6 - Towards the Free Trade Area of the Asia-Pacific (FTAAP)

Summary

We have seen APEC's progress in its main activity, trade investment liberalization and facilitation in Chapters 2, 4, and 5. APEC met its midterm Bogor Goals in 2010 and has started to tackle the post-Bogor agenda, that is, to pursue deeper liberalization and facilitation in the form of FTAAP and the Trans-Pacific Strategic Partnership (TPP), as well as broader cooperation in pursuit of greater economic growth.

In 2006 the APEC Business Advisory Council (ABAC) proposed a greater free trade area (FTA) covering all of the APEC economies (ABAC 2006). It aimed to promote the integration of all the FTAs that had mushroomed in the region over the past decade, thus creating a greater single market to achieve the maximum scale economy. The joint ABAC/Pacific Economic Cooperation Council (PECC) report of the same year (ABAC/PECC 2006) included both pros and cons of the FTAAP. Fred Bergsten, Director of the Peterson Institute of International Economics, Washington D.C., expressed his concern about the hobbled negotiations of the World Trade Organization (WTO)/Doha Development Agenda (DDA), and recommended FTAAP as a “Plan B” in preparation for the failure of the DDA and resulting vacuum of liberalization momentum in the region (Bergsten 2006). On the other hand, Charles Morrison, the American Chair of PECC, represented a majority view of PECC academics, indicating practical difficulty in conducting liberalization negotiations within APEC and insisting on the pragmatic strategy of the Busan Roadmap (Morrison 2006).

Bergsten served as the chair of APEC/EPG (Eminent Persons Group) from 1993 to 1995 and actively led the liberalization momentum within APEC then. The momentum heightened to the Bogor Declaration in 1994 and he planned to achieve it by negotiating an FTA (see Chapter 2 for details). However, in the following year the Japanese host invented the concept of “concerted unilateral liberalization” (CUL) within the Osaka Action Agenda, which disappointed many Americans, including Bergsten. I conjecture that after ten years he has resumed his original proposal together with American ABAC members. Of course FTAAP implies that APEC should quit its CUL modality and convert it to a legally binding FTA.