3 - The Political Economy of a Free Trade Area of the Asia-Pacific: A U.S. Perspective

Summary

INTRODUCTION

What are the prospects for a Free Trade Area of the Asia-Pacific (FTAAP)? This paper addresses this question from the perspective of the political economy of U.S. trade policy and the current role of the Asia Pacific Economic Cooperation Forum (APEC). To preview my argument, although such an agreement may well be beneficial from a narrowly economic standpoint, the reality of U.S. trade politics, of relations between Northeast Asian economies, and of APEC's relative institutional weakness make it highly unlikely that an FTAAP will come to fruition in the short to medium term, regardless of whether the Doha Round of the World Trade Organization (WTO) is successful or not. Moreover, even the tactical use of an FTAAP to advance the WTO agenda is likely to backfire and simply further undermine prospects for successful completion of the Doha Round. Instead, I suggest that APEC should play an active role in monitoring the proliferation of bilateral trade agreements in the region and work to promote the multilateral trade agenda.

To briefly elaborate, the logic of my argument runs as follows. With respect to the current U.S. political economy of trade, two developments are of particular significance. First, the U.S. strategy of “competitive liberalization” in which it pursues bilateral and minilateral agreements, both sectorally and broadly, with the intent of stimulating the multilateral path of the WTO has fractured the domestic coalition for free trade. Ironically, in their zeal to push forward the agenda of free trade — an agenda which I share — proponents of competitive liberalization have undermined the very movement to free trade that they so ardently advocate through a politically naïve understanding of trade politics. Creating piecemeal liberalization through open sectoral agreements such as the Information Technology Agreement (ITA) and bilateral trade agreements has undercut the coalition for free trade. By giving specific industries what they wanted, this policy has left protectionists in agriculture, steel, textiles, and others in control of the trade agenda.