Asia Pacific leaders asked to consider forging free trade area
Asia Pacific leaders asked to consider forging free trade area
P. Parameswaran Agence France-Presse/Washington
Leaders of 21 Asia-Pacific economies are being pressed to consider forging a regional free trade area to spur global liberalization.
The proposal to set up the Free Trade Area of the Asia-Pacific was made by the business lobby of the Asia-Pacific Economic Cooperation forum, whose leaders gather for annual talks in Santiago, Chile Nov. 20-21.
The APEC Business Advisory Council said in a report to the leaders that they needed to display "strong political commitment" to successfully negotiate a regionwide free trade agreement, which could bring significant benefits to the region as a whole.
The 21 APEC economies, including the United States, Japan, Russia, China and most Southeast Asian economies, account for nearly half of world trade and generate 70 percent of global economic growth.
APEC, which operates by consensus, is implementing a nonbinding tariff-busting plan to achieve free trade and investment among developed member economies by 2010 and developing members 10 years later.
Critics say the plan, adopted during a leaders' meeting in Bogor, Indonesia in 1994, is ineffective and needs to be overhauled.
ABAC believes its free trade agreement proposal would accelerate the Bogor goals and liberalization under the World Trade Organization (WTO), the global trade watchdog.
The United States reacted cautiously to ABAC's proposal.
"Well, you have to go to Santiago to find out," Deputy U.S. Trade Representative Peter Allgeier said.
But American economist Fred Bergsten, among the "eminent persons" who helped establish APEC, hailed the Free Trade Area (FTA) of the Asia-Pacific plan, saying it would revitalize the WTO process and integrate the region.
"The only decisive way to restart the momentum of both APEC and global trade liberalization, with all its political and security as well as economic benefits, is to launch the FTAAP process at Santiago," he said.
Bergsten, director of the Washington-based Institute for International Economics, said non APEC members like the European Union, Brazil and India "could simply not afford to accept the discrimination that an FTAAP would imply for them."
"Hence they would have to 'sue for peace' by insisting on a rapid and substantively ambitious conclusion to the Doha Round" of WTO multilateral negotiations, he told a meeting of the U.S.- Asia Pacific Council, a non-partisan body aimed at boosting regional cooperation.
Bergsten said the FTAAP plan would also help check the rising number of preferential trading arrangements in Asia creating trade diversion and discrimination and threatening to "draw a line down the middle of the Pacific."
"Especially if a Free Trade Area of the Americas and an East Asian Free Trade Area were to become a reality, the result would be a bipolar Asia pacific (and a tripolar global trading system)," he said.
In its report to the APEC leaders, ABAC proposed they agree to set up a high level task force to examine the free trade agreement concept with a view to discussing it further at next year's APEC summit in South Korea.
Kim Kihwan, a former senior South Korean trade official and a respected economist, said while an Asia-Pacific free trade pact was a good idea, "it is better for all economies to use the WTO as a forum to knock down barriers.
"It is still a second best solution," said Kim, the international chairman of the influential Pacific Economic Cooperation Council.