A new free trade area came into effect Friday, incorporating China and the six founding members of the Association of South East Asian Nations (Asean), BBC online reports.
In terms of population it is the largest trade area in the world, with nearly 1,9 billion people and it includes some of the leading export driven economies. The Asean countries include Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand. Other members of Asean, including Vietnam and Cambodia are due to follow suite in five years.
They plan to eliminate tariffs on 90 per cent of imported goods. This will reduce the cost of trade and is likely to lead to an expansion of cross border commerce between the countries concerned.
Chinese manufacturers will gain and so will South East Asian exporters of raw materials. Those countries are also likely to gain access to cheaper materials and components from China.
The World Trade Organization says about 400 regional and bilateral trade agreements are due to be in operation by 2010. Critics say they often put poor countries left out at a disadvantage.
