China and the 10-member Association of Southeast Asian Nations formally launched Friday the China-ASEAN Free Trade Agreement (CAFTA), forming an economic bloc of 1.9 billion people with trade worth around $200 billion.

China considers the agreement as a way of securing supplies of raw materials, while member countries in the ASEAN, including the Philippines, see opportunities in China's huge market.

Chinese Ambassador to the Philippines Liu Jianchao said under the agreement, more than 7,000 zero-tariff commodities could now be traded among China and the ASEAN countries.

“The removal of trade impendiments will lower the costs of transactions, further increase China-ASEAN trade volume and enhance economic efficiency. With market risk and uncertainties lowered, more investments would be generated from both Chinese and ASEAN companies into an integrated and rewarding market.

“Today would be the first day we are to enjoy substantial gains from freer trade, while we shall never forget that we have come a long way for ‘today’,” Liu said in a statement Friday.

“CAFTA will bring greater opportunities to the Philippines. With strong export potentiality in electronics, agricultural produce, fruits, fishery products and minerals, etc, the Philippines will enjoy considerable comparative advantages and expand market shares of its competitive goods.

“Furthermore, with the agreements on trade of services and investment coming into force, the Philippines would be well poised to boost service trade and attract investments,” the ambassador said.

Tourism, English teaching, eco-medical and retirement care services are areas where the Philippine government can really turn potential into profits, Liu said. More investments from both China and other ASEAN countries will give driving impetus to infrastructure development in the Philippines, he added.

Liu said CAFTA will open a broader vista for China-Philippine trade and economic cooperation. China-Philippine trade has registered relatively rapid growth in recent years, with a record high of more than $30 billion in 2007.

With CAFTA functioning in a full-fledged manner, both China and the Philippines should do more to press ahead with exchanges among prominent enterprises and to facilitate more effective bilateral cooperation in trade, he said.

“CAFTA will spur two-way investment flow between China and the Philippines. The Chinese companies are willing to bring their infrastructure investment up to higher level in various fields such as transportation, power generation, water supply and telecommunication,” Liu said.

China and ASEAN signed an initial FTA in November 2002. Some tariffs have been reduced since 2005 and agreements on goods and services, the first two stages, were concluded in 2007, while a deal on investment was completed in August this year.

Under CAFTA, tariffs on 90 percent of goods traded with China will be eliminated by 2010 for Indonesia, Brunei, Malaysia, the Philippines, Singapore and Thailand, and by 2015 for Laos, Vietnam, Cambodia, and Myanmar.

The remaining 10 percent, including on textiles and some electronics, are deemed sensitive and will be lowered more slowly.

Preferential access will be given for companies from ASEAN into China's services market, and vice versa, in areas such as business services and tourism.

China-ASEAN trade is targeted to hit $200 billion by 2010, up from $192.6 billion in 2008 and $113 billion in 2005. This will make it the third-largest free trade zone in trade volume after the European Economic Area and the North American Free Trade Area.

There are 560 million people in ASEAN and 1.3 billion in China. (With a report from Reuters)