ASEAN and China to enhance cooperation in energy projects

New mechanism in place is based on services not commodities.

"China and ASEAN have extended mutual preferential policies under the FTA framework to energy rather than just general commodities," said Zheng Weikuan, an economist at Guangxi University for Nationalities. He noted that in October, China signed a "certificate of origin" for electricity sold to Vietnam. The certificate of origin, known as FORM-E, is an instrument of the China-ASEAN Free Trade Area (FTA). Governments use it to allow commodities from the signing country to enjoy preferential handling in the recipient nation. The deal will be exempt from the 1% tariff that Vietnam customarily imposes on imported electricity. A total of 5.6 million kilowatt hours are involved, which means a saving of about US$3,420 in tariffs for Guangxi Grid, a subsidiary of China Southern Power Grid. Guangxi Grid already has plans to export more electricity to Vietnam and is building the means to transmit power to other ASEAN countries including Thailand, Laos and Myanmar. "The signing of the certificate means China and ASEAN are moving away from a mechanism based exclusively on commodities and looking toward services," said Fu Shuaixiong, from Peking University. Fu added that it will help unlock the energy sector in China and ASEAN, leading to more cooperation in the future.