The Association of Southeast Asian Nations (“ASEAN“) member states and China have substantially concluded the ASEAN-China Free Trade Area (“ACFTA“) 3.0 Upgrade negotiations. This was announced by Prime Minister Lawrence Wong and other ASEAN and China Leaders at the 27th ASEAN-China Summit on 10 October 2024.
The ACFTA is the cornerstone of China-ASEAN relations. It is ASEAN’s first free trade agreement (“FTA“) with an external dialogue partner, and China’s first FTA. The negotiations to upgrade the ACFTA were launched in 2022 with the objective of ensuring that the ACFTA remains relevant, future-ready and responsive to global changes. The negotiations at the recent ASEAN-China Summit marks the second upgrade since ACFTA’s inception in 2010, with full conclusion targeted for next year.
The ACFTA 3.0 Upgrade is expected to foster a more business-friendly and future-oriented environment for companies to tap into opportunities between the ASEAN member states and China. This will also facilitate enhanced trade flows, greater transparency and certainty especially during supply chain disruptions, and improved protection for consumers.
Five New Chapters
The ACFTA 3.0 Upgrade introduces the following five new chapters:
- Digital Economy: Covers e-invoicing, digital identities, e-payments, digital infrastructure connectivity, obligations on data governance such as online personal data protection, electronic transaction framework, and cross-border data flows, as well as cooperation in emerging technologies such as artificial intelligence (AI) and fintech. It aims to ensure seamless end-to-end digital trade for businesses operating in the ASEAN region and China, and address the digital divide.
- Green Economy: Establishes a structured pathway for deeper cooperation on environmental goods and services, green investment, and sustainable finance to promote a green and climate-resilient economy.
- Supply Chain Connectivity: Strengthens regional supply chains, ensuring a smooth cross-border flow of essential goods and services. Drawing lessons from the COVID-19 pandemic, this chapter highlights the importance of keeping markets open, improving the facilitation of trade in goods, strengthening infrastructure connectivity, and innovation.
- Micro, Small, and Medium Enterprises (“MSMEs”): Fosters deeper cooperation between ASEAN and China’s MSME authorities and the private sector to support MSMEs’ participation in international trade and better integrate them into the global value chain.
- Competition and Consumer Protection: Includes comprehensive provisions to protect consumers, including those engaged in electronic commerce, and strengthens competition provisions to emphasise transparency and information exchange in law enforcement. When implemented, the ACFTA will be the first ASEAN FTA as well as China’s first FTA to include a Competition and Consumer Protection chapter which extends beyond traditional cooperation to also include protection of consumers engaged in electronic commerce and other new commitments.
Enhancements to Existing Chapters
The ACFTA 3.0 Upgrade will also introduce enhancements to existing chapters to provide greater clarity, efficiency, and cooperation in trade practices between the ASEAN member states and China. These chapters include: (i) Customs Procedures and Trade Facilitation; (ii) Standards, Technical Regulations and Conformity Assessment Procedures (STRACAP); (iii) Sanitary and Phytosanitary Measures; and (iv) Economic and Technical Cooperation.
Click on the following link for more information:
- Singapore Substantially Concludes The Asean-China Free Trade Area 3.0 Upgrade Negotiations (available on the Ministry of Trade and Industry website at www.mti.gov.sg)
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