ASEAN - China Free Trade Area - Essay Example

?Policy Belief Executive Summary The policy belief paper is about the ASEAN- China Free Trade Area. The policy belief will focus on the eleven countries which are involved in the Free Trade. The eleven countries are Burma, Brunei Darussalam, Indonesia, Cambodia, Philippines, Singapore, Malaysia, Laos, China, Vietnam, and Thailand. The policy belief will shed light on the date that the trade agreement was signed by the heads of the eleven countries. It will also explain how trade is conducted among the countries, the tariffs used and the benefits that the countries enjoy as a result of the free trade. The policy belief will also explore the goals of the ASEA free trade and the rule of origin that applies to the goods. It will also explain how the trade is administered and how the countries solve the disputes that may come across on the way. The audience of the policy belief is a branch of international organization. Statement of the problem Should the ASEAN – China free trade area agreement benefit the people and the countries themselves? Background of the problem The ASEAN is a trade free trade which consists of eleven member states of Association of Southeast Asian Nations (ASEAN). The agreement was first signed on the 4th of November 2002 in Cambodia. The intention of the agreement was to start a free trade among the eleven countries by 2010. However, the agreement came in to effect on January 1st 2010. The trade area is the third largest in terms of GDP and the largest of all trade areas in terms of population. The trade area had a nominal GDP of 6 trillion US dollars as at 2008. The combined population of the trade area is approximately 580 million. On the issue of tariffs, the agreement reduced the 90 % of the imported goods to zero. The importers did not have to pay anything for the importation of the goods. The amendment took effect immediately in China and other six countries in the agreement and the other four countries promised to effect the tariffs by 2015. The goals of the Association are to increase their competitive advantage through production of high quality goods and elimination of tariffs on all imported and exported goods. The other goal is the attraction of more foreign direct investment to the association. The administration of the association is handled by the trade authorities and also by the national customs within the association. The secretariat of the association has the responsibility of monitoring and ensuring that every member complies with the rules and the regulations of the association. The secretariat ensures that there is consistent in the application of the association measures to all the country members of the association. In the dispute resolution, the secretariat of the association is no allowed to resolve any dispute arising between any two member countries. The disputes arising between any two members of the organization are resolved through dispute resolution or through informal means bilaterally. If the two member countries cannot resolve the disputes, they can refer to Senior Economic Officials Meetings (SEOM). The SEOM establishes a panel of arbitrators who helps to resolve the disputes. The member countries can always appeal the decisions made by the panels if member countries feel dissatisfied by the decision. The member country can appeal to the ASEAN Economic Community Council. Statement of the Organization’s Interest in the Issue The issue at hand matters most because of the following factors. One reason why the free trade area matters the China Government is because it has helped the Chinese Government in exportation and importation of its products. The Chinese Government has also benefited from the reduction of the tariffs for exportation and importation between the member countries. There has also been the exchange of technological knowledge between the member countries. The China Government has also benefited from the importation of goods from New Zealand. The elimination of tariffs and other trade barriers has enabled the country to open up more opportunities to export its goods throughout the ASEAN markets. The involvement of the country in the ASEAN market has made China to improve its education and tourism sector. The ASEAN markets provide more opportunities, transparency and increased certainty for the Chinese suppliers and also the investor who may be willing to invest in the markets. The ASEAN markets have offered more security to the Chinese investors and other making investments in the markets. The ASEAN market has also protected the competitors in China. Pre-existing Policies Apart from ASEAN there have been other international agreements that have been in existence. The other free trade agreements include ASEAN-India Free Trade Area, European Economic Area and North America Free Trade Area. The European Economic Area is the largest followed by North America Free Trade Area. ASEAN is the third largest free trade area. China has also been in negotiation with Iceland to start a bilateral trade. The negotiations of the Free Trade area were started in 2007 between the two countries. Though the countries had different social and cultural backgrounds, the bilateral would bring good social relation between the two countries and foster equality and mutual respect for all. The two countries were willing to cooperate in the following areas Education, Science and technology, clean energy, and investment. The Chinese Premier concluded that if the two countries were to trade together, they would face and find solutions to the challenges of bilateral trade together, they would also share developmental opportunities together. This would bring a lot of benefits to the people in the two countries. The two presidents were ready to work on environment, shipping and polar shipping in order to promote peace in the two countries. Through the signing of the bilateral agreement, the two countries would promote peace, Stability as well as development sustainable growth in Artic region. Since the two countries started the bilateral trade, they have witnessed great improvement in the development of the countries. Through the bilateral trade agreement, Iceland has been made as one of the Chinese travelers’ destination. The China government hopes to start bilateral trade Poland and Sweden soon. Policy Options The policy options which are available for the China government include, The Chinese government can start either bilateral or multilateral trade with other countries which are outside Europe. It can start the bilateral trade with countries in America and some extent, the African countries. This would make the country gain more in terms of exports and imports. The country can also divert the agreements to