Pacific Currents

Malcolm Cook
Senior Fellow, Institute of Southeast Asian Studies

APEC leaders’ tightening embrace of the Free Trade Area of the Asia Pacific proposal first floated by the APEC Business Advisory Council in 2004 offers APEC a unique opportunity for renewal and strengthening through expansion.

In 2010, APEC leaders ordered APEC to become “an incubator of an FTAAP by providing leadership and intellectual input into the process of its development” with the guiding principle that FTAAP should build on existing regional trade liberalization processes involving APEC members. (http://www.apec.org/Meeting-Papers/Leaders-Declarations/2010/2010_aelm.aspx ). These are the so-called pathways to an FTAAP. In 2014, FTAAP became the centrepiece of an APEC leaders meeting for the first time with leaders committing to “launch a collective strategic study on issues related to the realization of the FTAAP” that is scheduled for leaders consideration at APEC 2016. (http://www.apec.org/Meeting-Papers/Leaders-Declarations/2014/2014_aelm.aspx ).

Christopher Findlay
Executive Dean of the Faculty of the Professions at the University of Adelaide
Vice-Chair of AUSPECC

There is strong evidence that businesses are doing things differently.  Production processes are being organized into a series of value adding steps in different locations, organized in what is being referred to as Global Value Chains. These chains offer new opportunities for developing economies to enter global markets, and provide options for adjustment to economies at later stages of developing undergoing structural change. They offer finer options for capturing the benefits of differences in competitiveness in production process and better growth prospects as a result.

Data from the ADB shows over the period 1995 to 2008 that, while the rate varies a lot, the participation in GVCs in nearly every Asian economy increased¹. An exception was Hong Kong, whose position remained stable, having already developed a sophisticated system of production and distribution.  Participation measures here refer to the extent to which imported inputs are used in local production and to which outputs are inputs into production elsewhere.  The phenomenon is relevant to goods production but also applies in services.

Narongchai Akrasanee
Minister of Energy, Thailand
Chair, Thailand National Committee of Pacific Economic Cooperation (TNCPEC)

Asia-Pacific Economic Cooperation (APEC) is 25 years old this week and the leaders of its 21 member economies, the world’s largest regional economic group, will be hosted by China’s President Xi Jinping in Beijing to celebrate.

Although officially APEC is 25 years old, the so-called APEC attempt, or attempt at economic cooperation among the Asia-Pacific economies (countries) began more than 40 years ago.

The first group of people who saw the benefits of economic cooperation in Asia-Pacific was businesspeople. They saw the opportunity for trade and investment, or the opportunity to make money. This is not unlike the Arab/Indian merchants who sought trade cooperation with Southeast Asia more than 1,000 years ago or the merchants along the famous Asian Silk Road. Another route of development that eventually reached to APEC was through academia, through the development of public-policy thought.

Jusuf Wanandi
Co-Chair Pacific Economic Cooperation Council

The Asia-Pacific Economic Cooperation (APEC) forum celebrates its 25th anniversary this year. This milestone presents a chance for reflection on achievements as well as the future. Although most think of APEC in terms of the Bogor Goals of free trade and investment, these were the chosen means to an end — that end being “accelerated, balanced and equitable economic growth not only in the Asia-Pacific region, but throughout the world as well”.

Since 1989, the average income in the region has tripled from around US$5,000 to above $15,000. Asia- Pacific is now the world’s strongest growth center. The non-OECD economies of Asia-Pacific, notably China, have evolved into great traders. Asia-Pacific has also caught up very fast in the origination and hosting of the cross-border flows of capital and people. More importantly, the number of people living on less than $2 a day in the region has dropped from close to 1.2 billion to 412 million.

Malcolm Cook
Senior Fellow, Institute of Southeast Asian Studies

If Indian Prime Minister Modi accepts Chinese President Xi’s surprise (to the other members of APEC and to India) invitation to attend the APEC Leaders Meeting in Beijing in November, it will bring India closer to its twenty-year goal of becoming an APEC member economy. In 2005, I supported the  continued thwarting of this Indian aspiration for what I thought were sound, APEC-based reasons. (http://www.lowyinstitute.org/publications/how-save-apec)

Nine years on, the regional trade diplomacy picture has fundamentally changed while APEC has not. The Doha Round’s continuing comatose state has underpinned a continuing proliferation of bilateral preferential trade deals and an attempt at an Asia-Pacific regional trade deal (the Trans-Pacific Partnership) and an ASEAN-based, East Asian one (The Regional Comprehensive Economic Partnership).

Amitendu Palit
Head (Partnerships & Programmes) and Senior Research Fellow
The Institute of South Asian Studies (ISAS)

India is not a member of the APEC notwithstanding its long history of cultural and commercial exchanges with several APEC members. While this might seem odd, the absence is not difficult to explain.

India was hardly a blip on the region’s radar when the ‘flying geese’ began fanning their wings after the 2nd World War, drawing struggling economies with colonial pasts into a well-knitted architecture of explosive export growth combining cheap labour, embodied technology and disciplined organization practices. India’s inward-looking defensive trade policy, coupled with commitment to non-alignment and ideological discomfort with laissez faire and open trade policies, ensured its distance from the APEC remained far and unbridgeable.

