Other ASEAN agreements are being negotiated, including with Japan, which already has a number of important economic partnerships, while South Korea already has a free trade agreement. Both resemble the above – the reduction of more than 90% of all goods traded between ASEAN and these countries. ASEAN has concluded a number of free trade agreements with other Asian countries that are radically changing the global public procurement and production landscape. It has, for example, a contract with China that has effectively reduced tariff reduction to nearly 8,000 product categories, or 90% of imported goods, to zero. These favourable conditions came into force in China and in ASEAN members, including Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand. In addition, China`s share of ASEAN`s total trade rose from 2.1% in 1994 to 7% in 2003, making China ASEAN`s fourth largest trading partner after the European Union (11.5%), Japan (13.7%) 2000. United States of America (14%). This has a specific impact on the future of production capacity. The focus is on China, which has enjoyed a cheap youth “worker`s dividend” for the past 20 years and has therefore become the world`s production site. But China is also aging, and fast, because the same staff is now grizzled and getting richer. This means that cheap Chinese labour is a thing of the past, but this is offset by the fact that China is now becoming a huge consumer market.
With about 250 million Chinese of middle class standards in 2013, this figure will explode to 600 million by 2020. In addition to the China-India free trade agreement, ASEAN also has a combined free trade agreement with Australia and New Zealand, known as AANZFTA. The agreement, which will also be phased in, has eliminated tariffs on 67% of all products traded between regions and will be extended to 96% of all products by 2020. This is the first time ASEAN has entered into negotiations on a free trade agreement covering all sectors, including goods, services, investment and intellectual property rights, making it the most comprehensive trade agreement ever negotiated by ASEAN. For more details on this agreement, click here. Are you ready for ASEAN 2015? The integration of ASEAN in 2015 and the free trade agreements signed by China with ASEAN and its member states will change the nature of production and exports geared towards production and exports from China and Asia. In this important edition of Asia Briefing, we discuss these developments and the impact they will have on China and the global supply chain. This ACFTA for goods would soon be complemented by services and investments, with aggressive monitoring of negotiations on these relevant areas in 2005. These two agreements have a collective impact by making ASEAN the strategic hub of global sourcing and manufacturing. With a base of 150 million consumers of the middle class aSEAN, this market, which was then coupled with the 250 million from China and India, represents a middle-class consumer market, with a total free trade of about 650 million people – today. By 2030, in the face of Asia`s growing prosperity and growing dynamism, about 64% of the world`s middle class will be established in Asia, representing 40% of the total global consumption of the middle class.
An Introduction to Tax Treaties Across Asia In this issue of Asia Briefing Magazine, we examine the different types of trade and tax agreements that exist between Asian nations. These include bilateral investment agreements, bilateral double taxation agreements and free trade agreements that cover all companies directly active in Asia. ASEAN has a similar free trade agreement with India, which is being phased in and is reducing tariffs to 90% of all goods traded between ASEAN and India.