Upgrading the ASEAN–China Free Trade Agreement
In 2015, ASEAN and China signed an upgraded protocol to improve the original Framework Agreement for the ASEAN–China Free Trade Area (ACFTA). The upgraded protocol entered into force in July 2016 and implementation will start from August 2019.
Since ACFTA was launched, China’s share of ASEAN total merchandise trade increased from 8 per cent in 2004 to 21 per cent in 2018, making it ASEAN’s biggest trading partner with trade amounting to US$591.1 billion. China also rose to become ASEAN’s third largest source of FDI in 2017, with flows amounting to US$11.3 billion.
But how will the upgrading of the agreement likely affect these flows? The key changes relate to: simplifying Rules of Origin (ROOs) and Certificate of Origin procedures; improving services commitments from China covering the engineering, construction, sporting, securities and tourism sectors; strengthening provisions for investment promotion and facilitation; and building e-commerce capabilities — especially for micro, small and medium-sized enterprises.
Jayant Menon and Anna Cassandra Melendez
