The negotiations to update the free trade agreement between Southeast Asian countries and China are nearly complete after almost two years of discussions. Leaders from both sides announced during a summit in Vientiane that the ASEAN-China Free Trade Area (ACFTA) is set to be finalized and signed next year once final legal details are ironed out. Singapore’s Prime Minister Lawrence Wong emphasized the importance of this upgrade in the face of growing protectionism worldwide, stating that it sends a clear message about the significance of free trade and mutually beneficial market cooperation.
The ACFTA, which was established in 2010, was the first free trade agreement between the Association of Southeast Asian Nations (ASEAN) and an external partner, as well as China’s first FTA. Over the years, it has facilitated trade between the two sides, making them each other’s top trading partners since 2020. Trade in goods between ASEAN and China has more than tripled since 2010, reaching US$696.7 billion last year, with China also being one of ASEAN’s largest trading partners and a significant source of foreign direct investment.
The impending upgrade to the ACFTA will enable both ASEAN countries and China to benefit from future growth opportunities in areas such as the digital and green economies, according to Prime Minister Wong. The free trade area covers over 2 billion people and has a combined GDP of over US$20 trillion, making it a crucial economic partnership. The Singapore Ministry of Trade and Industry (MTI) highlighted the importance of updating the agreement to ensure it remains relevant, future-ready, and able to address global challenges effectively.
Negotiations for the upgrade began in 2022 with the goal of modernizing the ACFTA to address emerging trends and meet the evolving needs of the region. The enhanced agreement is expected to further strengthen economic ties between ASEAN and China by providing a more robust framework for trade and investment cooperation. By expanding the scope of the FTA to include new areas of collaboration, such as the digital economy and sustainability initiatives, both sides aim to seize opportunities for growth and innovation in a rapidly changing global landscape.
The summit in Vientiane marked a significant milestone in the process of updating the ACFTA and underscores the commitment of ASEAN countries and China to deepen economic integration and cooperation. With the completion of negotiations on the horizon, the stage is set for the signing of the upgraded free trade agreement next year, signaling a new chapter in the economic partnership between the two regions. The strengthened ACFTA is poised to play a key role in facilitating trade, promoting economic development, and fostering greater prosperity for the people of ASEAN and China in the years to come.
