Free trade sees slow progress

Agree­ments with re­gional part­ners leave much to be de­sired as smaller pacts stall wider co­op­er­a­tion

China Daily (USA) - - APEC SPECIAL - By ZHONG NAN zhong­nan@chi­nadaily.com.cn

Start­ing up the Free Trade Area of the Asia-Pa­cific would be a prac­ti­cal way to end the re­gional eco­nomic frag­men­ta­tion un­der­min­ing in­te­gra­tion in the cur­rent global en­vi­ron­ment, of­fi­cials said.

Even though the world is con­tin­u­ing its march to­ward glob­al­iza­tion, slow progress is be­ing made at the Doha round of the World Trade Or­ga­ni­za­tion’s ne­go­ti­a­tions, af­ter ini­tial de­lays in the process. Re­gional and bi­lat­eral free trade agree­ments are be­ing signed one af­ter another, while Asia-Pa­cific eco­nomic co­op­er­a­tion faces a cross­roads of in­te­gra­tion and frag­men­ta­tion.

“Ea­ger to re­store their earn­ing abil­ity, many mem­ber economies have long been call­ing for the Asia-Pa­cific Eco­nomic Co­op­er­a­tion to play an ac­tive role in pro­mot­ing the FTAAP ne­go­ti­a­tion process,” said Lin Gui­jun, a pro­fes­sor at Bei­jing-based Univer­sity of In­ter­na­tional Busi­ness and Eco­nom­ics.

Lin said China ex­pects all par­ties to be­gin the FTAAP ne­go­ti­a­tions as soon as pos­si­ble. But, the co-ex­is­tence of low-level free trade agree­ments will af­fect the de­vel­op­ment of re­gional trade flows be­cause of the dif­fer­ent pur­poses and work­ing mech­a­nisms.

De­spite the agree­ments, Asia-Pa­cific economies re­main di­vided into sev­eral groups rather than co­op­er­at­ing in a broad mul­ti­lat­eral frame­work.

Both of the two ma­jor mul­ti­lat­eral trade agree­ments in the re­gion are not fully rep­re­sen­ta­tive. For ex­am­ple, the United-States-led Trans-Pa­cific Part­ner­ship does not in­clude China.

Mean­while, the Re­gional Com­pre­hen­sive Eco­nomic Part­ner­ship pro­posed by the As­so­ci­a­tion of South­east Asian Na­tions has China as a mem­ber, but the US has yet to join.

In ad­di­tion, there are more than 200 trade ar­range­ments in the Asia-Pa­cific re­gion, with dif­fer­ent stan­dards and pref­er­en­tial poli­cies and rules of ori­gins, which may lead to vi­cious com­pe­ti­tion among trade groups and not be con­ducive to deep­en­ing eco­nomic and trade co­op­er­a­tion be­tween the coun­tries, data from the Min­istry of Com­merce shows.

FTAAP, the 21-mem­ber pact which in­cludes coun­tries that have signed the Trans-Pa­cific Part­ner­ship and other trad­ing pow­ers such as China and South Korea, is de­signed to pro­mote pro­duc­tive co­op­er­a­tion, to re­sist pro­tec­tion­ism and to fa­cil­i­tate fair com­pe­ti­tion in the Asia-Pa­cific re­gion.

The con­cept of FTAAP was pro­posed in 2004 and writ­ten into the dec­la­ra­tion of the APEC eco­nomic lead­ers’ meet­ing in 2006. China pro­posed the prepa­ra­tion of a fea­si­bil­ity study in 2014.

Min­istry of Com­merce spokesman Shen Danyang said trade pro­tec­tion­ism re­mains a ma­jor bar­rier against free trade and in­vest­ment across borders. Par­tic­u­larly in the af­ter­math of the global fi­nan­cial cri­sis in 2008, many economies have in­creased trade bar­ri­ers and seen dis­putes oc­cur fre­quently.

“Un­der these cir­cum­stances, the ef­fi­ciency and ef­fec­tive­ness of the nu­mer­ous free trade agree­ments in the Asia-Pa­cific re­gion have yet to be tested,” said Xue Rongjiu, vice-chair­man of the China In­sti­tute for WTO Stud­ies.

“The FTAAP talks are in line with the global trend of boom­ing free trade agree­ments and is cru­cial for coun­tries in the Asia-Pa­cific re­gion be­com­ing more open,” said Xue.

The Asia-Pa­cific is vi­tal to global peace and de­vel­op­ment, ac­cord­ing to Xue, as it ac­counts for 40 per­cent of the world’s pop­u­la­tion, 48 per­cent of its trade and 57 per­cent of global out­put.

Xue said top­ics such as trade in goods and ser­vices, in­tel­lec­tual prop­erty, e-com­merce, mar­ket com­pe­ti­tion and the en­vi­ron­ment will all be ne­go­ti­ated dur­ing the FTAAP talks.

China has 14 cur­rent free trade agree­ments in­volv­ing 22 coun­tries and re­gions. It is also ne­go­ti­at­ing the con­struc­tion of sev­eral new free trade agree­ments, in­clud­ing a Chi­naJa­pan-ROK agree­ment and one with Sri Lanka, as well as the Re­gional Com­pre­hen­sive Eco­nomic Part­ner­ship, a free trade pact in­volv­ing 16 coun­tries.

How­ever, China has not reached free trade agree­ments with some ma­jor trad­ing part­ners in the re­gion, such as the US and Ja­pan.

As the coun­try ex­pands its free trade net­work, the gov­ern­ment has also set pri­or­i­ties on mak­ing both goods and ser­vice trade more open, re­lax­ing in­vest­ment ac­cess rules, pro­mot­ing trade fa­cil­i­ta­tion, push­ing for­ward rule-mak­ing ne­go­ti­a­tions, and en­hanc­ing eco­nomic and tech­no­log­i­cal co­op­er­a­tion.

“It cer­tainly won’t be an easy task to com­plete the FTAAP talks within a short pe­riod. Smaller economies in the Asi­aPa­cific re­gion will need pol­icy guar­an­tees, such as get­ting more fa­vor­able tar­iff poli­cies for their prod­ucts from ma­jor economies in­clud­ing China, the US, Aus­tralia and Ja­pan dur­ing the term dis­cus­sion pe­riod,” said Yin Zonghua, vice-chair­man of the China Coun­cil for the Pro­mo­tion of In­ter­na­tional Trade.

Yin said that be­cause many coun­tries in the APEC re­gion de­pend heav­ily on trad­ing com­modi­ties and nat­u­ral re­sources, the lower prices of these min­ing and agri­cul­tural prod­ucts push them to try dif­fer­ent pol­icy meth­ods to sup­port their economies.

The ef­fi­ciency and ef­fec­tive­ness of the nu­mer­ous free trade agree­ments in the Asia-Pa­cific re­gion have yet to be tested.”

Xue Rongjiu, vice-chair­man of the China In­sti­tute for WTO Stud­ies

XIN­HUA

Of­fi­cials walk by a me­dia cen­ter for the 2016 APEC, a week­long se­ries of events start­ing on Mon­day in Lima, Peru.

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