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Asia Pacific needs to be inclusive and adopt FTAAP
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CHINA has supported the idea of accelerating APEC talks about the Free Trade Agreement of Asia Pacific (FTAAP). The Obama administration has a different perspective. It has promoted its own free trade plans.
What Asia Pacific needs is economic integration, which includes both China and the US. During the 1994 APEC meeting in Bogor, Indonesia, the group’s leaders opted for free and open trade and investment in the Asia Pacific. Official talks about the FTAAP started at the 2006 Hanoi APEC summit, when C. Fred Bergsten, the then-chief of the Peterson Institute for International Economics, presented a comprehensive plan for it.
However, the FTAAP was set aside until the Obama administration began to push its Trans-Pacific Partnership (TPP), which hopes to include major economies in East and Southeast Asia, Oceania and Latin America. But it excludes China.
TPP is a relatively high-level trade plan, which reflects the interests of the major advanced economies, especially the US.
In the past year, it has coped with delays and controversy, due to secrecy in talks.
In turn, ASEAN members and their FTA partners (Australia, China, India, Japan, Korea and New Zealand) are developing their Regional Comprehensive Economic Partnership (RCEP), which excludes the US.
RCEP is not as ambitious as TPP. It reflects the interests of emerging Asia and Oceania, and has a slow implementation schedule.
In Washington, the proposed FTAAP is seen as a distraction from its TPP. China’s view is that FTAAP could serve as a foundation for other regional talks, including TPP and RCEP. After all, the FTAAP includes both the US and China. Its goals and terms are not as stringent as those of the TPP but they are certainly more advanced and pressing than those of the RCEP.
A few years ago, the Asian Development Bank argued that an additional 3 billion Asians could enjoy living standards similar to those in Europe today by 2050, when the region may account for over half of global output. Where geopolitics and national interests divide the region, business and commerce unite it. Today, APEC’s membership has doubled to 21 countries, which account for some 40 percent of the world’s population, almost 60 percent of the world economy, and nearly 50 percent of world trade.
The Asian Century is certainly not viable without broader and deeper economic integration, which the FTAAP could galvanize in the region. The FTAAP is not just another effort to reduce tariffs; it seeks to create a massive free trade zone.
It is time to think in terms of evolutionary trade bloc paths that can be harmonized with each other over time. The Asia Pacific region is big enough for both the United States and China, and for the inclusive Free Trade Agreement of Asia Pacific.
Dr. Dan Steinbock is research director of international business at the India China and America Institute (USA) and a visiting fellow at the Shanghai Institutes for International Studies (China) and the EU Center (Singapore). For more, see www.differencegroup.net
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