Asia-Pacific shoulders responsibility in global economic growth
Despite a lackluster global economic recovery, the Asia-Pacific region has remained as the world’s most economically dynamic region and the main engine of global growth, almost a decade after the 2008 global financial crisis.
The global economy has shown a broad-based upswing while the World Trade Organization (WTO) forecast that global trade is expected to rebound this year.
The IMF said in its 2017 World Economic Outlook that global economic recovery is continuing at a faster pace. It revised up its global growth projections to 3.6 percent for this year and 3.7 percent for 2018.
However, economic policymakers in the Asia-Pacific are still facing a complex situation as they need to cope with various pressing global challenges in efforts to sustain the region’s exuberant momentum.
One major task among others is to renew the spirit of free trade with the emergence of anti-globalization and anti-trade sentiments.
According to the Pacific Economic Cooperation Council (PECC) annual survey, rising protectionism is seen as the “top risk to growth of the Asia-Pacific region.”
“Against the backdrop of concerns over rising protectionism, arguments for regional economic integration efforts and emphasis on pathways to achieving the Free Trade Area of the Asia-Pacific (FTAAP) and support for the multilateral trading system become even more pertinent,” PECC Co-chair Don Campbell said on the sidelines of the AsiaPacific Economic Cooperation (APEC) summit in Vietnam’s central port city of Da Nang last month.
APEC can address the doubts about the benefits of globalization by complementing its work on trade with an equally robust work on social policies, such as education, social safety nets and labor market policies.
“They provide stability, certainty and a sense of forward momentum,” said Campbell.
Promoting inclusive growth in the Asia-Pacific remains a top priority for APEC members, and the FTAAP notion has been increasingly accepted as an ideal model for boosting global trade and regional integration.
In fact, the FTAAP is not a new idea. It was first proposed in 2004 and written into the declaration of the APEC leaders’ meeting in 2006.
During the 2014 APEC meeting in Beijing, member economies pushed forward the FTAAP process and sketched a road map for it.
By encompassing all 21 APEC economies through trade and investment liberalization, the FTAAP, once established, will become the world’s largest free trade zone, covering 40 percent of world’s population, half of global trade and 60 percent of world trade.
Experts believe that the FTAAP is an effective way to reduce the “spaghetti bowl effect” of overlapping regional trade arrangements and lower fragmentation risks.
Alan Bollard, executive director of the APEC Secretariat based in Singapore, said APEC would like to see “some improved recipes for cooking the noodles,” and APEC members were testing the kitchen for trying things out.
“The FTAAP is a strategic choice for long-term prosperity of the Asia-Pacific region. It will provide institutional guarantee for our region’s open economy,” said Tang Guoqiang, co-chair of PECC.
Compared with other plans for a regional free trade regime, the FTAAP stresses inclusiveness, seeks greater regional integration and could unleash enormous potential for fast economic growth and balanced wealth distribution.
In his keynote address at the APEC CEO summit in Vietnam’s Da Nang in November, President Xi Jinping said the building of the FTAAP has been “the long-cherished dream of the business community in our region.”
“We should get into action, fully implement the Beijing Roadmap, move toward the FTAAP and provide an institutional underpinning for growing an open economy in the Asia-Pacific,” the Chinese leader said.
In view of the large potential of the Regional Comprehensive Economic Partnership (RCEP) to promote global trade and growth, the Association of Southeast Asian Nations (ASEAN) and its trading partners have stressed the need to fast-track their negotiations on a “modern, comprehensive, high-quality and mutually-beneficial” RCEP agreement.
Ten ASEAN leaders and their six trading partners – China, Japan, South Korea, Australia, New Zealand and India – have reaffirmed their commitment to wrap up the 16-nation regional trade pact by next year.