APEC trade agenda presents possibility, problems

09:08, November 11, 2010      

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The annual Asia-Pacific Economic Cooperation (APEC) summit involving senior officials from 21 Pacific Rim economies is being held in the City of Yokohama, Japan, and is aimed at discussing economic growth strategy and a path towards regional economic integration, against a backdrop of a changing global economic environment.

During the series of meetings and discussions of member economies, which collectively account for more than half the world 's economic output, the summit purports to outline measures to achieve a proposed region-wide free trade area and develop APEC's first regional economic growth strategy.

APEC's focus will most certainly be on the necessary developments needed to implement balanced, inclusive and sustainable growth in the region, within a broader ongoing strategic imperative of promoting inclusive growth by encouraging all Asia Pacific governments to improve international and domestic market efficiency.

However, with so many divergent economies involved it will come as no surprise if government entities are divided on key issues set for discussion, such as the expanding regional trade agreement known as the Trans-Pacific Partnership (TPP) and its long-term goal of becoming a region-wide free trade zone, dubbed as the Free Trade Area of the Asia-Pacific, or FTAAP.

The TPP started as a free trade agreement between Brunei, Chile, New Zealand and Singapore, and negotiations are under way to expand it with another five APEC economies, including the United States and Australia.

The TPP seeks to eliminate all tariffs among member economies in 10 years, but faces growing competition from nations such as China and South Korea -- in particular because of South Korea's somewhat aggressive trade liberalization.

Japanese Prime Minister Naoto Kan hinted recently that Japan, although yet to achieve a consensus within his own government, will take steps towards joining the TPP and would begin consultations with other nations on joining the trade pact.

However, opponents of the TPP say Japan's primary focus should be on signing bilateral free-trade agreements with nations like China, South Korea and the European Union, rather than committing to the TPP, which requires more stringent tariff wavers and market deregulation and would, at a delicate time in the prime minister's leadership, may not be well received domestically, particularly by the nation's agriculture industries.

Currently, Singapore, New Zealand, Brunei and Chile are members of the TPP, and the U.S., Australia, Peru, Vietnam and Malaysia are negotiating to join the agreement.

In addition, Japan, Canada and the Philippines have recently expressed interest in joining the group, with each nation wishing to participate having to reach an agreement with each of the existing nine partners to eliminate tariffs and nontariff barriers in wide-ranging areas such as telecommunications, labor standards and intellectual property rights.

"Even within his own (Democratic) party Naoto Kan will probably struggle to garner the kind of support he'd like to see for this move towards the TPP," David McLellan, a professor of East Asian studies at Waseda University told Xinhua.

"It also comes at a time when Japan may do well to prioritize its immediate neighbors, both out of economic and diplomatic necessity. In addition, Japan's agricultural industries are already suffering and the TPP could cripple some industries and small rice farmers would certainly suffer," he said.

"There are so many people within the DPJ (Democratic Party of Japan) who are very concerned about the effect of this agreement," said Masahiko Yamada, former agriculture minister who now heads the group of the DPJ politicians opposing the TPP, in a recent statement on the mater.

"This is a pact that could really change the shape of the nation, everything from agriculture, pension to how people work," Yamada said.

While conceding that the views of APEC members will be " extremely diverse" and that reaching a consensus on the specifics of how to pursue an FTAAP poses particular difficulties, Hidehiko Nishiyama, this year's chair of APEC senior officials' meetings and a senior official at the Japanese Ministry of Economy, Trade and Industry (METI), maintained that some of the groundwork has and continues to be laid.

The APEC will likely set down possible pathways for an FTAAP this year, according to Nishiyama, because moves involving regional frameworks such as the ASEAN plus three and the TPP appear to have "laid the groundwork for members to think about the FTAAP in a realistic way to some extent."

The question remains however, that whilst such a pathway may work theoretically the implementation and timeline of such a pact - - one which seeks to span such divergent economies, presents an unrealistic proposition.

The notion faces resistance from some member economies that want to strike free trade deals independently. For example Indonesia and the Philippines have voiced what could be described as ambivalence toward the concept in the short term, believing that it is only conceivable as a very long-term proposition.

Some political scientists also maintain that it is an unrealistic objective in light of the massive economic and political gulfs between the 21 member economies -- ranging from tiny countries such as Papua New Guinea to the mighty U.S. and China.

Still, the idea of an APEC-wide free trade zone, first floated by the U.S. at the 2006 meeting in Hanoi, Vietnam, has gained momentum in recent months and put the APEC back on the map as other regional collectives start to gain prominence, threatening to undermine the effectiveness of the APEC.

Meaningful and credible dialogue to achieve a consensual and harmonious vision for the proliferation of bilateral and regional free trade pacts within the region is perhaps the only way for the APEC to ensure its place as the preeminent framework for regional economic cooperation in which the world's three top economic powers -- the United States, China and Japan -- participate.

"I think the critical thing is to include a trans-Pacific dimension in the economic architecture that is evolving in Asia. It is clear that there will be more or less free trade agreements among the 10 (nations of ASEAN) plus three (Japan, China and South Korea)," said C. Fred Bergsten, an American expert on Asia-Pacific economies, in a recent interview with the Asahi Shimbun.

"In the absence of (a trans-Pacific dimension), what occurs is a big increase in discrimination by the Asian countries against the rest of the world, including the United States and other APEC economies not in Asia. That would represent disintegration of the trans-Pacific region rather than the integration that is the objective of the APEC," he said.

"The critical operational issue is moving ahead as quickly as possible with the TPP with as many APEC economies as possible. It will be essential to have a critical mass of APEC economies so that it is a meaningful, credible step in the direction of an FTAAP," Bergsten said.

Bergsten added that a timeframe for the implementation of APEC' s goals is essential and the collective would do well to aim for completion of both a 10-plus-three agreement and the initial core group of TPP by 2015 and then move on to a more comprehensive agreement by 2020.

Source: Xinhua


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