Tuesday, June 24, 2014

Developing an APEC FTAAP Conceptual Framework

Chen Ho


           APEC has begun to seriously consider the importance of realizing a Free Trade Area of the Asia-Pacific (FTAAP). The FTAAP goal can be considered to be more comprehensive and ambitious than the Bogor Goals. The reason is that an FTAAP could imply the inclusion of non-members of APEC that are linked to the Asia-Pacific region. It also indicates that APEC seeks to enhance regional economic integration (REI) through deeper trade and investment liberalization and facilitation as well as economic and technical cooperation.

           Most importantly, APEC has regarded RCEP, TPP and other regional undertakings to be pathways to an FTAAP. This development shows that APEC would like to place an FTAAP at a higher level of REI than the Bogor Goals. There is also the possibility that an FTAAP could be achieved through the signing of a free trade agreement (FTA) among APEC members. Since APEC is still working on achieving the Bogor Goals, the realization of an FTAAP remains a long-term APEC goal without a deadline.

           Thus APEC has not exerted the greatest efforts to develop a framework for an FTAAP. In response, ABAC has incessantly called on APEC to generate an FTAAP plan. The 2014 APEC host, China, has raised the issue of building an FTAAP framework (APEC SOM1 2014). In sum, the idea of creating an FTAAP is receiving more focused attention and necessitates greater consideration. The main purpose of the article is to construct an APEC conceptual framework for attaining an FTAAP in a systematic manner based on APEC principles.

The Development of an FTAAP

           The views of APEC on the creation of an FTAAP were stated in the various annual APEC Leaders' Declarations. The 2004 Leaders' Declaration mentioned that ABAC had presented a relevant proposal regarding the need to study the feasibility of an FTAAP (APEC 2004). In 2006, the Leaders' Declaration said that difficulties in negotiating an FTAAP existed but APEC should undertake studies on ways to promote REI and FTAAP. The creation of an FTAAP will be a long-term prospect (APEC 2006).

           By 2008, Leaders had mentioned in the Declaration that an FTAAP could bring economic benefit to the region but challenges existed. The Leaders called on Ministers to examine the prospects of an FTAAP through analyzing the economic impact of an FTAAP as well as discussing the capacity requirements that would be needed for negotiations in the future (APEC 2008).

           Afterwards, the support for attaining an FTAAP seems to lose momentum without mentioning a free trade agreement. In the 2012 Leaders' Declaration, Leaders mentioned that they recognized FTAAP to be an important instrument to advance APEC's REI. In addition, they noted that the various regional undertakings could serve as a way towards an FTAAP. The Leaders also maintained that APEC will continue to be an incubator of an FTAAP and will also provide leadership and intellectual input (APEC 2012). APEC Leaders mentioned in the 2013 Declaration that they reaffirmed their commitment to realize an FTAAP. APEC will continue to offer leadership and intellectual input into the REI process (APEC 2013).

           Another related issue is about the meaning of an FTAAP. It was mentioned previously that ABAC had called for negotiating a region-wide agreement in the 2004 ABAC Report to Leaders. In addition, APEC Leaders had stated the need to negotiate a comprehensive free trade agreement in the 2010 Leaders' Declaration. However, the idea of an FTAAP to be derived from a negotiated agreement does not seem to be evident in recent years. There exists the possibility to define an FTAAP to be different from a free trade agreement. For example, an FTAAP could be an expanded form of the Bogor Goals in which the achievement of an FTAAP would mean the further advancement of free and open trade and investment in the Asia-Pacific region.

           Furthermore, it is possible to state that the number of APEC members promoting the Bogor Goals would be different from the number of members joining an FTAAP. There is the possibility that APEC would increase the number of APEC members in the future, so as to strengthen the development of an FTAAP. Since the FTAAP idea comes from APEC, there is certainly the need to ensure that members of FTAAP are also APEC members. In the 2013 APEC Leaders' Declaration, Leaders called for the achievement of a seamlessly and comprehensively connected and integrated Asia- Pacific region to be part of APEC's work to realize the Bogor Goals and the Yokohama Vision of "Bogor and Beyond" (APEC 2013). Therefore, the enlargement of APEC's membership would strengthen the advancement of a seamless regional economy and generate greater benefits from an expanded FTAAP.

