Trade focus shifts
Bangkok Post | 2 August 2008
Trade focus shifts
Collapse of WTO talks puts spotlight back on a potential deal among Apec economies, writes Umesh Pandey
With the collapse of the World Trade Organization (WTO) talks this week, members of the Asia Pacific Economic Co-operation (Apec) forum are looking forward to working out a deal that would help its 21 members.
’’Although Apec members believe in multilateral agreements [and] the initial aim was to complete the Doha Round, but that seems like it is not going anywhere and therefore our aim is to try to push for a possible regional economic integration among the Apec member countries,’’ said Gonzalo Gutierrez Reinel, the deputy minister and secretary general for external relations of Peru.
Mr Gutierrez made the comment in an interview this week in Bangkok as part of an Asian tour that will also take him to China, as he sought to gather input ahead of the Apec summit that will take place this November in Peru.
The failure of Doha had made an Apec agreement more urgent, he said, while acknowledging that a lot needed to be worked on before any papers are ready for signatures in November.
’’This is an issue that has been discussed over the past year or so and the key is how do we do it, with three options that are available,’’ he said.
The first option, he explained, would be to start from scratch for all countries and work things out gradually. This would be time-consuming and cumbersome but is an approach many countries may prefer as it would offer an opportunity to rework some existing FTAs.
The second option is to work on the existing free trade agreements and on their related rules of origin that could be standardised to create a common platform for all countries. Mr Gutierrez said this would make it easier for existing FTAs to remain as they were, while linking the remaining ones not yet negotiated or in various stages of talks.
The third option, he said, was to use one existing FTA as the basis for an agreement among all 21 economies. One good choice would be the so-called P4 FTA covering Singapore, Chile, Brunei and New Zealand, which was singed in 2005 and took effect in November 2006.
’’We have to work on the common FTA for the member countries and make it happen,’’ he said.
While he was reluctant to give a timeframe, as trade deadlines are notoriously hard to meet, he would want to have some kind of solid basis in place by the tine the Apec leaders meet in November.
Mr Gutierrez said the third approach may gain some backing as larger members of the Apec are either supportive of the move or are indifferent to it.
’’The FTAAP (FTA Asia Pacific) has received support from the bigger countries in Apec such as the United States, Australia, New Zealand and Canada, while countries such as China and Japan are working on it and are leaning toward a possible deal,’’ he said.
In the absence of a multilateral pact under the WTO, he said FTAs were now becoming an important part of each country’s policies, including Peru’s.
Citing the example of the Peru-US FTA, he said bilateral trade had risen from less than $1 billion before the pact took effect, to more than $5 billion annually. He also said a China-Chile deal had pushed up the value of Chinese goods exported to Chile by 50% while Chile’s exports to China rose 150%.
Peru is also working on an FTA with China and hopes for details to be finalised at the Apec summit in Lima. China this year has overtaken the United States as Peru’s largest trading partner, he added.
Another deal is being negotiated with Apec member Japan, with a focus on trade protection, also expected to be completed by November.
’’We do not want the Apec summit to be a mere talking session but one where real deals are undertaken and that is why we are pushing for so many things at the same time,’’ Mr Gutierrez said.
His aim is to lift trade between Asia Pacific economies and Peru as the region accounts for nearly 45% of overall trade, while the US accounts for about 30%.
’’What we are doing is not putting all the eggs in the same basket. We want to diversify, and focusing on Asia Pacific and China especially is one such way.’’
