APEC was established 17 years ago, and today has 21 member nations from both sides of the Pacific. However some of these countries' economies have developed faster than others, leading to a slowdown in efforts to promote further integration.
APEC's original goal was to realize free trade among developed countries by 2010, and eventually include the region's developing countries by 2020. But the ASEAN's aim is also to establish a free trade area by 2010, develop separate free-trade agreements (FTA) with China, India and South Korea and promote close economic partnerships with Australia, New Zealand and Japan. In addition, individual ASEAN members have signed bilateral FTAs with countries outside the association. APEC's reaction to this economic fragmentation is going to be closely scrutinized.
The First East Asia Summit in Kuala Lumpur last December included fewer countries than APEC, with the attendees probably hoping that a smaller grouping would make it work more efficiently. But its biggest problem was the 10 participating countries were all ASEAN members, which meant that its resolutions were strongly influenced by ASEAN interests.
Whether or not the East Asia Summit will be able to overcome these restrictions will be a key factor in determining its success. In addition, four of the countries have managed only modest economic development, which will hamper economic cooperation.
One foreseeable outcome is that the timetable for regional economic integration will not be able to proceed any faster than the ASEAN. This means that it will have to wait until the ASEAN completes its Vision 2020 partnership plan before it can push for regional economic collectivization.
APEC's plan for trade liberalization is scheduled to follow the same timetable as ASEAN's goal of bonding its members together. This, however, does not necessarily mean that there must be a competitive relationship between the two. As a result, it's doubtful if the summit's goals will diverge from those of APEC and the ASEAN, since they are closely related. A major obstacle will be whether or not ASEAN's developing economies -- Vietnam, Laos, Cambodia and Burma -- will be able to catch up. If not, they will hinder development moving forward.
During the 12th APEC Economic Leaders' Meeting held in Santiago, Chile, in 2004, participants began researching strategies for building an Asia-Pacific community. Business leaders supported the establishment of an Asia-Pacific free trade zone that would integrate the various recent bilateral and regional free trade agreements. The Free Trade Area of the Asia Pacific would integrate a massive area of the Pacific Rim that would constitute almost half of the world's trade.
Since the US refused to sign the Treaty of Amity and Cooper-ation in Southeast Asia in 1976, and despite Japan's attempts to speak for it, the US was in the end not invited to join the First East Asia Summit. This was a setback for the US, but after considering it for a year, it made a strategic suggestion to support the establishment of an Asia-Pacific free trade zone.
The US decision came in part from the collapse of the Doha Round of global trade talks in July because of disputes over customs duties and agricultural subsidies. As it is still unclear when the WTO will resume negotiations on trade liberalization, the US then suggested the establishment of an Asia-Pacific free trade zone in the hope that supporting such a regional trade agreement would help speed up the pace of global trade and investment liberalization.
This is the new approach that the US has adopted in its trade with Asia in recent years. It also symbolizes a shift from a passive to an active stance, and shows that US attention to regional affairs is not limited to fighting terrorism.
The Asia-Pacific free trade zone proposal was received enthusiastically by countries with developed economies like Australia, Japan and Canada, but was opposed by China, the Philippines and Indonesia over concerns that it would impede the bilateral trade agreements that were already in place or being drawn up. Indonesian Foreign Minister Noer Hasan Wirajuda explained that Jakarta had already established plans for economic integration with other partners in the area and China.
The summit's chairman finally decided to list the Free Trade Area of the Asia Pacific as a long-term goal and it was written into the joint declaration from the ministerial meeting. Further research into the proposal will be done before the start of next year's APEC summit.
APEC has already agreed that it will start research on the establishment of an Asia-Pacific free trade zone next year. Future work towards that goal may include the following steps. First, creating small task forces to research the feasibility of establishing a free trade zone. Second, drawing up the criteria for a free trade zone to serve as guidelines for next year's discussions. Third, determining how to integrate the ASEAN free trade area with free trade organizations from other countries to prevent conflict. Fourth, the free trade area should include all APEC members.
Two organizations would be particularly affected by an Asia-Pacific free trade zone.
The first is the ASEAN because it has set itself a goal of completing its trade liberalization by 2010 and its economic collectivization by 2020. Once the zone is established, it will dilute ASEAN's unifying power because countries could accomplish the same integration goals by participating in the free trade zone instead of joining ASEAN.
The second is the East Asia Summit. As the gathering is still in its early stages, participants are limited to Southeast Asian countries, and its stated goal is trade liberalization in that area. As such, Japan, Australia and New Zealand will likely side with the US in support of establishing an Asia-Pacific free trade area.
Moreover, the summit is only held once every two years while APEC meets annually. As its efficiency, experience and number of participating countries increase, and with support from the US, Canada, Australia and New Zealand, APEC's potential advantages far surpass those of the summit. ASEAN members Singapore and Thailand may also support the establishment of a free trade area.
The Hanoi Declaration from this year's APEC Economic Leaders' Meeting also included setting up a free trade zone in its future goals. It also reflects the US' increased attention to the area and its intention to check China's economic ambitions. With China intent on marginalizing Taiwan, we should support the US' proposed Asia-Pacific free-trade zone to fight economic isolation and promote equal trade.
Chen Hurng-yu is a professor at the Graduate Institute of Southeast Asian Studies at Tamkang University.
Translated by Marc Langer
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