YOKOHAMA — Pacific Rim leaders agreed Sunday in Yokohama to play a key role in forging a vast free trade agreement encompassing the thriving region based on a U.S.-backed free trade initiative and other existing regional undertakings, while adopting their first-ever common growth strategy to seek better quality of growth.
The agreement written in a declaration issued after the two-day summit of the Asia-Pacific Economic Cooperation forum highlighted the 21 member economies’ eagerness to take concrete steps to bring “reality” to their vision to create a Free-Trade Area of the Asia-Pacific, which had been considered no more than a vague concept.
Called the “Yokohama Vision,” the leaders’ declaration stipulates the future direction for the 21-year-old forum, which has seen progress in its past trade liberalization efforts and needs to adapt to the changing global economic landscape after the 2008 financial crisis.
But the vision’s effectiveness remains to be seen as the forum, to be chaired by the United States next year, operates on the basis of non-binding commitments and did not set any clear timelines for the envisaged regionwide free trade area or social indexes to gauge the progress in growth quality as sought in the strategy.
“To promote liberalization and facilitation of trade and investment, we will seek to become a close community that promotes deeper economic integration,” Prime Minister Naoto Kan said in announcing the declaration as chair of the latest annual summit, held for the first time in the country since 1995.
“To realize this, we will make an FTAAP the goal for APEC,” Kan said.
In the declaration, the leaders said an FTAAP “should be pursued as a comprehensive free trade agreement by developing and building on ongoing regional undertakings,” including the U.S.-backed Trans-Pacific Partnership initiative and the “ASEAN plus three” grouping preferred by China.
“To this end, APEC will make an important and meaningful contribution as an incubator of an FTAAP by providing leadership and intellectual input into the process of its development,” it said.
The goal is part of a wider vision that APEC will seek to “develop a community” which is more economically integrated, provides a more secure economic environment and has a higher quality of growth, according to the document.
ASEAN plus three groups Japan, China, South Korea and the 10-member Association of Southeast Asian Nations, while the TPP is being negotiated by nine APEC members including Australia, New Zealand, Singapore and the United States as an ambitious regional free trade agreement.
During the summit and a later press conference, Kan reiterated Tokyo’s positive stance toward joining the TPP initiative, which would encompass two of the world’s three largest economies if Japan joins it.
With the initiative increasingly garnering attention in the region, U.S. President Barack Obama and other leaders of the nine negotiating countries held the TPP’s first-ever summit on the sidelines of APEC and welcomed the “solid progress” they have made so far, a White House press release said.
Kan joined the meeting as an observer, in his capacity as APEC host. But Japan has yet to announce whether it wants to join the TPP, as concerns remain at home about drastically opening up its heavily protected agricultural market because the TPP would require member economies in effect to reduce all tariffs to zero.
Kan said in his own news conference after the one announcing the Yokohama Vision that he was urged by “many TPP countries to decide to join the framework as early as possible” in the TPP summit.
Summary of the Yokohama Vision declaration
The following is the gist of the “Yokohama Vision” declaration adopted by an Asia-Pacific Economic Cooperation forum’s summit meeting that wrapped up Sunday in Yokohama.
The APEC leaders:
— agree to take concrete steps toward realization of a Free Trade Area of the Asia-Pacific, or FTAAP.
— see that an FTAAP should be pursued as a “comprehensive free trade agreement” by developing and building on ongoing regional undertakings, such as the Trans-Pacific Partnership and ASEAN-plus-three grouping.
— seek to develop an APEC community in which trade and investment are freer and more open.
— hail “significant progress” seen in APEC’s review this year of the achievement of the Bogor Goals by five industrialized economies and eight volunteer developing economies, but note more work remains to be done.
— set a growth strategy that includes an action plan that encompasses such issues as structural reform, human resource and entrepreneurship development, and human security.
For a community that promotes high quality growth, APEC set forth a strategy through 2015 that includes an action plan focusing on such issues as structural reform, human resource and entrepreneurship development, and human security. Human security involves such issues as counterterrorism and food security.
With the target year of 2010 having arrived for developed members to attain their long-held free trade goals, the leaders hailed the “significant progress” seen among five such members plus eight others but also said “more work remains to be done” toward the goals.
Under the so-called Bogor Goals, named after the Indonesian city where APEC leaders reached the agreement in 1994, developed economies are committed to achieving free and open trade and investment by 2010, and developing economies by 2020. The goals have no specific numerical targets.
According to the declaration, the average applied tariff rate across the region fell to 6.6 percent in 2008 from 10.8 percent in 1996. It was 16.9 percent in 1989 when the forum was launched, APEC data show.
The leaders also said that they will refrain from “competitive devaluation” of their currencies as some countries’ monetary policies have sparked concerns over protectionism in global trade, and reaffirmed their strong commitment to bringing the stalled Doha Round of global market-opening talks to a prompt conclusion.
They also extended their “commitment on standstill” made in 2008 until the end of 2013 to refrain from raising new trade barriers and imposing new export restrictions, as concerns linger over China’s tightening control of its rare earth exports.
APEC accounts for 52.7 percent of the world’s gross domestic product and 44.4 percent of global trade by value, according to the latest data offered by the Japanese government.
What was initially a 12-member forum now groups Australia, Canada, Chile, China, Hong Kong, Japan, South Korea, Mexico, New Zealand, Papua New Guinea, Peru, Russia, Taiwan, the United States, and seven ASEAN members — Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.