This story is convoluted, but it will be of interest to all you followers of trade negotiations. Again somewhat lost in all the talk about international currency wars and global economic imbalances was the just-concluded APEC meeting in Yokohama, Japan. The Asia-Pacific Economic Cooperation (APEC) is rightly regarded by many as a non-event on the world's calendar, being little more than an opportunity to play dress-up in nifty native costumes and make Dubya look silly in times past. However, the Yokohama meeting may be said to be a tick above the moribund in the arena of regional economic integration that I have great interest in following.A few weeks ago, an event hosted here at LSE IDEAS (this link contains a video interview of Warwick's Asia expert Shaun Breslin) discussed contrasting visions of economic integration in the Asia-Pacific. My previous wrap-up post featuring presentation slides has more. In brief, the three largest economies in the world are proposing different versions of integration that suit their interests. China is keenest on ASEAN+3 or ASEAN's ten member states plus China, Japan, and South Korea, Meanwhile, the Japanese are championing the East Asian Community or the so-called ASEAN+6: the countries mentioned above plus Australia, New Zealand, and India. Lastly, the Americans still want to turn APEC--not originally envisioned as a free trade grouping--into one. The US is keen on turning the current Trans-Pacific Partnership (TPP) among Brunei, Singapore, Chile, and New Zealand--a very odd set of countries in geographical terms--into something wider. The US aside, Australia, Vietnam and Peru are also in the negotiating process. Malaysia recently joined TPP negotiations--perhaps a sign that the US strategy of making TPP a bandwagon for regional integration that doesn't leave it behind alike ASEAN+3 or +6 is working.
Professor Breslin believes that the proliferation of preferential trade agreements is designed to forestall the creation of a regional FTA. That is, it becomes more and more difficult to conclude an agreement once you gather more economies with disparate interests. Notice that I said "parties" instead of "countries." For, in an interesting twist, Taiwan is considering whether to join TPP negotiations as well. Remember, APEC is composed of economies, not countries. This expediency allows APEC member Taiwan a workaround to its exclusion in the likes of ASEAN+3 or +6 at China's will.
For a counterblast to Professor Breslin's idea that the proliferation of such proposals is meant to delay the emergence of a pan-regional trade deal, consider what the APEC participants have said in their 2010 Leaders' Declaration. By contrast, they suggest that ASEAN+3, ASEAN+6, and TPP are not competing but complementary arrangements that may eventually lead to a Free Trade Area of the Asia-Pacific" presumably involving the bulk of APEC economies:
We will further promote regional economic integration, working toward the target year of 2020 envisaged by the Bogor Goals for all APEC economies to achieve free and open trade and investment.Again, there is much reason for scepticism. How can the US complete a deal with nine participants when it cannot even complete a bilateral arrangement with South Korea after three years, for example? Recall, too, that the Bogor Goals are well off track. The text of the 1994 Leaders' Declaration says APEC's achievements should include "the industrialized economies achieving the goal of free and open trade and investment no later than the year 2010 and developing economies no later than the year 2020." 2010 is about to end, yet agricultural protectionism remains rife in the likes of the US and Japan. As for the Doha Development Round, forget about it since most of the rest of the world already has.
We will take concrete steps toward realization of a Free Trade Area of the Asia-Pacific (FTAAP), which is a major instrument to further APEC's regional economic integration agenda. An FTAAP should be pursued as a comprehensive free trade agreement by developing and building on ongoing regional undertakings, such as ASEAN+3, ASEAN+6, and the Trans-Pacific Partnership, among others. To this end, APEC will make an important and meaningful contribution as an incubator of an FTAAP by providing leadership and intellectual input into the process of its development, and by playing a critical role in defining, shaping, and addressing the "next generation" trade and investment issues that FTAAP should contain. APEC should contribute to the pursuit of an FTAAP by continuing and further developing its work on sectoral initiatives in such areas as investment; services; e-commerce; rules of origin; standards and conformance; trade facilitation; and environmental goods and services.
Importantly, remember that this is not the first time the US has tabled the FTAAP idea. Alike the Free Trade Area of the Americas (FTAA), FTAAP has singularly failed to find adherents. Ah well, hope always springs eternal for some.
