Rules drive the future, a new chapter in upgrading the China ASEAN Free Trade Area
How to inject more certainty into the development of the region and even the world in today's context of unilateralism and protectionism? China and ASEAN have jointly provided a strong response. On October 28th, China and ASEAN signed the Free Trade Area 3.0 Upgrade Protocol (hereinafter referred to as the "3.0 Agreement") in Kuala Lumpur, the capital of Malaysia. This is not only another milestone in the open cooperation between the two sides, but also injects strong momentum into building an open world economy at a critical moment.
Yuan Bo, Director of the Asia Research Institute of the Ministry of Commerce Research Institute, pointed out in an interview with International Business Daily that since 2002, the China ASEAN Free Trade Area has evolved from version 1.0 of "market access" to version 2.0 of "open upgrading", and then to version 3.0 of "rules and future", keeping pace with the times and continuously developing. After nearly three years of negotiations, the 3.0 version of the agreement has been signed, focusing on future oriented economic and trade cooperation between China and ASEAN, including expanding cooperation in emerging fields such as digital and green economy, strengthening standards, rules, and supply chain connectivity, promoting trade facilitation and inclusive development. It is a new blueprint for cooperation formulated by both sides in the context of global changes. After the implementation of the 3.0 version of the agreement, it will promote the upgrading of China ASEAN economic and trade cooperation, become an important practice for China to expand the network of high standard free trade zones, and provide important assistance for the implementation of China's "15th Five Year Plan" and the "ASEAN Community Vision 2045".
The upgraded protocol of the China ASEAN Free Trade Agreement 3.0 version covers nine major areas, including digital economy, green economy, supply chain interconnection, standards and technical regulations and conformity assessment procedures, sanitary and phytosanitary measures, customs procedures and trade facilitation, competition and consumer protection, small and medium-sized enterprises, and economic and technological cooperation, in addition to legal and institutional chapters. So, compared to the existing China ASEAN Free Trade Agreement and the Regional Comprehensive Economic Partnership (RCEP), what bloodlines has the 3.0 version of the agreement connected? What are the specific new breakthroughs?
Yuan Bo analyzed that the "gold content" of the 3.0 version agreement is mainly reflected in:
One is to achieve new breakthroughs in emerging field rules. For example, the groundbreaking addition of two new chapters on green economy and supply chain interconnectivity has established a framework of rules for cooperation between both parties. These two chapters are not included in the free trade agreements reached by China and ASEAN, and will play an important role in demonstrating and leading the region. The chapter on digital economy, which was previously only an e-commerce chapter in the RCEP agreement, focuses on digital trade such as e-commerce. This time, cooperation in emerging fields such as cybersecurity, artificial intelligence, financial technology, and digital divide has also been introduced, with higher standards and richer content.
The second is that the rules in traditional fields have made new developments. For example, standard technical regulations and conformity assessment procedures, customs procedures and trade facilitation, and sanitary and phytosanitary measures (SPS) have been covered in previous agreements, but new rules have been added this time, such as establishing pre determined service standards and setting up sub committees for SPS measures. In addition, standards have been raised in terms of transparency. Although RCEP also has relevant content on competition and consumer protection, the 3.0 version of the agreement covers areas such as e-commerce and digital markets, providing consumers with more comprehensive protection.
It is worth noting that the digital and green economy rules reached in the 3.0 version of the agreement have established an institutional framework for comprehensive cooperation between China and ASEAN in emerging fields, "Yuan Bo pointed out." In the chapter on digital economy, paperless trade, electronic invoices, electronic payments and authentication rules, single window system construction and interconnection can help accelerate the clearance and transaction process of goods, reduce settlement risks, and lower trade costs such as enterprise clearance
Yuan Bo analyzed that in the field of financial technology cooperation, the 3.0 version of the agreement encourages member countries to adopt simplified licensing procedures and sandbox supervision measures, which can provide opportunities for financial innovation for financial technology enterprises and accelerate the implementation of new financial products. In addition, the upgraded version has strengthened the requirements for transparency and other rules, especially the disclosure of information regarding the proposed policies. At the same time, a dispute resolution mechanism has been introduced, which can provide stable policy expectations and strong institutional guarantees for enterprises.
In the chapter on green economy, both sides jointly formulated priority cooperation items such as clean energy, green manufacturing, green services, and ecological agriculture, and cooperated to create a green trade development platform, providing new development opportunities for enterprises to expand green trade investment and industrial cooperation in the region. Yuan Bo analyzed that strengthening green technology cooperation, encouraging circular economy, digitalization, and green coordinated development are conducive to helping enterprises reduce costs and increase efficiency, accelerate green and digital transformation. The coordination and cooperation of green standards are conducive to solving trade barriers in the fields of products and services, and can also help enterprises reduce the cost of entering the market. Sustainable financial terms are beneficial in providing solutions for the funding support needed for corporate green transformation.
