Economy
APEC broadens horizons
By Wu Jiao and Li Xiaokun (China Daily)
Updated: 2010-11-15 09:30
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Proposed new free trade area will encompass half of global output
YOKOHAMA, Japan / BEIJING - Pacific rim economies pledged on Sunday to turn their dream of a vast free trade area into reality, while President Hu Jintao warned regional leaders global economic recovery was far from certain amid rising protectionism.
The 21-member Asia- Pacific Economic Cooperation (APEC) group vowed to maintain the region as an engine for economic growth, at the end of a two-day summit in the port city of Yokohama, south of Tokyo.
Chinese experts said the foundation for the ambitious free-trade plan has already been laid with mechanisms such as the existing 10-(members of ASEAN)-plus-three (China, Japan and the Republic of Korea).
In a statement released at the end of the APEC annual meeting, following on the heels of the G20 Summit that concluded in Seoul on Friday, leaders agreed to start working on a Free Trade Area of the Asia-Pacific (FTAAP), without issuing a timetable.
The blueprint is expected to encompass nearly half of the world's economic output.
"We instruct APEC to take concrete steps toward realization of an FTAAP, which is a major instrument to further APEC's regional economic integration agenda," the leaders said.
"An FTAAP should be pursued as a comprehensive free-trade agreement by developing and building on ongoing regional undertakings, such as ASEAN+3, ASEAN+6, and the Trans-Pacific Partnership (TPP), among others," the declaration said.
Ma Zhaoxu, spokesman for the Chinese delegation at the summit, said APEC leaders proposed to establish the mechanism in a "step-by-step" way.
To that end, the statement extended a 2008 freeze on new barriers to investment or trade in goods and services for another three years to 2013.
AFP on Sunday quoted analysts as saying that "with World Trade Organization negotiations in limbo, and warnings rife of a return to protectionism", talks to expand the TPP seem to be another way of regaining momentum on global trade reform.
The TPP is a proposed free trade zone that would eliminate most tariffs and other trade barriers.
It currently includes Brunei, Singapore, Chile and New Zealand with the United States, Australia and other countries in talks on joining.
Jin Canrong, a professor of international studies at Renmin University of China, said it will be hard to push the FTAAP without establishing a sub-zone, (regional cooperative mechanism), as Asia-Pacific is such a huge region.
"But now we have 10+1, and we are working under 10+3, and maybe we will have 10+6, 10+8," he said adding that this helps pave the way to achieve the goal.
Su Hao, a scholar of Asia-Pacific studies with China Foreign Affairs University, said it is a milestone for the FTAAP to appear as a goal in the official APEC statement.
"But given the ambiguous blueprint it is hard to realize the goal in a short period," he said.
Washington's desire to get involved in the mechanism will help consolidate US dominance in the fastest-growing region in the world, he said.
Lu Jianren, an expert on Asian economic issues from the Chinese Academy of Social Sciences, said that the TPP is only one way to achieve the FTAAP, not the only way as the US hopes.
Another highlight of the Sunday statement is the pledge to "take concrete steps" to oil the wheels of trade at a time of rising concern over protectionism.
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The president also suggested that APEC should cooperate more with the G20 and other mechanisms to complement each other's strengths.
"It is a new idea to promote cooperation between APEC and G20. To bring favorable interaction between the two mechanisms will help both better solve global issues," said Jin of Renmin University.
Regional leaders on Sunday also agreed to refrain from competitive devaluation of currencies and move toward more "market-determined exchange rate systems".
Agencies and Ma Liyao contributed to this story.