China - Asean Free Trade Area: Background, Meaning, And Prospects

China and ASEAN reached the agreement of establishing a free trade area in the next ten years on November 6th, 2001, which brought their cooperation to a brand-new era. In November 2002, the political leaders of China and ASEAN signed the Framework Agreement on ASEAN-China Comprehensive Economic Cooperation, which outlined the broad area of economic cooperation between them and guaranteed its basic framework. The concept of China-ASEAN Free Trade Area (short for CAFTA) was rooted in a deep and complex background. China and ASEAN are facing the challenges of economic globalization and regional integration, as well as the constantly changing circumstance of international economics. As a result, China and ASEAN made their necessary choice of establishing a free trade area to promote their economic conditions. The implement of CAFTA can make great contributions in the following fields: promoting the mutual trade and investment between the two parties; widening the areas of their economic cooperation; strengthening the economic link between China and ASEAN; and playing a positive role in the early realization of East-Asian economic integration. In the process of the full implement of CAFTA, two opposite elements may affect the progress. On one hand, the competition still exists between China and ASEAN on export and drawing foreign capital and becomes an obstacle to their further contact. On the other hand, some other positive factors may lay a solid foundation for its establishment, such as: the constructing of ASEAN Free Trade Area offers valuable experience and basic framework; China's rapid economic growth as well as its entry to the WTO offers motive power and pivot; the ever-strengthening economic cooperation after years of contact and harmonious political partnership between China and ASEAN offer the source and guarantee. On the whole, the progress of CAFTA is irresistible due to the fact that the positive elements are much more than the negative ones. After years of exploration, AFTA has formed a mature set of mechanism, which will lay a sound foundation for the establishment and furtherdevelopment for the future CAFTA. Now, the CAFTA has entered upon an essential phase of negotiation and this free trade area will take trade arrangement as its main body and give priorities to five sectors including agriculture, information and communications technology, human resources development, investment and Mekong River basin development. With the gradual development of CAFTA, the cooperation between China and CAFTA shall be extended to much broader areas.