By Liu Zhiqin Source: Global Times Published: 2018-3-6
During the past 40 years, the concept of free trade areas (FTAs) has been frequently mentioned, and FTAs have become a symbol of globalization. Developed nations in the West have tried to use FTAs as bridges to gain access to resources and the commercial advantages of free trade. Most developing countries have used FTAs to learn about international business operations and make connections with foreign companies.
The concept of free trade began before the 18th and 19th centuries. To acquire more natural resources and cheap products from world markets, the UK offered the idea of free trade and worked on regulations and laws to protect the interests of participating countries.
The UK and other developed countries have benefited from free trade, and many other nations copied the concept in recent decades.
China has been one of the best students in the world in managing FTAs. China has done its best to support globalization and has gained benefits from the globalization process.
In 2013, China set up its first FTA in Shanghai, which represented the upgrading of China`s reform in promoting a market economy system and integration into the global economy.
In 2015, China expanded the concept to Guangdong and Fujian provinces and the city of Tianjin. By 2017, there were several new areas designated as FTAs making great contributions to China`s economic development.
Although these areas are called "pilot areas," they have become a new way to upgrade local industrialization and national modernization.
China has entered a "new era of socialism with Chinese characteristics" and the whole world is facing serious challenges with US protectionism and arrogance that causes more difficulties for free trade.
As a result, FTAs will be under pressure. Some countries are hesitant to further deepen cooperation with China`s FTAs. Anti-dumping measures imposed by the US and European nations will have negative impacts on FTAs.
Perhaps it`s time to explore a new direction by introducing Voluntary Trade Zones (VTZs) for those who are interested in doing business with China.
VTZs mean first of all that every participant is voluntarily doing business under specific conditions with their counterparts, be they individuals, institutions, enterprises or companies.
In VTZs, favorable policies including taxes, administration and services will be discussed and agreed on by those concerned. The principle behind VTZs is to liberalize market power and make it more competitive in order to combat US protectionism.
VTZs can be a supplementary tool for countries, companies or individuals to do business with China and other foreign counterparts.
Such VTZs can be something like the use of blockchain to connect future smart technologies in handling business activities. This might bring about a new, voluntary globalization.
In this new era, we need innovation to answer new questions. VTZs could be a new step to ease tensions and facilitate a new, voluntary globalization.
The author is a senior fellow of the Chongyang Institute for Financial studies at Renmin University of China.