At the 22nd APEC Economic Leaders’ Meeting recently con­vened in Beijing, the member economies de­cided to approve a roadmap for APEC’s contri­bution to the realization of the Free Trade Area of the Asia-Pacific, marking the of­ficial launch of the FTAAP process.

 

The FTAAP can promote eco­nomic cooperation in the Asian- Pacific region under the frame­work of APEC and provides a third option to potentially resolve the conflict between two major proposed free trade agreements—the Regional Comprehensive Economic Part­nership and the Trans-Pacific Partnership Agreement (TPP).

 

It also maintains China’s lead­ing role in the process. China’s initiative to develop a roadmap for the FTAAP offers a wider range of options for economic integration in the region in ad­dition to the Regional Compre­hensive Economic Partnership and the China–Japan- South Korea FTA.

 

The FTAAP can start with the issues on which member economies have reached or are able to reach a consensus while prioritizing the areas that are in the in­terest of most members. Once a solid foundation is achieved on this basis, economic integration can gradually be ad­vanced from there.

 

Though a timetable has not been agreed upon, the implemen­tation of the FTAAP should be started at least by the deadline of the adopted Bogor Goals that aim for free and open trade and investment in the Asia-Pacific by 2020. And the feasibility research and negotia­tions on the FTAAP should be completed sometimes in the next five years.

 

Other problems remain to be solved, such as sub-regional trade arrangements, public-private partnerships as well as economic and technological cooperation. For instance, coop­eration on technical innovation, assistance and transfer should be promoted to narrow the gaps in economic and social de­velopment among all members.

 

In addition, other measures are needed. On the borders, trade and investment barriers should be removed to increase market access. With regard to cross-border trade and invest­ment, costs should be lowered and association in the region should be promoted. Within the borders of potential mem­ber states, further integration of regulations and structural re­forms are necessary to provide better conditions for business.

 

Furthermore, given the complexity of geopolitics in the region and the existing network of FTAs, there are still divergences of opinion and stumbling blocks in terms of feasibility research and follow-up work. The attitude of the United States in particular is significant because it regards the Trans-Pacific Partnership as the basis for the FTAAP, which is meant to offer an independent path to regional economic inte­gration free of the influences of other major powers.

 

The United States contends that the Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership are incom­patible with the FTAAP in their present forms.

 

It holds that negotiations on the Trans-Pacific Partnership are likely to conclude around the end of this year. Nonetheless, the Regional Comprehensive Economic Partnership is in its initial stage of negotiations, and its member states include the least-developed countries as well as India, which tends to be intransigent in international trade negotiations, adding to uncertainty about whether or not agreements can be reached by 2015.

 

Following the model of the Trans-Pacific Partnership, the United States hopes to press other economies of APEC into accepting the new rules for trade and investment based on the global value chain. This indi­cates that the United States does not oppose the establishment of the FTAAP. But it insists that the FTAAP should conform to the high standards of the Trans-Pacif­ic Partnership, especially in terms of transparency, competition and exchange rates, whereas develop­ing economies, China included, are cautious about these clauses.

 

Another uncertainty of pro­moting the FTAAP is how to deal with the relations among the three regional trade agreements. The common development of the FTAAP’s predecessor trade agreements through competi­tion, complementation and more effective negotiations among members is the key to realizing the FTAAP.

 

Sheng Bin is the president of the China APEC Acad­emy and the Distin­guished Professor of the “Chang Jiang Scholars Program”.

 

The Chinese version appeared in Chinese Social Sciences Today, No. 666, November 7, 2014                                                 

Translated by Ren Jingyun

Revised by Justin Ward