Suggestions: Elements of an FTAAP Conceptual Framework

           The development of an FTAAP conceptual framework necessitates the inclusion of ideas that will follow APEC principles of voluntarism and consensus building. The APEC approach of making decisions in a cautious and evolutionary manner will continue to guide the building of an FTAAP. In addition, APEC also recognizes the importance of abiding by views that have been presented previously, so that this tradition should be respected. Therefore, the suggestions presented in the following paragraphs are considered to be able to satisfy APEC beliefs.

           The first suggestion is that APEC promotes the open regionalism idea. The advancement of an FTAAP will also promote the WTO and ensure that non-APEC members are not discriminated. APEC can show the world that the creation of a free trade area can also benefit non-APEC members.

           The second suggestion is that the achievement of the Bogor Goals should come first before the attainment of an FTAAP. If APEC members would like to hasten the realization of an FTAAP, they could seek to reach the Bogor Goals before the final 2020 deadline. The important point is that the meaning of Bogor Goals' free and open trade and investment should be clear and achievable. Furthermore, the setting of the year 2025 to be a potential deadline for realizing an FTAAP will be a positive development because it will exert pressure on APEC. Most importantly, APEC must have an FTAAP conceptual framework to accompany any FTAAP deadline.

           The third suggestion is that APEC membership in the future should be enlarged to enhance the advancement of an FTAAP. The expansion of APEC membership would increase the size of an FTAAP. This means economies that touch the Pacific Ocean should be able to join APEC. Furthermore, economies that border the economies touching the Pacific Ocean should also become APEC members. The result is the building of a seamless regional economy and the generation of greater benefits from an enlarged FTAAP.

           The fourth suggestion is that APEC should promote open membership to link the TPP, RCEP and PA with an FTAAP. APEC members should be able to become members of the three aforementioned FTAs, on the condition that they can adhere to the rules. Members of the three FTAs will become APEC members. Thus the difference in the rules of the FTAs will have less negative impact. In addition, businesses can choose the FTAs that satisfy their needs in terms of less transaction costs.

           The fifth suggestion is that APEC should welcome the development of free economic zones (FEZs) and create an APEC Free Economic Zones Network (AFEZN). The FEZs are effective for assisting with the achievement of the Bogor Goals and an FTAAP through the implementation of economic liberalization measures. A FEZ serves as a model for economic liberalization in an economy and full scale adoption of the economic liberalization measures is possible at a later stage. The AFEZN is a platform for sharing experiences and strengthening linkages.


1. ABAC. 2004. "2004 ABAC Report to Leaders." Manila: ABAC Secretariat.
2. APEC. 2004. "2004 APEC Leaders" Declaration. Singapore: APEC Secretariat.
3. APEC. 2006. "2006 APEC Leaders" Declaration. Singapore: APEC Secretariat.
4. APEC. 2008. "2008 APEC Leaders" Declaration. Singapore: APEC Secretariat.
5. APEC. 2010. "2010 APEC Leaders" Declaration. Singapore: APEC Secretariat.
6. APEC. 2012. "2012 APEC Leaders" Declaration. Singapore: APEC Secretariat.
7. APEC. 2013. "2013 APEC Leaders" Declaration. Singapore: APEC Secretariat.
8. APEC ISOM. 2013. "Theme and Priorities of APEC 2014." Singapore: APEC Secretariat.
9. APEC MRT. 2013. "2013 APEC MRT Meeting Statement." Singapore: APEC Secretariat.
10. APEC SOM1. 2014. "APEC Framework of Strengthening Regional Economic Integration." Singapore: APEC Secretariat.
11. Ho, Chen-Sheng. 2013. "Advancing the Attainment of the Bogor Goals: The APEC Way." Paper presented at the 2013 ASCC Conference in Jakarta, Indonesia.

No comments:

Post a Comment