Even as the global crisis spurs protectionist measures, there is continued momentum towards increased trade liberalization in the Asia-Pacific, with ASEAN at the center.
On January 1, 2010, free trade agreements between ASEAN and China, ASEAN and India, and ASEAN and Australia/New Zealand went into effect.
The Telegraph reports that the ASEAN-China free trade area scraps duties on 90% of goods traded across China, Brunei, Indonesia, Singapore, Malaysia, Thailand, and the Philippines. The remaining ASEAN countries (Cambodia, Laos, Myanmar and Vietnam), which are less developed, will see barriers fall in 2015.
Eight years in the making, the ASEAN-China FTA creates the world's largest free trade area by population, and will "rival" the EU and NAFTA in terms of value (AFP: ASEAN-China open free trade area).
Increased trade liberalization create winners and losers on both sides. The New York Times published an excellent report in December describing how low-cost Chinese producers can squeeze competition elsewhere in Asia. This FTA will increase the prevalence of such competition.
Meanwhile, with less fanfare, the ASEAN-India free trade agreement also went into effect on Jan 1 (Bernama: Not All Easy as India-ASEAN FTA Comes Into Effect). Its scope is smaller, covering only Malaysia, Thailand and Singapore. There is trepidation among Indian businesses in several sectors, such as the fishing industries, whoview the ASEAN competition as destructive.
The ASEAN-Australia-New Zealand FTA also went into effect on January 1, 2010, with a plan to eliminate tariffs on 96% of goods traded by 2020.
Perhaps following the footsteps of China, India, Australia and New Zealand, the EU announced earlier this week it would permit the European Commission to pursue free trade negotiations with individual ASEAN countries.