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China-ASEAN FTA Agreement Benefits China's Textile Export
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Since China and the ASEAN started their tariff reduction process on July 1, 2005 on the basis of the China-ASEAN Free Trade Area (CAFTA) agreement, the ASEAN would gradually lower its tariff upon Chinese textile and apparel, which may increase China's textile export to this region.


According to figures from the China Chamber of Commerce for Import and Export of Textiles, Thailand and Malaysia's previous tariff rate upon textile and apparel import from China averaged at 21.5 percent and 16.8 percent, and the rate dropped to 16.9 percent and 15 percent from July 1, 2005, and will drop to 10.6 percent and 9.2 percent from Jan. 1, 2007.


The two countries will lower their tariff upon Chinese textile goods to zero in 2010, and the Philippines will reduce its textile tariff in a similar way, the chamber of commerce said.


Indonesia, with its tariff rate against Chinese textile goods below 5 percent, will directly lower it to zero in 2009.


Vietnam's previous textile tariff rate was as high as 36.6 percent, and it dropped to 31 percent after July 1, 2005, and will drop to 27.2 percent in 2006. It is expected to reach 26.6 percent in 2007, 22.8 percent in 2008, 19 percent in 2009, 12.6 percent in 2011, 5.8 percent in 2013 and zero in 2015.


Beginning from July 2005, China, Brunei, Malaysia, Indonesia, Myanmar, Singapore and Thailand gave tariff cuts to each other on 7,455 kinds of commodities. The practice was launched in compliance with the Trade in Goods Agreement of a Framework Agreement for Overall Economic Cooperation between China and the ASEAN countries.


By 2010, China and six old ASEAN member nations, including Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand, will impose zero tariffs on most normal products, while China and the other four new ASEAN members of Cambodia, the Laos, Myanmar and Vietnam will do the same in 2015.


The China-ASEAN FTA has a population of 1.8 billion and US$2 trillion in gross domestic product (GDP). It will become the third largest global trading region after the European Union and the North American Free Trade Zone.


During the January-November period of 2005, China exported textile and apparel worth US$5.08 billion to the ASEAN, growing 22.4 percent year on year and accounting for 4.8 percent of China's total textile export.


Meanwhile, China imported textile and apparel worth US$620 million from the ASEAN, growing 5.8 percent year on year and making up 4 percent of China's total textile import.


Due to frequent limitations from the United States and the European Union, Chinese textile export still faces huge frustrations when entering the two largest markets after the elimination of global textile quotas in 2005, insiders said.


The significant textile tariff reduction will not only expand Chinese exports to Southeast Asia, but also help them to enter Western countries through bypass means, insiders said.


(Xinhua News Agency January 21, 2006)


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