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Shared goals may have found progress but nothing is binding

by Kazuaki Nagata

The APEC summit managed some commendable achievements, including pointing to a path toward establishing the Free Trade Area of the Asia-Pacific and drafting a growth strategy for the region, but the 21 members are now facing political struggles in achieving the pact, experts said.

A primary focus was exploring a process by which to forge FTAAP, and the Pacific Rim leaders agreed that it “should be pursued as a comprehensive free-trade agreement by developing and building on ongoing regional undertakings, such as ASEAN Plus Three, ASEAN Plus Six and the Trans-Pacific Partnership, among others,” their statement said.

According to Japanese government officials who briefed the press on the meeting on condition of anonymity, getting all the member economies on the same FTAAP page was the most difficult task.

“How could we get the member economies to share the recognition and approach to something that was not yet concrete? I was worried at the beginning,” one official said.

Daisuke Hiratsuka, director general of research planning at the Institute of Developing Economies at the Japan External Trade Organization, welcomed the progress toward FTAAP at the Yokohama APEC summit.

“This year’s APEC recognized the significance of developing smaller regional trade areas like the TPP to realize FTAAP. I think showing such a realistic road map was the biggest achievement,” he said.

FTAAP was first floated by the APEC Business Advisory Council in 2004 and proposed by U.S. President George W. Bush during the APEC 2006 summit in Vietnam. It was decided at the APEC 2009 summit in Singapore that the Yokohama gathering would explore a workable route.

But the FTAAP vision lacks specifics that future APEC forums will probably focus on. For instance, the leaders’ statement did not include a target year for the pact.

Then there are the political hurdles, said Hidehiko Fujii, chief economist at the Japan Research Institute.

“The TPP has a U.S. color and ASEAN Plus Three has a Chinese color. Thus, when pushing one of them, one color will stand out over others,” Fujii said. “It should be something that members can actively join, rather than testing them on whether they side with the U.S. or China.”

The Yokohama talks also drafted its first-ever growth strategy, which stresses balanced, inclusive, sustainable, innovative and secure aspects.

While no numerical targets were included, Hiratsuka said it is important that the plan values “inclusiveness,” because as trade and investment become freer and more open, this should not just benefit mostly large firms.

On APEC’s future, some want it to have binding power.

“I think the importance of binding arrangements will increase in the future,” Shujiro Urata, an economics professor at Waseda University’s Graduate School of Asia-Pacific Studies, said during a panel discussion in the APEC CEO summit Saturday.

Urata said APEC has followed a voluntary, nonbinding approach and it worked better in dealing with new issues such as growth strategies. But “a binding approach should be adopted for issues that have been discussed for many years, such as trade and investment liberalization,” he said.

However, other experts stressed the importance of keeping APEC nonbinding.

When it’s binding, it is difficult to quickly deal with new issues and make policies, and “things do not really move forward,” said Hiratsuka.

As for new members, while some economies, including Colombia, have been interested in joining, the Yokohama meeting did not seem to weigh the subject.

But Fujii of JRI said APEC should be open to new members.

“APEC should be a large-scale, open organization,” which would enhance its value, he said.