Op-ed: APEC and TPP work to integrate region
The potential of the Trans-Pacific Partnership is enormous. Nine APEC economies are currently negotiating the regional free trade agreement, with the latest informal round held in Kuala Lumpur.
The agreement will cover more than USD 500 billion worth of current trade, if talks are eventually successful, according to research by APEC’s Policy Support Unit. But that’s a drop in the ocean compared with the possible end game. APEC Leaders have agreed that the TPP could become a building block for a much-wider Free Trade Area of the Asia-Pacific, a long-term APEC goal.
The nine economies achieved broad outlines of the TPP agreement on the sidelines of the APEC Leaders’ meeting in Honolulu in November. And other economies including Japan, Canada and Mexico have expressed an interest in joining. Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam, and the United States will now push ahead with their negotiations with the aim of forging a high-quality agreement that sets new standards for international trade and reflects the growing economic importance of the Asia-Pacific region.
APEC has played a supportive role in developing the TPP since its beginnings in 2002, along with other free trade agreements, because advancing free trade is our core mission. Since its inception in 1989, APEC and its 21 member economies have been working hard to achieve greater regional economic integration, primarily by breaking down trade and investment barriers, at, across and behind borders, to help build sustainable economic growth. APEC’s achievements on this front have delivered real results for people living throughout the region, in the form of increased incomes, lower unemployment and poverty.
A TPP agreement also aims to enhance trade flows and strengthen integration among participating economies, potentially creating more jobs. And the TPP is designed to be a living agreement, meaning it can be expanded to include new economies. This objective suits APEC’s agenda, particularly given our vision for a Free Trade Area of the Asia-Pacific.
APEC Leaders first proposed a FTAAP in 2006 at their meeting in Hanoi. But in 2010 they agreed that now was the time to turn this aspirational goal into a concrete one. A FTAAP should be pursued, they said, as a comprehensive free trade agreement by developing and building on regional groupings such as the TPP and ASEAN+ among others. With that in mind, they tasked APEC with the role of incubator for a FTAAP, including by addressing “next generation” trade and investment issues that it should contain.
As a result, APEC in 2011 has advanced issues such as greater regulatory convergence and cooperation among economies and strengthening supply chains, which will improve the flow and goods and services and the ease of doing business in the modern, globalised world. APEC’s work on these issues can also transfer into other negotiations, including the TPP, where parties are looking to develop and include such “next generation” issues in their agreements.
Despite sharing some similar objectives, APEC and the TPP are distinctly separate forums and with different approaches. APEC is non-binding and non-negotiating, and achieves results through open dialogue, cooperation and peer pressure. Given its unique structure of large and small, and developed and developing economies, APEC is also well placed to build the capacity of its members to participate in free trade negotiations and meet the obligations of resulting agreements. And thanks to APEC’s non-binding approach, members are free to explore, analyse and mature ideas for overcoming trade barriers before implementing them. In other words, APEC can successfully tackle a wide range of issues that might be more difficult for forums that seek to create formal commitments.
In 2012, TPP economies will hold a series of negotiations to push them closer to a final agreement. APEC too, chaired by Russia and then Indonesia in 2013, will diligently continue its own work to facilitate trade in the Asia-Pacific region, to support stronger economic growth and increased prosperity for all.
This op-ed by APEC Secretariat Executive Director Ambassador Muhamad Noor was first published in the New Straits Times in Malaysia.