APEC Business Advisory Council (ABAC), a major adviser of the Asia-Pacific economic bloc, is calling for progress on the Doha Development Agenda, hoping for quick completion of long-delayed World Trade Organization (WTO) negotiations.

"In today's international trade world, there is nothing more important than the conclusion of the Doha Development Agenda," said Hernan Somerville, 2004 Chair of ABAC.

He is also president of the Chilean Bankers' Association. Chile is the hosting nation of the 2004 APEC meeting.

The proliferation of free trade agreements (FTAs) between economies is a response to the lack of progress at the WTO, he said.

"Countries are showing greater impatience because of the standing still of the Doha Round negotiation," Somerville said, "They now are in talks on regional FTAs."

There is growing business uncertainty regarding the eventual outcome and implications of the trend of FTA proliferation, he noted.

This might affect world trade somewhat, he said. "If two nations sign a FTA with each other, what will happen to the third country?"

It is necessary to review bilateral agreements, he said, to make regional FTAs comply with the basic requirements of the WTO.

He also said the real solution to push for the international trade is the conclusion of WTO negotiations.

"Today, countries are talking about bilateral FTAs," he said.

"If the Doha agenda continues to be delayed," he says, "nations may enter into multilateral FTAs."

Somerville is lobbying countries to come back to the negotiating table and solve disputes on agricultural and dumping issues.

And as the chair of ABAC, he is trying to work out a solution to push for WTO talks.

Somerville said that ABAC is studying the feasibility of an FTA for the Asia-Pacific Region, the preliminary results of which will be released next August.

"It (APEC FTA) will not write off the WTO," he said, "but will push other economies outside APEC such as the European Union and India to catch up in the WTO."

If an FTA is reached within the APEC, he explains, it will be the incentive for other nations to seek a similar agreement within the WTO.

No nation can afford to lose the APEC market, which covers 40 per cent of the world's population and more than 60 per cent of global gross domestic product, he said.

This will send strong signals to the world and push along WTO proceedings.

Now APEC members are signing bilateral FTA accords, making the APEC weak in strengthening regional trade.

In this sense, APEC itself also needs a FTA to guide its development, he said, adding that challenges such as an APEC FTA would require much work.

Technical and political questions need to be settled before agreement.

Currently, ABAC is analyzing and solving the technical questions, Somerville said.

And he calls for APEC economies to put more political will in promoting world trade.

"We can achieve the FTA step by step," he said, adding that different requirements could be made for developing and developed countries.

He also stressed that the APEC FTA was not the first option to push for international trade, and that the best way was the finalization of WTO talks.

APEC nature

"It is time to review the voluntary nature of APEC," said Somerville, adding the implementation of the gentlemen's agreements within the APEC was rather weak.

Although goals of reduction of import duties and facilitation of trade and investment were made within the APEC, the implementation did not meet expectations, he said.

The effect of the "gentlemen's agreements" was limited.

"When (APEC) members sit down to review their implementation of these goals, they pointed out each other's demerits in A, B, C and D," Somerville said. "Then, what changes happened?"

"Nothing!"

Therefore, the ABAC chair said, it was necessary to bind APEC members to their commitments.

ABAC is actively considering the possibility of converting APEC arrangements from voluntary into binding, he said.

Increasing trade costs

Somerville also calls for the international business community to create a level ground for traders from different countries.

ABAC is looking into the increasing trade costs for small and medium-sized enterprises (SMEs) caused by the security requirements initiated by some nations.

"For example," he said, "The United States requires foreign traders to meet additional criteria on their containers shipped to the US, for the sake of security."

"We understand the measures," he said. "But it increases trade costs."

The increase would not be a big concern for large companies or developed countries as they are rich. However, it could be bad for SMEs and developing nations, Somerville said. And the requirements might evolve into new trade barriers if nations abuse the criteria.

"Our concerns are that red tape and delays on the approval of customs clearance could lead to new barriers," he said.

Compensations should be given to small traders who suffer from the criteria.

ABAC is working on a list, indicating which transactions should be compensated, which Somerville said is achievable.

Meanwhile, developed nations should help developing ones with professional manpower and technical supports to ensure security needs will not hamper international trade.

"We hope the cost will decrease in 2006," Somerville said.