The challenges of regional bodies

By Johnny C. Chiang 江啟臣  / 

Wed, Dec 17, 2008 - Page 8

APEC’s 16th Summit was held in Lima, Peru, last month. Without a question, the Taiwanese public and media were most interested in the meeting between Chinese President Hu Jintao (胡錦濤) and former vice president Lien Chan (連戰). Given the way China and Taiwan had tried avoiding each other at previous APEC meetings, the Lien-Hu meeting could be viewed as the first official and positive dealing between the two countries under the APEC framework.

The meeting also received positive recognition from APEC members. After this year’s APEC ministerial meeting, Australia and Peru announced they would be joining the Trans-Pacific Strategic Economic Partnership (TPSEP), also known as P4 and Trans Pac.

Unfortunately for Taiwan, this move will have a longlasting impact on its attempts at regional integration.

P4, with its members New Zealand, Singapore, Chile and Brunei, is the only free-trade agreement (FTA) with members from both sides of the Pacific and the only one between Asian and American countries. This agreement came into force in 2006 and is different from most FTAs, which are exclusionary in nature.

The P4 clearly stipulates that APEC members and other like-minded economies can join the agreement under the condition that other members agree to their accession. The P4 also clearly states that it covers a wide range of areas while also being an open and flexible platform. Especially after Sept. 22, when the US announced it would take part in negotiations on the expansion of the P4, the body gained much more importance and will likely make other countries willing to join.

In other words, after the US, Australia and Peru join the negotiations, the P4 could very well expand to include seven countries. There are reports that Vietnam is also thinking about taking part in the upcoming round of talks on increasing the number of P4 member states. Other interested APEC members have until March, when the talks are scheduled to begin, to express their interest in joining.

The expansion of the P4 is also important because it will add new variables to the strategic environment of the Asia-Pacific region and because of the impact it could have and the changes it may bring about. After the 1997 Asian Financial Crisis, ASEAN has been at the heart of regional economic integration with developments such as ASEAN Plus One, Plus Three and Plus Six gradually evolving and expanding, and with the East Asia Summit being held each year since 2005.

This was the first time the US, a major economic partner for East Asian countries, was so distant from East Asia, as it was excluded from the core of ASEAN’s integration system.

While on the surface the US may have appeared pleased to see regional integration in East Asia, it began to worry it might continue to be excluded from the East Asia summit and its regional structure. Starting in 2006, Washington adopted a series of actions, including its strong advocacy of a “Free Trade Area of the Asia-Pacific Region” (FTAAP) at APEC 2006 and its public promotion of the transformation of APEC into an “Asia-Pacific Economic Community.”

The US also sent a special envoy to ASEAN and gave Australia’s recent proposals for the creation of an “Asia-Pacific Community” tacit recognition.

It is by no means a coincidence, therefore, that the US has decided to take part in negotiations for an expanded P4. This decision is built on specific strategic plans for the region. As early as March, the US took part in negotiations on financial liberalization within the P4.

In addition, the expansion of the P4 could become a crucial turning point for the US in terms of a regional, strategic response to East Asian regionalism, as the P4 could grow to include seven countries. The US has ratified FTAs with Chile, Singapore, Australia and Peru, in addition to Canada and Mexico (through NAFTA), all of which could seek access to P4 through US membership.

Sooner or later, countries that have FTAs with the US could also become part of the expansion of the P4. For the US, the P4 will suddenly become a strategic link to the Asia-Pacific. It could then use this link to create a new economic sphere for itself, giving it new economic impetus and the power to control developments of the global economic and trading system.

When this happens, the strategic environment for regional integration in the Asia-Pacific will undergo substantial qualitative changes. It is questionable how many breakthroughs will be made in terms of East Asian integration when China and Japan start vying for power, and it will also be worth paying attention to how ASEAN, which has long relied on the US market, will react.

Johnny C. Chiang is director of the Department of International Affairs at the Taiwan Institute of Economic Research.

TRANSLATED BY DREW CAMERON