Xinhua, China state news agency, earlier dubbed Cafta as the largest free trade agreement embracing developing countries, covering a population of 1.9-billion and involves about $4.5-trillion in trade volume.
“We expect robust recovery due to China Asean Free Trade Agreement,” said Liu during a briefing on prospects and challenges of Philippines and China in the global economy held at Clark Freeport Zone on Saturday.
Some quarters expressed concerned on the Cafta earlier, but Ambassador Donald Dee of the Philippine Chamber of Commerce and Industry (PCCI) said that the free trade agreement gives more opportunities for Filipinos. He stressed that the real challenge is to develop more products for China’s 1.3-billion strong market.
Speaking to businessmen and students, Liu said that stable Yuan, the Chinese currency has help Asean member countries to weather the 1997 financial storm.
He said that China expects the same impact on Asean member countries with the implementation of the CAFTA earlier this year.
The trade agreement between China and Asean member countries like the Philippines, Brunei, Malaysia, Indonesia, Singapore and Thailand commenced last January 1, cutting tariff rates from said countries to China to 0.1 percent from 9.8 percent.
In return, average tariff on Chinese goods was cut from 12.8 to 0.6 percent by the said countries which are the original members of the Asean.
Xinhua also reported that by 2015, the policy of zero-tariff rate for 90 percent of Chinese goods will be extended to the four new Asean members – Cambodia, Laos, Myanmar and Vietnam.
The Cafta involves agricultural and other products, services high tariff items like automobiles, rice and some petrochemical products which are listed as “highly sensitive.”
However, the Makati-based Universal Access to Competitiveness and Trade (UACT), an affiliate think-tank of the PCCI, said in its Cafta primer that some Asean member countries see the free trade agreement with “mixed sense of threat and hope.”
UACT noted that the sense of economic threat arises from the sheer size and dynamism of China’s economy and its growing ability to flood the market with competitively priced products.
However, Dee said that Filipino businessmen must look at the perceived challenges as opportunities.
He said that Cafta provides wider export market for Philippine products.
Dee also stressed that the real challenge is coming up with products that can be exported within Cafta member countries, especially China.
He also challenged Filipino businessmen and political leaders to change the mindset from wealth redistribution to wealth creation.
He said that wealth creation will forge equitable and broad based economy.