New Opening of Service Trade Markets Opportunities for China-ASEAN Economic and Trade Cooperation
By Xu Ningning
China and ASEAN: Opening of Service Trade Markets
With the economic globalization and regional economic integration, today’s world witnesses the new round of industrial restructure with service and service trade playing an increasing role in the national economy and the center of international industry shifting from manufacturing to service.
Service trade is the essential part of China-ASEAN Free Trade Area. Since the Framework Agreement on Comprehensive Economic Cooperation between China and ASEAN signed by leaders of China and ASEAN in November 2002, in which it is decided that the establishment of China-ASEAN Free Trade Area in 2010, the negotiation of service trade has been going on several years. On January 14, 2007, Premier Wen Jiabao and the leaders of 10 ASEAN countries signed in the Philippines the Service Trade Agreement, which will take effect on July 1, 2007.
The Service Trade Agreement of China-ASEAN Free Trade Area is the legal documents that regulate the opening up of service trade market of China and ASEAN and deal with problem thereof, defining the rights and obligations of both sides under the framework of China-ASEAN Free Trade Area as well as a list which provides the first concession commitments made by both sides in opening up their respective service trade markets.
According to the Agreement, on the basis of the commitment made to the WTO, China will make new commitment in 26 sectors under construction, environment preservation, transportation, sports and businesses. On the other hand, ASEAN makes commitment to open its markets in finance, telecommunications, education, tourism, construction, and medicines, including the further opening up of these markets and permission of solely-funded and equity joint ventures and other cooperation for the other party, relaxing in the limit of stake proportion in establishing companies.
The agreement is the first of its kind under the framework of free trade area for service trade. Currently, the Chinese service trade has only a small number of enterprises “going abroad” with focus on catering and commerce and the competitiveness in transportation, logistics, finance and insurance is not so strong. The commitment made by China-ASEAN opening is conducive to further opening of markets on the basis of complementary advantages. The service trade export increase can also provide more choices for consumers from both sides so that they can find more quality service. And the Agreement has found a new path for the service industry of China to go abroad. The Chinese businesses should attach great importance to the market and choices offered by the opening up of service trade market at both sides and catch the business opportunities.
Fields Opened and the Business Opportunities Offered
The sectors involved in the agreement include: construction, transportation, telecommunications, tourism, business service, finance, education, environment preservation, sports, and medicines.
Construction China and 5 of ASEAN countries have made concession commitment in the construction industry. Of which, China will open it construction and related engineering service to ASEAN and Cambodia, Indonesia, Malaysia, the Philippines and Vietnam will open to China the construction industry and other related engineering services, including the construction of buildings, construction, installation, and assembly of civil works, as well as other construction service sectors. The construction industry is the competitiveness of China, which will bring more favorable conditions for project contract and labor service for Chinese construction businesses in ASEAN.
Transportation China and 7 ASEAN countries have made concession commitment in opening of transportation market. Of which, China will open to ASEAN its air transport service, highway transport service, and the auxiliary services sectors for all transport, Brunei will open its marine shipping service, Cambodia will open its marine shipping, air transport, highway transport, and pipeline transport, Malaysia will open its marine shipping auxiliary service, Myanmar its marine shipping, international passenger transport (excluding coastal shipping), international cargo shipping(excluding coastal shipping) and marine cargo loading and unloading, the Philippines will open its service sector for marine shipping, Singapore its marine shipping and air transport, highway transport, and maintenance of automobiles, Thailand its marine shipping, all of these openings provide favorable conditions for Chinese enterprises to get access to the construction of ports, and shipping in ASEAN.
Telecommunications 4 ASEAN countries, namely, Cambodia, Malaysia, Myanmar, the Philippines, will respectively open the fundamental telecommunication service and value-added telecommunications services. In fact, Chinese enterprises like ZTE and Huawei have already been involved in the telecommunication network construction in ASEAN. More Chinese enterprises will have chances to “go abroad” so as to increase the development of service trade.
Tourism 7 ASEAN countries commit to open its tourism. Of which, Brunei will open the hotel and catering industries (including takeaway services); Cambodia hotel, catering, travel agencies, and tourist guide; Indonesia hotel, including complete service of restaurants, tourist consultancy, travel agencies in international hotels and service for tourism businesses; Malaysia exhibition and convention centers and theme parks; the Philippines accommodation, guide service; Thailand accommodation, catering, takeaway service, other services for tourism businesses. The tourist markets in China and ASEAN are mature, which will provide more solid foundation for sound matching of both sides.
Commercial service China and 7 ASEAN countries have made concession commitment in commercial services. Of which, China will open its computer services and real estate and other commercial services; Cambodia professional services (including law, accounting, auditing, taxation, etc), computer and related services, lease service without operators and other related services; Malaysia computer and related services; Myanmar advertising and printing services; the Philippines services related to mining and energy distribution; Singapore professional services (including taxation, engineering services), research and development, real estate service, lease service without operators and other services; Thailand professional services (including accounting, building design, engineering service, gardening construction); Vietnam professional services (including law, accounting, auditing, and taxation), computer and related services, lease service without operators (dry lease) and other commercial services.
Finance 7 ASEAN countries have made concession commitment in finance. Of which, Cambodia will open to China all insurance and related business, banking, and other financial services; Laos banking and other financial services, insurance (life insurance, and non-life insurance, re-insurance and other service sectors; Myanmar finance and insurance; the Philippines financial service, commercial banks, financial companies, investment companies; Singapore insurance and other related services, banking and other financial services; Vietnam all insurance and related services, banking and other financial services. Currently China is still weak in terms of its financial institutions going abroad, the favor given provide access to the Southeast Asia market but make a challenge for competitiveness of Chinese businesses.
In addition, both China and ASEAN have made favor commitment in education, environment preservation, sports, and medicines, which will create favorable conditions for both sides in the cooperation.
The Service Trade Agreement of China-ASEAN Free Trade Area is the achievement made in the construction of the free trade area, marking the step forward of the construction of the FTA. It will provide system security for both sides in service trade, be conducive to the deep cooperation between two sides and advance of the service industry. Enterprises from both sides should take advantage of this opportunity to get access to regional economy and international market. Meanwhile industrial associations should be informed of the new changes from both sides and build bridge for businesses in China and ASEAN to “go abroad” and “come in” playing their roles as communications and organization.