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China Signs Trade Pact With ASEAN

Landmark Accord Could Challenge U.S. Influence in Southeast Asia by 2010

By William Foreman
Associated Press
Tuesday, November 30, 2004; Page E03

VIENTIANE, Laos -- China moved Monday to expand its influence in a region long dominated by the United States, signing an accord with Southeast Asian nations aimed at creating the world's largest free trade area by 2010 -- a sprawling market of nearly 2 billion people.

China's concerns about securing vital sea lanes and feeding its booming economy's ravenous appetite for oil and raw materials were seen as key motivations for the trade pact with the 10-nation Association of Southeast Asian Nations at the group's annual summit, held in Laos's capital of Vientiane.

Bo Xilai, right, China's commerce minister, shakes hands with ASEAN Secretary General Ong Keng Yong at the annual ASEAN Summit in Laos. (Adrees Latif -- Reuters)

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But some analysts say the agreement shows how an increasingly bold China is forging new alliances that would reduce, and possibly eventually challenge, America's influence in Asia.

"China is using its huge market as a bait to lure ASEAN countries away from [the] U.S. and Japan and build closer relations," said Chao Chien-min, a China watcher and political science professor at Taiwan's National Chengchi University.

"I think what Beijing has in mind is to forge good economic and trade relations now and then increase exchanges in other areas, particularly in the military and security arena," Chao said.

The agreements signed Monday removed tariffs on goods and created a mechanism to resolve ASEAN-China trade disputes. The accord aims to end all tariffs by 2010, drawing ASEAN's combined economies -- worth $1 trillion -- closer to China's $1.4 trillion economy.

Ong Keng Yong, ASEAN's secretary-general, said trade with China would speed up with the free trade agreement. "So by the time this whole FTA [free trade agreement] is done, as we want to by 2010, it should become quite substantial: $130 or $140 billion, perhaps," he said.

In comparison, the annual ASEAN-U.S. trade is $120 billion and ASEAN-European Union trade is $110 billion per year, he said.

Ong said it would be a long time before China surpassed the United States because the Americans are bigger investors in the region.

China's deal with ASEAN was sealed as the 10-nation group agreed to another pact that would build an ASEAN community, much like the E.U., by 2020.

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