• Cooperation between ASEAN and China was elevated to a higher level with the signing of the Framework Agreement on Comprehensive Economic Cooperation by the ASEAN and China Heads of State / Government on 4 November 2002 in Phnom Penh, Cambodia.

• The Framework Agreement which came into force on 1 July 2003 is an umbrella Agreement which provides general provision on the establishment of an ASEAN-China Free Trade Area (ACFTA) within 10 years by pursuing:

  • progressive elimination of tariffs and non-tariff barriers;
  • progressive liberalisation of trade in services and investment;
  • strengthen trade facilitation measures; and
  • economic co-operation in areas of common interest.
   
  
• The following ACFTA Agreements has also being signed:

• Tariffs have been reduced from 1 January 2004 by the six original ASEAN member countries (ASEAN-6) and China. Duties were eliminated on 1 January 2006.

• Malaysia 's products under the EHP:

  • 503 unprocessed agriculture products; and
  • 87 specific manufactured products such as coffee, animal and vegetable fats/oils, cocoa and cocoa preparations, mineral fuels (coal/coke), soap, stearic acid, article of rubber and glass envelope for Cathode-Ray Tube (CRT).

• Tariff liberalisation on all other products (other than EHP) has been implemented beginning 1 July 2005 and to be conducted in four tranches i.e. 2005, 2007, 2009 and 2010.

• ASEAN-6 and China is required to reduce tariffs to 0-5% on 40% of their products by 2005 and 60% of their products by 2007.

• Extended timeframe for tariff elimination of up to 2012 will be given for not more than 150 tariff lines. Malaysia 's 150 tariff lines include:

  • polyethylene, polypropylene and polystyrene;
  • rubber tyres and tubes;
  • textiles and fabrics;
  • footwear;
  • ceramic products;
  • articles of iron and steel; and
  • electrical products.

• Products in the Sensitive Track are divided into Sensitive List (SL) and Highly Sensitive List (HSL).

• Duties for Sensitive List will be reduced to 20% by 2012 and to 0-5% by 2018.

• Duties for Highly Sensitive List will be reduced to 50% by 2015. No further tariff cut commitments.

• Malaysia has 701 products in the Sensitive Track, of which 416 are in the SL and 285 in the HSL. Products in the Sensitive Track include:

  • unprocessed agriculture products
  • tobacco products;
  • plywood;
  • ceramics and glass;
  • iron and steel; and
  • automotive products.

Continuous improvements are being undertaken on the ROO and Operational Certification Procedures (OCP) to simplify the rules and trading procedures under the ACFTA.

• ASEAN and China signed the Second Protocol to Amend the Agreement on Trade in Goods of the Framework Agreement on Comprehensive Economic Co-operation between ASEAN and China at the 17 th ASEAN Summit on 29 October 2010, Ha Noi, Viet Nam and 2 November 2010 in Kuala Lumpur, Malaysia.
• This Protocol has enter into force on 1 January 2011 for Brunei, Malaysia, Singapore, Thailand, Viet Nam and China, 15 January 2011 for Lao PDR and at the latest by July 2011 for the other 4 ASEAN Member States (Cambodia, Indonesia, Myanmar and the Philippines).
• Under the review, ASEAN and China have agreed on (4) four fundamental features in the new revised OCP to facilitate trade and assist the business communities in their business operation:

- “Movement Certificate” means an issuance of Certificate of Origin (CO) by an intermediate ACFTA parties, where the goods pass through, to undergo bulk break activities or repackaging of products;

- “Third Party Invoicing” means invoice issued by third non-ACFTA parties provided that the product meets the requirements of the ACFTA ROO and must be shipped out from either one of the ASEAN Member States or China;

- Longer validity period of 1 year from the earlier period of 4 months for the CO Form E upon presentation to the Customs authority of the importing Party; and

- Allows importing country to undertake verification visits.

• ASEAN and China has also adopted Product Specific Rules (PSR) for the following products:

- textiles and apparel;

- plastic products;

- footwear products;

- iron and steel products;

- preserved fish canned products;

- palm oil and ice cream; and

- jewelry product.

• ASEAN-China Services Agreement was signed on 14 January 2007. First package of liberalisation commitment was implemented on 1 July 2007.

• The Agreement excludes services liberalisation pertaining to government procurement and government related services.

• Negotiations on the second package of liberalisation commitment have been completed and a Protocol to Implement the Second Package of Specific Commitments under the Agreement on Trade in Services was signed at the 19th ASEAN Summit in Bali, Indonesia on 16 November 2011.

• Malaysia's liberalisation commitments under the First Package include sectors such as:

• architecture;
• engineering;
• telecommunications;
• financial services;
• education;
• health; and
• tourism.

• The ASEAN-China Investment Agreement was signed on 15 August 2009 and has entered into force on 1 January 2010 for all ASEAN Member States and China.

Malaysia 's Exports to China

2004 : RM 514.1 million (only EHP)
2005 : RM 1,037.2 million
2006 : RM 3,824.5 million
2007 : RM 5,603.0 million
2008 : RM 6,332.6 million
2009 : RM 8,380.0 million

Malaysia 's Imports from China

2004 : No imports
2005 : RM 25.9 million
2006 : RM 158.1 million
2007 : RM 867.4 million
2008 : RM 1,601.4 million

• The establishment of an FTA between ASEAN and China will create an economic region with 1.7 billion consumers, regional GDP of about US$2 trillion and total trade estimated at US$1.23 trillion. It will be the biggest and largest FTA among developing countries.

• With a population of 1.2 billion, market access opportunities through preferential trade for Malaysian products will increase.

• The removal of trade barriers between ASEAN and China will lower costs, increase intra-regional trade and strengthen the attractiveness of Malaysia and the region as a preferred investment destination.

  • Agreement on Trade in Goods of the Framework Agreement on Comprehensive Economic Cooperation between ASEAN and China.
  • List of products offered for tariff reduction beginning 20 July 2005.
  • List of products listed under the Sensitive Track
  • Product Specific Rules under the ASEAN-China Free Trade Area.
  • ASEAN Consultation to Solve Trade Investment Issues (ACT).
  • Framework Agreement on Comprehensive Economic Cooperation between ASEAN and People's Republic of China.
  • Protocol to Amend the Framework Agreement.
  • Agreement on Dispute Settlement Mechanism of the Framework Agreement on Comprehensive Economic Cooperation between ASEAN and China.