Kenichi Kawasaki
Consulting Fellow, Research Institute of Economy, Trade and Industry (RIETI)
Senior Fellow, National Graduate Institute for Policy Studies (GRIPS)
Adjunct Fellow, Japan Institute of International Affairs (JIIA)

Summary
Quantitative studies using an economic model show the Trans-Pacific Partnership (TPP) and Regional Comprehensive Economic Partnership (RCEP) complement each other rather than be competitors toward the establishment of the Free Trade Area of the Asia-Pacific (FTAAP).  Breaking down the sources of those macroeconomic benefits by the policy measures of Asia-Pacific Economic Cooperation (APEC) member economies showed that the contribution by China would be the largest.  Nonetheless, in many countries of Association of South‐East Asian Nations (ASEAN) and outside this region, contributions by a country’s own initiatives will be much larger than those by its trade partners, including China.  Meanwhile, larger economic benefits are expected from NTMs reductions in addition to tariff removals.  It is thus suggested that domestic reforms are essential in order to enjoy the macroeconomic benefits of international Economic Partnership Agreements (EPAs). 

Hugh Stephens, Vice-Chair, CANCPEC

Don Campbell, Co-Chair of PECC and Chair, CANCPEC

Published: December 12, 2013 in Canada-Asia Agenda

Abstract:

On October 18, Canada and the EU announced an agreement on the provisions of a Canada-EU Trade Agreement (CETA). The concessions that Canada was willing to make for the CETA may indicate a path forward in terms of finding the balance necessary to achieve a winning outcome with Asia Pacific countries, especially through Trans- Pacific Partnership (TPP) Agreement.

Hugh Stephens
Vice Chair, CANCPEC
Fellow of the Canadian Defence and Foreign Affairs Institute
Executive-in-residence at the Asia Pacific Foundation of Canada

[Published in iPolitics, January 14, 2014]

The failure of Trans-Pacific Partnership (TPP) trade ministers to conclude the TPP agreement this past December in Singapore no doubt pleased many critics of the agreement.

Criticisms have been widespread — ranging from the ‘secrecy’ of the negotiations, to possible limits on national sovereignty arising from required changes to Canadian law, to wild accusations that it will undermine Internet freedom for Canadians. The Council of Canadians, never a friend of trade liberalization, has had particularly harsh words for the TPP.

Steven CM Wong
Senior Director, ISIS Malaysia

LOGIC: The more extensive and deeper an agreement is, the more likely it is to be the de facto standard

How does the Trans-Pacific Partnership (TPP), now being negotiated among 12 Asia-Pacific countries, including four from Asean, impact the latter's  Regional Comprehensive Economic Partnership (RCEP)?

It is easy to claim, as some have done, that both are building blocks towards freer trade. But are they really? This claim is further doubtful if the two blocks are of different size, weight and degree of ambition.

Ippei Yamazawa
Professor Emeritus, Hitotsubashi University, Japan

This year Indonesian host has tried to highlight the Bogor Goals so that we have been invited to report directly our IAP review study at Committee for Trade and Investment (CTI) Workshop in Medan, ABAC3 in Kyoto, and ASCC in Jakarta, that is all tripartite stakeholders , officials, business, and academics in July. By and large our report was welcomed and mentioned in the recommendation letters by the last two to the APEC Leaders.

Hugh Stephens
Vice Chair, CANCPEC (Canadian National Committee for Pacific Economic Cooperation)
Fellow, Canadian Defence & Foreign Affairs Institute (CDFAI)

On April 24-25, 2013 the Association of Southeast Asian Nations (ASEAN) will hold its 22nd Leaders’ Summit in Brunei Darussalam. ASEAN, comprised of ten nations in the heart of Asia (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam) has been around since 1967 but it is only in recent years that it has taken on its role as the linchpin of economic growth and trade in the region.

Dr. Manfred Wilhelmy
Chairman CHILPEC (Chilean National Committee for Pacific Economic Cooperation)

The Pacific Alliance (PA) was established in Lima, Peru in April 2011. The founding members were Peru, Mexico, Colombia and Chile, represented by their Presidents Alan García, Felipe Calderón, Juan Manuel Santos, and Sebastián Piñera, respectively. The new Mexican President, Enrique Peña Nieto, has given his full support to the initiative.

Observers to the PA include Panama (which may become a full member), Costa Rica, Uruguay and Guatemala, among Latin American economies. Outside of Latin America, Canada, Australia, New Zealand, and Japan are important Pacific nations that have joined as observers.

Mr. Ian Buchanan
Chairman AusPECC (Australian Pacific Economic Cooperation Committee)

"Those who cannot remember the past are condemned to repeat it," said philosopher George Santayana. The aim of this paper is to draw lessons from Asia's supposed "growth miracle" by disaggregating when, where—and why—growth occurred to better understand the roles of exogenous factors versus domestic policy choices.

Our thesis is that the post-World War II "miracle" growth shared by many regional economies was a result of a unique set of circumstances linked not to their "Asian-ness"—but to exogenous, geo-political, developments and, in particular, to the Cold War.

World Economic Forum report on Global Value Chains

The Shifting Geography Of Global Value Chains: Implications For Developing Countries And Trade Policy*

Context

Two contradictory trends are at work in the global economy. First, globalization through multinational corporation (MNC) production networks continues apace. This promotes convergence and integration. The global value chains they operate have become the world economy’s backbone.

The second trend pertaining to economic crisis policy responses is one of divergence. Associated with this is the threat of a spiral of protectionism and consequent disintegration, impacting the most vulnerable and trade-dependent states in particular. This highlights the role the World Trade Organization (WTO) has played in stemming the tide of protectionism.

Ippei Yamazawa
Professor Emeritus, Hitotsubashi University, Japan

Negotiations for three economies’ accession to the TPP have started toward its final stage. While Canada and Mexico will clear additional hurdles of liberalization easily thanks to their membership of NAFTA, Japan is reported to face strong requests by the U.S. and Australia on her liberalization of agricultural products. Nevertheless, all existing members of the TPP negotiation welcome the three economies’ accession in principle since it will increase the scale economy merit of TPP.