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LEAD: Central Asian powers agree to pursue free-trade zone.

BEIJING, Sept. 23 Kyodo

(EDS: UPDATING)

Leaders from China, Russia and four Central Asian countries agreed Tuesday to pursue plans for a free-trade zone that would range from Shanghai to the Caspian Sea.

Following a proposal by Chinese Premier Wen Jiabao, the prime ministers from Kazakstan, Kyrgyzstan, Tajikistan, Uzbekistan and Russia agreed ''to set as an objective'' establishing a free-trade zone covering the six countries, China's official news agency Xinhua said.

Leaders from the six countries, which since June 2001 have belonged to a group called the Shanghai Cooperation Organization (SCO), met in Beijing to discuss the trade zone along with other topics.

Chinese president Hu Jintao also met with the leaders.

China needs Russia and the Central Asian countries for a secure supply of manufacturing resources, and the other countries need China as a market, said Andy Xie, chief Asia economist with Morgan Stanley in Hong Kong. But he anticipated difficulty in getting Russia to agree to the free-trade zone.

''Russia has considerations other than economics,'' Xie said. ''Russia still has reservations about an open relationship with China, so it's complicated. There's an insecure feeling. Something needs to be done to overcome that.''

Wen said previous meetings of the SCO have given the group a solid organizational structure, according to Xinhua.

Earlier in the day, the six premiers signed agreements mostly on the SCO's internal management, after about 90 minutes of formal discussions.

The documents cover multilateral economic and trade cooperation among the SCO members; the SCO budget for next year; rules and regulations on salary guarantees and allowances for staff of the SCO permanent body; local antiterrorism institutions; personnel arrangements; and technical initiation of the SCO permanent body as well as the joint communique, Xinhua said.

During the formal discussions, Wen proposed to counterparts Mikhail Kasyanov of Russia, Daniyal Akhmetov of Kazakstan, Nikolai Tanayev of Kyrgyzstan, Akil Akilov of Tajikistan and Utkur Sultanov of Uzbekistan that the SCO eventually set up the free-trade zone, Xinhua said.

It added the Chinese premier also proposed setting up large SCO projects on economic and technological cooperation, with priority given to those in transportation, energy, telecommunication, agriculture, home appliances, light industry and textiles.

A free-trade zone, he said, should be among the longer term objectives of the group.
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Publication:Asian Economic News
Date:Sep 29, 2003
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