HANOI, June 26 (Xinhuanet) -- The establishment of an ASEAN-China free trade area (ACFTA) will facilitate two-way trade, and sharpenthe competitive edge of their goods and services in the world economy, Vietnamese Deputy Trade Minister Phan The Rue told Xinhuain a recent interview.

    "In the long term, the ACFTA will encourage the movement and accumulation of capital and labor structure changes in industries, accelerate restructure of economic sectors, and create a close link between industries and enterprises of the ASEAN and China, enhancing effectiveness and competitiveness of the whole block in the world economy," he stated.

    The fact that the ASEAN-China Agreement on Trade in Goods, signed in November 2004, will take effect on July 1, 2005, is a "very meaningful progress towards the establishment of the ACFTA in2010 as leaders of the ASEAN and China pledged in the China-ASEAN Framework Agreement on Comprehensive Economic Cooperation inked inNovember 2002 in Cambodia."

    Now, the 10-member ASEAN (the Association of Southeast Asian Nations) and China are discussing the construction of agreements on trade in services and investment, two important components of the ACFTA. "I pin great hope on the current negotiation process. If possible, just in 2005, the ASEAN and China can sign the agreements on trade in services and investment," said the deputy trade minister.

    Trade and investment ties between the ASEAN and China, dynamiceconomies in the world with strong interaction in many important fields like agriculture, electronics, machinery, chemical, mineral,garment and textile, have grown substantially in a stable way in recent years, laying "firm foundations for the two sides to reinforce their close economic relations, and fully tap advantagescoming from the ACFTA's process of liberalizing and facilitating trade," he noted.

    The establishment of the ACFTA with a population of 1.7 billion and the gross domestic product (GDP) of more than 2.5 trillion US dollars will offer big opportunities to all members, since it will gradually remove trade barriers among them, and remarkably facilitate the flow of goods, services and investment.

    Economical effectiveness and competitiveness of many fields, including petrochemical, machinery, telecommunications and agriculture will increase, helping sharpen competitive edge of goods and services of the ASEAN and China in the world market, Ruesaid.

    During the ACFTA's establishment and development, however, some economically disadvantageous countries in the ASEAN strongly need practical assistance from other members of the free trade area, especially China, he noted, citing some forms of aid, including "technical assistance and cooperation projects, and flexibility in realizing common liberalization targets."

    For Vietnam, the ACFTA is a new and more flexible playing ground which will substantially affect its multifaceted economic relations with China, Rue said.

    "The ACFTA is an important catalyst for expansion and reinforcement of Vietnam-China economic ties. Besides, it will encourage enterprises of the two countries to conduct business according to international standards and customs, helping overcomeshortcomings in border trade, and reduce goods smuggling," he clarified.

    China and the ASEAN, including Vietnam, Thailand, Indonesia, Malaysia, Singapore, Brunei, Myanmar, Laos, Cambodia and the Philippines, have seen remarkable improvements in trade and investment.

    In 2004, the two-way trade was over 100 billion dollars, more than doubling the figure in 2000. Now, the ASEAN is China's 4th biggest trade partner, and China is the 5th biggest partner of theASEAN. The ASEAN has so far invested nearly 40 billion dollars in China, which has had investment of roughly 2 billion dollars in the 10-member block.

    "The ASEAN and China are attracting great investment both within and outside the two entities. In 2004, direct investment inthe ASEAN and China totaled over 84 billion dollars," Rue said.

    Last year, the import-export turnovers of China and Vietnam surged 47.68 percent to 7.19 billion dollars, he noted. China's customs statistics show the two countries posted two-way trade of 6.74 billion dollars in 2004, up 45.3 percent against 2003. Enditem