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China and Thailand are to sign a bilateral free-trade agreement on vegetables and fruit in mid-June, the Chinese Ministry of Commerce confirmed Wednesday.

Tariff rates for over 200 vegetables and fruit will drop from the present 30 per cent to zero under the agreement, said Sun Yuanjiang, a ministry official.

China could increase its exports of apple juice to Thailand by between 20 and 30 per cent under the zero-rate tariffs, said Le Jingna, a sales manager of the Shaanxi Haisheng Fruit Development Shareholding Co Ltd.

But industry experts said Thailand will benefit more from the bilateral free-trade agreement because its agricultural products are more competitive.

Officials with the Thai Embassy in China said their country is trying to clinch similar free-trade deals on farm produce with other countries, but declined to name them.

The bilateral agreement is part of the "early-harvest" scheme of the planned free-trade zone between China and the Association of Southeast Asian Nations (ASEAN), of which Thailand is a member.

Last November, the then Chinese Premier Zhu Rongji signed a framework agreement with ASEAN to set up a free-trade area. China is now in bilateral negotiations with the 10 ASEAN member countries.

Under the "early-harvest" scheme, bilateral Chinese-Thai trade will enjoy reduced tariffs before the scheduled establishment of the China-ASEAN free-trade area in 2010.

The scheme is scheduled to be implemented before January 1 next year. Tariff cuts for the first group of products should be completed in 2006.

The products involved are mainly farm produce.

China and ASEAN are important agricultural trading partners. Bilateral trade in farm produce has exceeded US$5 billion in each of the last few years.

Chinese officials said the "early-harvest" scheme will provide opportunities for Chinese exports of rice, livestock, meat, sugar and vegetables.

They said they also hoped the scheme would stimulate Chinese investment in agriculture in ASEAN countries.

The free-trade area between China and ASEAN will apply to trade in goods and services, investment and economic co-operation, according to the framework agreement signed in November. Trade in goods will be the core of the free-trade area.

China and ASEAN held their seventh meeting in China's Guangxi Zhuang Autonomous Region in February and established three task forces to negotiate issues relating to place of origin, services and investment.

Under the framework agreement, China and ASEAN will start lowering tariffs in general in 2005.

China aims to set up a free-trade area with Brunei, Indonesia, the Philippines, Singapore and Thailand in 2010 and with Cambodia, Laos, Myanmar and Viet Nam in 2015.

The majority of trade between China and ASEAN will then enjoy zero-rate tariffs, while non-tariff measures will be lifted and bilateral trade and mutual investment liberalized.

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