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China-Thailand Zero Tariff Fruit and Vegetable Agreement

Despite hopes that a new zero tariff agreement on the trade of agricultural products between China and Thailand would boost the market, prices and volumes remained unchanged on the first day of trading under the new regime.

Traders in Pingxiang, the largest port for fruit and vegetables in south China's Guangxi Zhuang Autonomous Region, said they noticed no changes.

As usual, 3,000 tons of fruit and vegetables were imported from Thailand via Vietnam on Wednesday at the normal price, said Huang Qingfu, a Pingxiang official in charge of economic cooperation.

China and Thailand signed an agreement in June this year on mutual exemption of tariffs on 188 products. Under the agreement the two countries will eliminate tariffs on imported fruits and vegetables beginning Wednesday in advance of the agenda for the exemption of tariffs under the framework agreement of the Sino- ASEAN (Association of Southeast Asian Nations) free trade zone.

"The new agreement will of course bring more business opportunities, but the brokers and retailers usually intend to wait and see what goes forward before they start to do something," said Lei Duorong, mayor of Pingxiang city.

The yearly turnover of fruit and vegetables hits 1.5 to 1.8 million tons. In most cases, Chinese products are re-sold to neighboring nations and some ASEAN nations sell products to China via Vietnam.

Sui Gui, seasoned fruit broker, did not feel much change in the market.

"I know about the zero tariff thing, but I don't worry about my business," he noted.

The businessman buys and sells 2,000 tons of fruit with Vietnamese traders. He indicated that Thailand fruit such as longan and bananas are of good quality but prices are also higher than in Vietnam. Even the tariff cut will not make prices competitive, he said.

He said the main reason was that China and Thailand do not share a land border and river shipment and airfreight greatly add to the cost.

"The transport expense prevents me from doing business with Thai people directly," he said.

But government official hold an optimistic view on the agreement.

Meng Ping, a Pingxiang official handling foreign economic cooperation, expected that more fruit and vegetables from China and Thailand will pass through the port and the impact on price will also show up in the near future.

Zero tariffs can cut costs, promote structural adjustment and improve the competitive edge, said Chen Daoyuan, researcher at the development research center of Guangxi.

Chen said that the tariff exemption was only the beginning of a long-term cooperation between China and ASEAN nations, which has a bright prospect since the two sides are complementary in a variety of fields including foreign trade, service industry and investment.

Statistics indicate that agricultural product exchanges hit five billion US dollars each year, approximately 10 percent of the whole bilateral trade turnover between China and ASEAN countries.
(Xinhua News Agency  October 02, 2003)

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