China's push for Asia-Pac FTA gains ground

China's push for the proposed Free Trade Area of the Asia-Pacific (FTAAP) at the upcoming Apec summit has cleared the first hurdle, with senior officials of the 21-member grouping agreeing to launch a feasibility study. The study, which reportedly met with US resistance, will be launched if it is approved at a two-day meeting by trade and foreign ministers of the Asia Pacific Economic Cooperation (Apec), which starts today, and the Apec Economic Leaders' Summit on Tuesday.

Apec secretariat executive director Alan Bollard told a media briefing yesterday that the new study differs from the one conducted in 2006 outside the grouping. The study, which will last two years, will be more detailed and look at how the FTAAP fits in with proposed trade initiatives, particularly the US-led Trans-Pacific Partnership (TPP), a grouping which comprises 12 members so far, and which excludes Beijing, and the China-led Regional Comprehensive Economic Partnership (RCEP), a group with 16 members so far, and excludes Washington.

"We want to know how likely the two are to converge towards something in the direction of an FTAAP or would they send economies off in different directions," said Dr Bollard in response to a question from The Straits Times.

"Apec would like to see a convergence and this study will help give us directions about whether that's happening or not."

The FTAAP was broached in 2004 to minimise "the possible ill effects" from a complex web of regional and free trade agreements in Apec economies. It was entered into the Apec agenda in 2006, when a feasibility study was done by the Apec Business Advisory Council (ABAC) and the Pacific Economic Cooperation Council (PECC).

But the study reported that "the FTAAP is not politically feasible at the present time or in the near term", in part due to the strategic rivalry between Beijing and Washington.

Earlier media reports suggested that China has had to drop its proposal to launch a feasibility study at the Apec summit due to US objections that the FTAAP would be a distraction from the TPP. But a commentary by China's official Xinhua news agency yesterday pointed out that the FTAAP has "long been a common vision for Apec economies, not a product of China's own wishful thinking".

"China's determination to push for concrete steps on the FTAAP only showcased its efforts to shoulder more international responsibility, since the country has been repeatedly urged to do so," it added.

Dr Bollard said yesterday that the Apec senior officials, who met over two days from Wednesday, also agreed on a regional connectivity blueprint consisting of three key themes. These are: improving infrastructure development and financing; facilitating trade by cutting red tape; and connecting businesses, tourists and students better across the Asia-Pacific.

Apec leaders are also expected to back a regional anti-graft network, led by China, that will promote best practices in intel-sharing and cross-border prosecution of corrupt fugitives, he added.

The Apec summit will also highlight new growth drivers such as the urbanisation trend and the Internet economy, which are needed amid slowing growth in the region due to weak domestic demand among others.

Apec policy support unit director Denis Hew said at the briefing yesterday, which launched a report on Asia-Pacific economic trends, that the region's growth this year is forecast to be 3.9 per cent, down from 4.3 per cent last year.

The bright spark will be the services sector, which accounts for 70 per cent of Apec economies' growth and 46 per cent of regional employment.

"The services sector has been outperforming all other sectors and can be further leveraged to provide higher-income jobs for the Asia- Pacific," added Dr Hew.

kianbeng@sph.com.sg

This article was first published on November 7, 2014.
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