Regional Free Trade Agreement May Not be Far Off for Asia-Pacific

Plausibility assessments of a Free Trade Agreement for the Asia-Pacific indicate that such an arrangement may not be so far off.

"We have finished reviewing 14 of 30 FTAs within the APEC region, analysing divergences and convergences," confirmed Senior Officials' Meeting Chair, Gonzalo Gutierrez at the Senior Officials' Policy Dialogue today. "It is a long term process but this comparative analysis of already-existing agreements is a significant contribution to the possible establishment of a Free Trade Agreement for the Asia-Pacific. Now, we must decide how this tool will inform our strategy."

Plans to implement a regional trade agreement have been in development for several years and rigorous analysis has been applied to actual similarities and differences among existing agreements. While comparison has revealed a range of disparities among APEC member economies' FTAs, these are by no means preclusive to a region wide agreement.

For example, Kati Suominen of the Inter-American Development Bank observes several very distinct styles of approach to tariff liberalisation. Nonetheless, she explains, "Ten year trends indicate that these divergent approaches will achieve the same results. One economy may make changes in increments while the next implements change at once. Still, trends indicate that each approach will lead to the same outcome in the tenth year of an agreement. In real time, tariff liberalisation has already reached 80 percent today and will have reached 95 percent by 2017 for existing FTAs."

To Suominen, a region-wide agreement is less complex than a system of bilateral agreements and would lead to a greater wealth of opportunities. The main challenge in the near-term is to define an integration strategy that will leverage RTA reforms while also retaining APEC's important regional gains toward liberalisation.

Describing sentiments expressed among the APEC business community, Dr. Carl Voigt of the Marshall School of Business at the University of Southern California asserts, "They want plans for a free trade area to start now and to move quickly. Specifically, they want standard Rules of Origin and common language. And they want assistance for small to medium enterprises."

This comes as Peru - host to the Senior Officials' Meeting - prepares to sign Free Trade Agreements with both Canada and Singapore on Thursday. According to Chair Gutierrez, "These are two very important partners for Peru." Of Singapore, he explains, "In establishing a relationship with this Asian economy, Peru will be well positioned to export services and to forge additional trade agreements with other members."