It has the potential to unite more than a quarter of the world's population and a single market worth more than US$2trn in a trading bloc to rival the EU or the United States. But will it work?
The landmark ASEAN-China trade accord was signed at a summit meeting in Laos between China and the 10-member Association of South East Asian Nations (ASEAN).
The agreement commits members to lower tariffs by 2010 but exceptions to it cover thousands of "sensitive goods," such as sugar, iron, steel and cars deemed by various governments to be strategically important industries. It also excludes trade in services.
There are other blanks in the accord: The agreement makes no provision for sorting out more troublesome non-tariff barriers to trade and gives the four poorest members of ASEAN – Cambodia, Myanmar, Laos and Vietnam – until 2015 to comply.
Despite these holes, ASEAN officials said they expected the deal to give a significant boost to the grouping's bilateral trade with China. That is expected to reach close to US$100bn for the whole of 2004, closing fast on ASEAN's trade with the United States, which stands at around US$120bn annually.
Who will emerge the real winner from the deal remains to be seen. China currently has a deficit with the ASEAN bloc, due to its voracious consumption of raw materials.
But in the longer term the balance is expected to shift in China's favor as its consumer exports to ASEAN grow, pushing aside more expensive Japanese and Korean brands.
With China's comparative economies of scale, that could also put the pressure on ASEAN's homegrown manufacturers, who will find it difficult to remain competitive.