The ASEAN-China Free Trade Agreement (ACFTA) was established in 2010 to boost economic cooperation and trade between the Association of Southeast Asian Nations (ASEAN) and China. Under the agreement, both parties agreed to reduce or eliminate tariffs on a wide range of goods and services.
Tariff rates are essentially taxes imposed by governments on imported goods. By reducing or eliminating these tariffs, the ACFTA aims to make trade between ASEAN and China more efficient and cost-effective. This, in turn, helps to promote economic growth and development across the region.
The ACFTA covers more than 7,000 products, including agricultural goods, industrial products, and even services such as tourism. Under the agreement, ASEAN and China have agreed to gradually reduce or eliminate tariffs on these products over a period of time.
For example, when the ACFTA was first established in 2010, ASEAN and China agreed to reduce tariffs on 90% of products traded between them to zero within a decade. This means that by 2020, almost all goods traded between ASEAN and China would be tariff-free.
However, some products were given special treatment under the ACFTA. For instance, some agricultural goods such as rice, sugar and corn are still subject to tariffs due to their sensitive nature. In addition, certain industries such as the automotive and steel sectors are still subject to tariffs due to competition concerns.
Overall, the ACFTA has been instrumental in boosting trade between ASEAN and China. In recent years, bilateral trade between the two parties has grown significantly, with China becoming ASEAN`s largest trading partner in 2020.
It is worth noting, however, that the ACFTA is not without its challenges. For example, some critics argue that the agreement has led to a flood of cheap Chinese exports flooding ASEAN markets and hurting local industries. Nonetheless, the ACFTA remains an important part of the economic relationship between ASEAN and China, and will likely continue to drive economic growth and development across the region in the years to come.