The shift in China ’s approach took place between 1997 and 2001. [877] At a China-ASEAN summit in 2001 – known as ASEAN+1 (i.e., China) – China proposed the creation of a China-ASEAN free trade area to be established by 2010 (initial discussions had begun in 1999). [878] The ASEAN-China Free Trade Area, or ACFTA as it became known, was an extraordinarily bold proposal to create a market of almost 2 billion people, thereby making it by far the largest free trade area in the world. [879] The ASEAN countries had become increasingly nervous about the effect China ’s growing economic power might have on their own exports and also their inward foreign investment: its proposal for a free trade area helped reassure them that China would not pursue economic growth regardless of the consequences for others. At the ASEAN-China summit in 2003, China formally acceded to ASEAN’s Treaty of Amity and Cooperation – which committed China to the core elements of ASEAN’s 1967 Charter – the first non-ASEAN country to do so (India has since followed). In 2002 it also signed the Declaration on the Conduct of Parties in the South China Sea, which rejected the use of force in resolving the disputes over the Spratly and Paracel islands. [880] These had been a serious and continuing source of tension between China on the one hand and Vietnam, Taiwan, the Philippines, Malaysia and Brunei on the other, culminating in military conflict with Vietnam [881] and the Philippines. [882] The agreements between ASEAN and China were to have a major impact on the political dynamics of East Asia. Prior to them Japan, which had long been the major external player in the South-East Asian economies, had resisted entering into regional trade agreements, preferring instead to operate by means of bilateral agreements. Japan now suddenly found itself on the back foot, outmanoeuvred by China ’s bold diplomacy, and ever since it has been running to catch up. [883]
Already, in 1997, during the Asian financial crisis, there had been the first ASEAN+3 summit (China, Japan and South Korea) and this was later formalized into a regular event. At the ASEAN+3 summit in 2003, the Chinese premier Wen Jiabao proposed that a study be made into the feasibility of an East Asian Free Trade Area, which was accepted. [884] Following China ’s lead, in 2005 Japan started to negotiate its own Free Trade Agreement with ASEAN, which was agreed upon in outline form in 2007. In 2009 Australia and New Zealand did likewise. There is now a complex web of Free Trade Agreements in the process of negotiation in East Asia which is intended to act ultimately as the basic infrastructure of a wider East Asian Free Trade Agreement, designed to be in place around 2007 and implemented before 2020. [885] Whether this ever materializes, of course, is another question, but the progress towards a lowering of tariffs in the region – with China in the driving seat – stands in marked contrast to the effective demise of the WTO Doha round, a point lost on neither ASEAN nor the rest of East Asia. [886]
