Public Consultation on the ASEAN-China Free Trade Area (ACFTA) 3.0 Upgrade Negotiations

1. Introduction

1.1 The Ministry of Trade and Industry (MTI) is seeking feedback on the ASEAN-China Free Trade Area (ACFTA) 3.0 Upgrade Negotiations. The public consultation period is from 2 to 31 October 2023.

 

2. Background

2.1 The ACFTA is the cornerstone of ASEAN-China relations. The Agreement is significant as it is ASEAN’s first free trade agreement (FTA) with an external dialogue partner, and China’s first FTA. The ACFTA eliminates tariffs for 94.6% of tariff lines of exports to China that originate from Singapore. It creates market access and ensures a more predictable operating environment for services suppliers. The Agreement also provides investors and investments with protection by establishing a more transparent, facilitative, and secure environment for investors.

2.2 Economic relations between ASEAN Member States (AMS)¹ and China have strengthened considerably since the respective Agreements under ACFTA entered into force². The value of ASEAN-China trade in goods has increased more than five times from US$160 billion in 2006 to US$879 billion in 2021³. In 2021, ASEAN and China were each other’s largest goods trading partner. ASEAN-China trade in services increased about 3.5 times from US$19 billion in 2007 to US$67 billion in 2019⁴. China is also ASEAN’s fourth largest foreign investor (US$127 billion, stock value), after United States (US$488 billion), European Union (US$ 397 billion) and Japan (US$290 billion)⁵.

 

3. ACFTA Upgrade 

3.1 The first ACFTA upgrade negotiations (i.e., ACFTA 2.0 upgrade negotiations) were launched in 2014, signed in 2015, and entered into force for all Parties in 2018. The second ACFTA upgrade negotiations (i.e., ACFTA 3.0 upgrade negotiations) were launched at the 25^th ASEAN-China Summit in November 2022 and is targeted for conclusion by end-2024.   

3.2 The ACFTA 3.0 upgrade negotiations will review the topics set out in Figure 1. AMS and China will also address trends such as supply chain connectivity, digitalisation, and sustainability through ACFTA 3.0. Rules of Origin, Product Specific Rules, and Services are not within the scope of ACFTA 3.0 upgrade negotiations as these areas were reviewed during the ACFTA 2.0 upgrade negotiations. 

Topics to be reviewed	Link to existing texts
Trade in Goods	Agreement on Trade in Goods of the Framework Agreement on Comprehensive Economic Co-operation between ASEAN and the People's Republic of China. - 21/11/2004 Protocol to Amend the Trade in Goods Agreement of the Framework Agreement on Comprehensive Economic Co-operation between the Association of Southeast Asian Nations and the People's Republic of China - 08/12/2006
Tariff Liberalisation	Annex 1: Modality for tariff reduction and elimination for tariff lines placed in the normal track Annex 2: Modality for tariff reduction/elimination for tariff lines placed in the sensitive track
Customs Procedures and Trade Facilitation	Protocol to Amend the Framework Agreement on Comprehensive Economic Co-operation and Certain Agreements thereunder between the Association of Southeast Asian Nations (ASEAN) and the People’s Republic of China – Effective 1 July 2016 (see Section B)
Technical Barriers to Trade	Protocol incorporating ASEAN-China Technical Barriers to Trade and Sanitary and Phytosanitary Measures Chapters (2012)
Sanitary and Phytosanitary Measures
Investment	Agreement on Investment of the Framework Agreement on Comprehensive Economic Co-operation between ASEAN and the People's Republic of China - implemented 15 Feb 2010
Micro, Small and Medium Enterprises	NIL
Economic and Technical Cooperation	Protocol to Amend the Framework Agreement on Comprehensive Economic Co-operation and Certain Agreements thereunder between the Association of Southeast Asian Nations (ASEAN) and the People’s Republic of China – Effective 1 July 2016 (see Chapter 4)
New Issues *areas listed are non-exhaustive	Digital Economy The upgrade negotiations will explore provisions to develop cooperation in areas such as digital trade and services (e.g., e-commerce, paperless trade); data governance (e.g., online personal data and consumer protection; data sharing, exchanging and comparing in response to big data utilisation; electronic transferable records; and cross-border data flows); and other trade-related aspects of digital economy cooperation including cybersecurity, artificial intelligence, smart city development, upgrading technology and innovation, digital transformation and management. Green Economy The upgrade negotiations may include commitments on strengthening collaboration, including through sharing knowledge, best practices, and technology in: low-carbon and sustainable economy (e.g., green finance, sustainable consumption and production, circular economy, green skills development); green technology (e.g., low-carbon technologies, sustainable and green infrastructure, environmental industry, green industry); sustainable energy (e.g., smart energy solutions, energy storage systems, renewable energy, and conservation). Supply Chain Connectivity The upgrade negotiations will explore ways to strengthen the resilience and sustainability of regional supply chains, giving priority to the continued and smooth cross-border flow of essential goods and services.

 

4. Invitation to Provide Feedback

4.1 MTI invites businesses and members of the public to provide feedback on the various aspects of the ACFTA that could be improved and other beneficial provisions that could be incorporated into the upgraded Agreement by 31 October 2023. Feedback should be submitted via the form HERE. Alternatively, the form can be accessed via the QR code below.

4.2 Please note that all submissions received may be published and attributed to the respective respondents unless they expressly request MTI not to do so. As such, if respondents would like (i) their whole submission, or part of it, or (ii) their identity, or both, to be kept confidential, please state so in the submission. In addition, MTI reserves the right not to publish any submissions received where MTI considers it not in the public’s interest to do so, such as if the submission appears to be libellous or offensive.

 

 

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¹ AMS comprise Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Viet Nam.
² ACFTA comprises three different agreements – trade in goods, trade in services and trade in investments. These three agreements entered into force in 2005, 2007 and 2009 respectively, and the ACFTA entered into force in 2010.
³ Source: UN Comtrade
⁴ Source: BATIS
⁵ Source: IMF CDIS

Annex A – Frequently Asked Questions on the ASEAN-China Free Trade Area (ACFTA)