Saturday, September 20, 2014

Strengthening APEC's Role in Regional Economic Integration

Chen Ho


        In recent years, APEC has begun to consider the realization of a Free Trade Area of the Asia-Pacific (FTAAP). The FTAAP goal is more ambitious than the Bogor Goals. The development indicates that APEC is seeking to enhance regional economic integration (REI) through deeper trade and investment liberalization and facilitation as well as economic and technical cooperation. At the same time, APEC members are also forming free trade agreements (FTAs) in the form of Trans-Pacific Partnership (TPP) and Regional Comprehensive Economic Partnership (RCEP). APEC has regarded RCEP, TPP and other regional undertakings to be pathways to an FTAAP. The main purpose of the article is to provide suggestions for APEC to enhance REI through the building of the trilateral relationship among FTAAP, TPP and RCEP.

Development of an FTAAP

        In the "2004 ABAC Report to Leaders," ABAC suggested the development of an FTAAP. ABAC called for APEC Leaders to show strong political commitment to negotiate a region-wide agreement that would bring economic benefits to members. An FTAAP would accelerate the achievement of the Bogor Goals and minimize the negative effects from the proliferation of complex web of FTAs (ABAC 2004).

        Subsequently, 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).

        The most important milestone for the FTAAP idea was reached in 2010 when the APEC Leaders stated in their Declaration that APEC will take concrete steps to realize an FTAAP. The Leaders further said that an FTAAP should be a comprehensive free trade agreement that will build on regional undertakings, such as ASEAN+3, ASEAN+6 and the Trans- Pacific Partnership. In addition, APEC will serve as an incubator of an FTAAP through the provision of leadership and intellectual input into its development (APEC 2010).

        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).

        With China as the 2014 APEC host, the APEC's work towards achieving an FTAAP is showing signs of renewed vigor. One of the priorities for APEC in 2014 is: "Advancing Regional Economic Integration." Specifically, APEC will pursue the realization of an FTAAP through the creation of favorable conditions for FTAAP (APEC ISOM 2013).

        During the 2014 SOM1 Meeting in Ningbo, China presented a proposal titled "APEC Framework of Strengthening Regional Economic Integration." The proposal seeks to enhance the realization of an FTAAP. The framework consists of four elements: 1) Enhance transparency of RTAs/FTAs; 2) Strengthen capacity building activities to achieve an FTAAP; 3) Formulate a work plan to realize an FTAAP; and 4) Launch an FTAAP feasibility study (APEC SOM1 2014).

        Most importantly, the proposal calls for the development of a work plan or roadmap. Essentially, the roadmap will identify the steps toward an FTAAP. In addition, the roadmap will clarify major principles focusing on the relationship between the pathways and an FTAAP as well as the relation between an FTAAP and the Bogor Goals. Furthermore, the proposal suggests the year 2025 to be the deadline to realize an FTAAP (APEC SOM1 2014).

Analyzing the FTAAP-TPP-RCEP Relationship

        The APEC Leaders' support for ensuring that an FTAAP will be built on regional undertakings was clearly stated in the 2010 Declaration, as mentioned in the literature review. In the 2013 APEC MRT Meeting Statement, Ministers agreed that APEC will analyze the convergence of TPP and RCEP within the APEC framework (APEC MRT 2013). Specifically, there is a need to study ways to converge TPP and RCEP with an FTAAP.

        In theory, one way to enhance the convergence of TPP and RCEP with an FTAAP would be to ensure that the rules of the TPP and RCEP are as similar as possible. After doing so, APEC could state that the two FTAs have led to the realization of an FTAAP in which an FTAAP is define to be a free trade area with loose meaning and not a formal agreement. In addition, if an FTAAP is regarded to be a formal free trade agreement, an FTAAP agreement could be composed of rules from the TPP and RCEP.

        If an FTAAP is an idea and not a formal agreement, another way to converge the two major FTAs in the Asia-Pacific region would be the enabling of open membership for APEC members. This way can be called membership convergence. From a technical standpoint, this method is feasible in that the two FTAs can develop their own rules. The APEC members will be able to join the two FTAs, as long as they are willing to accept the rules. At the same time, the members of the two FTAs will become APEC members. Thus the TPP and RCEP are linked with an FTAAP through membership convergence. The benefit is that businesses in the Asia-Pacific region will be able to choose the FTA that satisfies their needs the most.


        First, it is suggested that APEC continues to support the open regionalism idea. APEC's realization of an FTAAP should include the support for the WTO and ensure that non-APEC members are not discriminated. APEC should show to the world that the creation of a free trade area will also be beneficial to non-APEC members.

        Second, APEC membership in the future should be enlarged to further advance an FTAAP. The expansion of APEC membership would increase the size of an FTAAP. 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 outcome is the building of a seamless regional economy and the generation of greater benefits from an enlarged FTAAP.

        Third, APEC should work to ensure that TPP and RCEP can be joined by APEC members, as long as their rules are followed. In doing so, the FTAAPTPP- RCEP relationship will be strengthened. At the same time, APEC will consider an FTAAP to be a free trade area and not a formal agreement. The TPP and RCEP will jointly serve as an informal FTAAP without a formal agreement. Additionally, members of RCEP and TPP can become APEC members. The benefit is that APEC will not need to spend tremendous amount of resources to negotiate a formal free trade agreement to realize an FTAAP.


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.

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