other areas such as education. This would help the country to improve its education and technology and that of its counter parts to. The country can also start bilateral or multilateral trade with more than one country. It can involve like over 20 countries. This would provide the Chinese government to benefit from the increased opportunities and also the expanded market. It would also increase its import and export market and at the same time lower the tariffs for most of the materials that it may require from the member countries. The Chinese government can also involve other ministries in the government other than the ministry of foreign affairs. This would in turn increase the opportunities for the country and also benefit the people of China. Advantages and disadvantages of each policy option Trading with other countries which are outside Europe Advantages It would increase the opportunity for China Many people in China would benefit China would get increased market for its products There would be transfer of technology between the member countries The process involved in the exportation and importation would be made shorter for both the exports and imports of goods and services There would be promotion of peace between the two countries There would be development of sustainable growth in China There would be stability in China Disadvantages The Chinese Government can lose in term of import taxation Chinese people can be affected morally The process can be a bit expensive for the Chinese government The process can take long before it is implemented in the countries Bilateral Trade with more than one country Advantages There would be transfer of technology and education The government can benefit from the wide market offered by the many countries There would be the promotion of peace between the countries concerned There would be improvement in production of goods and services There would be increased market for the goods and services from China thus increasing the sales and profits There would be reduced tariff, therefore the country would not spend more importing its products The process of importing and exporting to the member countries would be made shorter through the removal of the trade barriers and tariffs Disadvantages The government can lose a lot in terms of import tax from the trading countries Sometimes it can be very expensive China can have little to offer to the trading countries but the other countries can have a lot they would require from China The process can take some time to be processed Not all the countries would be willing to work with China There can be political unstable in China Involving other ministries apart from the ministry of Foreign Affairs Advantages It would increase the opportunities for China People of China concerned with other ministries would benefit It would increase the transfer of education and technology There would be promotion of peace in the two countries There would be the improvement of the goods and services produced in the two countries Disadvantages Sometimes it can be very expensive for the country The Chinese government may not achieve what it intended to achieve The process can take time to be processed and implemented Education and other areas Advantages It would increase the opportunities for the Chinese Government It would lead to improved production of goods and services There would be the promotion of peace in the countries concerned Disadvantages Education and other areas would limit the country in terms of trade It can be expensive for the Chinese government The implementation of the process can take time Recommendation I would recommend that the Chinese government establishes bilateral or multilateral trading agreements with more than one country preferably twenty countries. The country should increase the number of countries than it is willing to trade with. With applying this policy, the Chinese government can benefit from the increased market for its goods and services. The country can also benefit from the reduced tariff if it needs to import its goods to the member countries. Although this policy may have some shortcomings, the benefits are greater than the short comings. The Chinese Government can also benefit from the transfer of technology and education from the member countries. This would increase the productivity of the Chinese government. The move would also increase the income revenue for the Chinese government since the government would not have to pay for the goods and services that it would be importing from other countries. Establishing trade free association would also promote peace in China and also in the other countries involved in the association. There would also be the promotion of sustainable growth in both countries. Through the removal of the tariffs and the trade barriers, the people of the republic of China and the other countries which would be concerned would have a free movement between and among the countries. Chinese government can also gain a lot from the trade in the concerned countries since it would gain in terms of advancement in technology and improving its products and services. This would in turn increase the demand for the China goods in the countries involved in the trade. There would also be a rapid of trade in China. In conclusion, I would advise the Chinese Government to apply the policy in its ministry of foreign affairs since it would benefit the whole country and other countries which would be involved in the free trade. Sources Recommended Pushpanathan, Sundram. ASEAN Charter: One year and going Strong. The Jakart Journal, 22 December 2009 The journal talks about how the association has grown stronger after one year. It describes the measures and the strategies that have enabled the association to be stronger. John S. Wilson & Benjamin Taylor. Deeper Integration in ASEAN: Why Transport Technology Matter for Trade. Trade Facilitation Reform Issue Brief, The World Bank 2008 The journal sheds light on the importance of free trade in transport. It also sheds light on how trade can enhance reform in the countries concerned De Castrol, Isagani. Big Brother China woos ASEAN. Asia times. 6th November 2010 The article sheds light on the involvement of China in ASEAN free trade. It also highlights the other countries involved in the trade http://news.xinhuanet.com/english/china/2012-04/21/c_131541443.htm The website sheds light on how the two presidents of China and Iceland negotiates on the starting of free trade area. It also highlights the date of the meetings set by the two presidents http://www.china-embassy.org/eng/zt/zfbps/ retrieved on 21st of April 2012 The website sheds light on the ministry of foreign affairs of China. It contains some policies on that ministry Read More