The Association of Southeast Asian Nations (Asean) and China have officially launched negotiations to upgrade the Asean-China Free Trade Area (ACFTA).

This announcement was made on Sunday at the 25th Asean-China Summit in Phnom Penh, Cambodia, where Asean also held its annual leaders' summit.

"Upgrading the ACFTA sends a signal to the private sector and all stakeholders that both Asean and China are committed to make the ACFTA more relevant to businesses, future-ready and responsive to global challenges," a statement posted on the Asean website said.

It noted that the AFTA is the oldest free trade deal that Asean has with its dialogue partners. A framework agreement was signed in 2002 during the Arroyo presidency, two years after China proposed the idea of a free trade agreement.

Tariffs were gradually lowered beginning the following year and were cut to zero for six Asean countries, the Philippines included, in 2010. The rest of the regional bloc followed in 2015.

"The upgraded ACFTA will cover areas of mutual interest, among them, digital economy, green economy, supply chain connectivity, competition, consumer protection, and micro, small and medium enterprises (MSMEs)," the statement read.

China is Asean's largest trading partner and second-largest source of foreign direct investments (FDI). Total merchandise trade between Asean and China was said to have increased by 29 percent to $669 billion last year despite the lingering impact of the Covid-19 pandemic.

FDI flows from China to Asean were also said to have hit $13.6 billion in 2021, almost double the $7 billion recorded in the previous year and accounting for 7.8 percent of total FDI flows to the region.

"Moving forward, the upgraded ACFTA would further support these trends and momentum," the statement read.

Source: The Manila Times

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