Tue, Nov 09, 2010 - Page 1 News List

APEC members debate power to forge trade deals

AP, YOKOHAMA, Japan

Pacific Rim economies are debating whether to give APEC the power to negotiate free-trade pacts, a move that could pave the way for a massive free-trade zone that lowers tariffs on goods from electronics to food.

Members of the APEC forum are using their annual gathering this week to discuss changing the toothless organization into one with enough authority to negotiate a binding Pacific-wide free-trade agreement, Japanese officials said yesterday.

If realized, it would encompass 44 percent of global trade and more than half the world economy. However, it also has the potential to batter farmers in countries like Japan and South Korea, where an array of agricultural products are protected by high tariffs.

Leaders including US President Barack Obama and Chinese President Hu Jintao (胡錦濤) gathering this weekend in Yokohama for the APEC summit will agree to take steps toward such a sweeping free trade agreement, according to a draft of the final communique obtained by the Associated Press. It gave no timeframe.

However, to forge such a trade treaty, APEC would have to become a negotiating body, a big change from what it is now — a forum started in 1989 to promote trade and investment throughout the Pacific, but without any real powers.

APEC members such as the US and Japan are in favor of moving toward the Pacific-wide free-trade area — officially known as the Free Trade Area of the Asia-Pacific — but others like Indonesia and the Philippines are reluctant, preferring to keep it as a vague, long-term goal.

Experts have also said it is an unrealistic objective given the complexity and huge variation among the 21 member economies, which range from Papua New Guinea to China and the US.

Still, the idea of an APEC free trade zone, first floated by the US at the 2006 summit in Hanoi has gained momentum as a way to harmonize the proliferation of bilateral and regional free trade pacts within the region and amid frustration with stalled WTO talks.

As steps toward creating a Pacific-wide free-trade area, the leaders are expected to endorse possible smaller regional free-trade pacts, including the Trans-Pacific Partnership, which the US and four other countries — Australia, Malaysia, Vietnam and Peru — are negotiating to join. It currently consists of Brunei, Chile, New Zealand and Singapore.

Malcolm Cook, the East Asia program director at the Lowy Institute, a Sydney-based think tank, said the Free Trade Area of the Asia-Pacific is probably a “non-starter.”

The Trans-Pacific Partnership “will take its place as the most likely path for a regional agreement” partly because it doesn’t include China, making it easier to negotiate, he said.

The annual APEC summit is being held against a backdrop of tension over currencies and territorial disputes that could overshadow its official agenda, which is strictly economic. Japan is embroiled in spats with China and Russia over disputed islands.

One of week’s goals is to draw up an overarching economic growth strategy for members that emphasizes innovation and is compatible with efforts to protect the environment. Developed nations will also be evaluated on their progress in reaching APEC’s goal set in 1994 to achieve free trade and investment by next year.

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