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A transit and trade agreement between China, Pakistan, Kyrgyzstan and Kazakhstan signed eight years ago is expected to come into effect in the first week of October this year, according to sources close to the central government.

Sources said the four countries agreed to adopt a multi-modal transport system and each nation will issue 600 permits to truckers in the next three months.

Under the agreement, taxes or tolls will not be imposed on transport in the territories of transit countries. To facilitate movement of goods in transit, customs authorities of these countries are devising uniform customs procedures and formalities.

But strong measures are also being taken to stem drug and arms trafficking, and trade in banned goods.

The agreement was signed in 1995 but implementation was delayed due to differences concerning permits and fees between member countries.

These disagreements were resolved during a recent conference in Islamabad, capital of Pakistan.

Industry experts said waiving transit fees and toll charges could substantially boost trade. Vehicles approved for transit traffic would make use of the waiver according to the agreement.

China and Thailand are also expected to implement free trade in industrial goods starting on Jan 1, 2005, according to sources.

Discussions are now under way on an expanded Free Trade Area (FTA) agreement, after agreeing to eliminate tariffs on Thailand's fruit and vegetables, now 20-25 per cent, starting on October 1.

A pact to cover industrial goods is also being negotiated under the framework agreement between China and the 10-member Association of Southeast Asian Nations (ASEAN) to create a free trade area.

It was in November 2001 when leaders from China and the ASEAN agreed to set up a China-ASEAN Free Trade Area in the next 10 years.

Amid a global economic slowdown, trade between China and ASEAN continued to surge in 2002, jumping 31.8 per cent to a high of US$54.8 billion, official statistics show.

Such robust growth in trade has generated greater expectations on future prospects of China-ASEAN trade, respectively the sixth and fifth largest trade partners of each other.

There has been progress in talks between Thailand and China covering other processed agricultural products such as food, fishery and dairy products under the FTA. Zero tariffs could be offered from 2006.

Under the Sino-Thailand FTA framework, import tariffs for all items from all sectors would be eliminated by 2010.

At present, import tariffs in China for industrial goods average at 10 per cent, while those of Thailand are about 30 per cent.

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