In terms of consensus on the rules for supply chain interconnection, the 3.0 version of the agreement establishes cooperation mechanisms in the supply chain of key goods and services, strengthens communication and coordination, promotes pilot projects in the supply chain field, enhances the resilience of regional supply chains, and ensures interconnection at lower costs. These rules can promote stable and sustainable development of trade and investment between China and ASEAN, and help enterprises effectively cope with external environmental uncertainties. Yuan Bo analyzed that infrastructure interconnection and cooperation, such as strengthening multimodal transport, improving port productivity and efficiency, and solving bottleneck problems in logistics and transportation, can provide more efficient logistics support for enterprises to expand cross-border business and facilitate better layout of industrial and supply chains in the region.
The chapter on competition and consumer protection, on the one hand, clarifies the boundaries for anti competitive and unfair business industries, and also establishes rules for government departments to improve the transparency of competition enforcement procedures, which helps stabilize expectations, reduce the cost of violations and non compliant behavior of enterprises, and ensure fair competition in the market. "Yuan Bo analyzed that on the other hand, it further strengthens consumer protection clauses, enhances new rules and provisions such as online consumer protection, foreign consumer protection, and consumer dispute resolution, which can provide more comprehensive protection of the rights and interests of both parties' consumers in the digital economy era, reduce consumers' concerns about cross-border transactions, and create a better market environment for economic and trade exchanges between the two sides.
Regarding the establishment of a separate chapter on "small and medium-sized enterprises" in the agreement, Yuan Bo analyzed that this further highlights the agreement's emphasis on small and medium-sized enterprises. The agreement proposes many areas of cooperation, including establishing information platforms, promoting their use of e-commerce, supporting formalization and digital transformation, providing financing information, etc., to help small and medium-sized enterprises integrate into the global market and cooperation value chain, and achieve sustainable development. At the same time, chapters on digital economy, green economy, supply chain, etc. also have a lot of content supporting small and medium-sized enterprises. For example, encouraging small and medium-sized enterprises to use digital technology for production and business activities, and promoting digital solutions to enhance the resilience and connectivity of regional supply chains.
Regarding the new rules on customs procedures and trade facilitation, Yuan Bo analyzed that establishing service standards for pre ruling rules can help enterprises avoid penalties or delays caused by classification or valuation disputes; Strengthening the application of single window and information technology, promoting paperless trade and equivalent recognition of electronic documents, clarifying the identification standards for certified operators and the additional facilitation measures they can enjoy, can all help enterprises save cross-border trade costs and mitigate the adverse effects of current changes in the international trade environment.
The upgrade of SPS and TBT rules (standards, technical regulations, and conformity assessment procedures sections) requires further strengthening of mutual recognition of rules and standards and improving policy transparency. ”Yuan Bo pointed out that this helps to reduce non-tariff barriers in the field of goods trade, lower cross-border certification costs for enterprises, and make it easier for the products produced to enter the other party's market.
Yuan Bo also emphasized the progress and highlights of the "rule making" in the fields of digital economy and green economy. She pointed out that in the field of digital economy, the previous e-commerce chapter reached between China and ASEAN in the RCEP agreement mainly focused on promoting digital trade such as e-commerce. The 3.0 version of the agreement covers richer cooperation content, such as cybersecurity, artificial intelligence (AI), financial technology, digital divide, etc., which helps to promote the expansion of cross-border e-commerce cooperation between the two sides to a wider range of digital economy cooperation. For example, China relies on its technological advantages in the field of AI to strengthen cooperation with ASEAN countries in AI applications, expand new application scenarios and innovate business models in combination with ASEAN countries' characteristic industries, while helping ASEAN industries upgrade and transform towards digital intelligence. Cooperation between the two sides in these fields has great potential and space for development.
In the field of green economy, the 3.0 version of the agreement has established priority cooperation areas such as green trade, green investment, green technology, and green standards, and will also promote standard cooperation and mutual recognition in areas such as new energy vehicles and electronic appliances. For example, currently, major ASEAN countries consider electric vehicles as a strategic industry, and the domestic electric vehicle consumption market is growing strongly. Relevant institutions predict that the average annual compound growth rate of the six major economies in ASEAN alone will reach 16% to 39% in the next decade. In 2024, the sales of Chinese electric vehicles in the ASEAN market will exceed 170000 units. Many Chinese car companies have already invested in building factories in ASEAN countries and are establishing close production and supply chain cooperation with the local areas, with great potential for future development. China and ASEAN can further strengthen cooperation in policy communication, technology exchange, and talent cultivation under the 3.0 version of the agreement framework, promote standard docking in areas such as batteries, charging stations, data flow, and privacy protection, enhance mutual recognition of safety, environmental protection, and other testing results, jointly build a mutually beneficial and sustainable electric vehicle ecosystem, enhance the overall industrial competitiveness of the region, and drive countries to transition towards green and low-carbon development.