Proposed trans-Pacific trade pact could get boost from US-Korea deal
Forbes
FOCUS - Proposed trans-Pacific trade pact could get boost from US-Korea deal
8 April 2007
SINGAPORE (XFN-ASIA) - The US-South Korea free trade deal could encourage further liberalization and create an environment conducive to a proposed trans-Pacific free trade area linking Asia and the Americas, officials and analysts say.
While the US-initiated Free Trade Agreement of the Asia Pacific (FTAAP) received only lukewarm response during an Asia Pacific summit in Hanoi last year, US officials won agreement to consider it as a long-term prospect.
Washington has said the conclusion of a free trade agreement (FTA) with South Korea, the biggest since the North American Free Trade Area, is a step in that direction.
’The US-South Korea FTA is another demonstration of our strong commitment to work to enhance economic ties in the Asia Pacific region,’ said Sean Spicer, assistant US trade representative for public affairs.
’The high quality FTA with Korea and our other FTAs either concluded or under discussion with Asia Pacific countries provide an excellent example for FTAAP, as well as helping to create an environment of competitive economic liberalization that makes an FTAAP more possible,’ he told Agence France-Presse.
The FTAAP, which would cover economies accounting for 60 pct of global economic output and half of world trade, has been raised as a possible ’Plan B’ should faltering World Trade Organization (WTO) talks collapse entirely.
Stretching from China to Chile, the FTAAP aims to harmonise a whole series of regional and sub-regional FTAs.
However, a business-backed study last year concluded that the proposed cross-Pacific free trade zone was not politically feasible in the near term.
Leaders of the Asia Pacific Economic Cooperation (APEC) forum are expected to hear a report from their officials on the FTAAP idea at their annual summit in Australia in September.
Julius Cesar Parrenas, senior advisor at the Taiwan Institute of Economic Research, said the US-South Korea deal would give impetus to the FTAAP, which would cover all 21 APEC economies.
’Other East Asian economies will likely feel pressure to strike their own free trade deals with the US, either bilaterally or through FTAAP, as the US-South Korea FTA will give Korean exports an edge,’ Parrenas told AFP.
’To the extent that the US-South Korea FTA raises the prospects of more bilateral FTAs among Asia-Pacific countries, the argument for an FTAAP as an alternative to the growing ’spaghetti bowl’ of bilateral FTAs becomes more convincing.’
Noting that the deal with South Korea is Washington’s first with an East Asian economy with a significant agriculture sector, Parrenas said it ’provides a model that may help facilitate negotiations between the US and other East Asian economies within the framework of FTAAP.’
A spokesperson for Singapore’s trade ministry also welcomed the US-South Korea deal, telling AFP: ’We see it as having a positive impact on APEC’s vision of open regionalism and momentum towards greater regional economic integration.’
The accord ’reflects the desire of businesses for greater trade and investment liberalization (and) ... complements initiatives such as the FTAAP, which is also a desire of businesses,’ the official said.
Charles Morrison, president of the Hawaii-based think tank East West Center, stressed however that the FTAAP is a long-range goal.
’The Korea-US FTA probably will give a boost to other FTA proposals as it gives the two countries an edge over competitors ... However, the FTAAP is generally regarded as a long-range vision,’ he told AFP.
Analysts said Asia is also watching whether Congress will renew the US president’s fast-track trade negotiating powers, or Trade Promotion Authority (TPA), which expires on July 1.
Absence of the TPA will clip Washington’s ability to negotiate more FTAs.
If the authority is renewed, Japan is likely to be interested in an FTA with the United States, Morrison said.
China might be ’a long way off’ from being a free-trade partner for Washington as Beijing is likely to have difficulty meeting US labour and environmental expectations, he added.
’But certainly Japan and China will also have an interest in FTAs with Korea so the US-Korea agreement could be an impetus to further FTAs in Northeast Asia,’ Morrison said.
Spicer said the US would welcome FTAs among its Asian trading partners ’so long as they are consistent with the WTO and do not exclude the United States.’
