THIS STORY
The BBC's Rupert-Wingfield Hayes in Beijing
"The deal is far from done"
Philippine President Gloria Arroyo
"The important thing was to minimise the philisophical preamble"
See also:

19 Oct 01 | Business
Asia braced for China's WTO entry
05 Nov 01 | Asia-Pacific
Asean summit struggles to make headway
05 Nov 01 | Asia-Pacific
Asean stumbles over war on terror
05 Nov 01 | Business
Asean leaders' trade hopes
29 Oct 01 | Business
Recession dominates Asia summit
17 Oct 01 | Business
Asia's economies face aftershocks
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