Page last updated at 00:33 GMT, Friday, 1 January 2010

China and Asean free trade deal begins

By Andrew Walker
BBC News

A vendor in Jakarta
The deal is supposed to be mutually beneficial

A new free trade area comes into effect on Friday, incorporating China and the six founding members of the Association of South East Asian Nations (Asean).

These countries include Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand.

They plan to eliminate tariffs on 90% of imported goods.

This will reduce the cost of trade and is likely to lead to an expansion of cross border commerce between the countries concerned.

In terms of population it will be the largest trade area in the world, with nearly 1.9bn people and it includes some of the leading export driven economies.

Cheaper materials

Chinese manufacturers will gain and so will South East Asian exporters of raw materials.

Those countries are also likely to gain access to cheaper materials and components from China.

But there have been warnings from South East Asia that some industries are not ready to compete with China and that jobs will be lost.

Other members of Asean , including Vietnam and Cambodia are due to follow suite in five years.

Regional and bilateral trade agreements have proliferated in recent years.

The World Trade Organization says about 400 are due to be in operation by 2010.

Supporters say they are a step on the way towards comprehensive global trade liberalisation.

But critics say they undermine that effort and put poor countries left out at a disadvantage.



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