The Rebirth of APEC

By+An+Gang

When Singapore， New Zealand and Chile announced the official launch of the Pacific Three Closer Economic Partnership （P3-CEP） negotiations 12 years ago during the Economic Leaders Meeting of the Asia-Pacific Economic Cooperation （APEC） in Mexico， they could not have anticipated that their cooperation initiative would one day spiral into a geopolitical competition.

The initial aim of the P3-CEP negotiation was to explore a voluntary free trade project under the APEC framework.

In 1994， the APEC leaders meeting held in Bogor， Indonesia， set goals for industrialized member economies to achieve a system of free and open trade and investment by 2010 and for developing economies to do the same by 2020. Later， the vancouver leaders meeting in Canada in 1997 endorsed a proposal for Early voluntary Sectoral Liberalization in 15 sectors. However， due to the Asian financial crisis in 1997-98 and the international financial crisis in 2008-09， a new wave of protectionism emerged， thus slowing the trade liberalization among APEC members. Additionally， the WTOsponsored Doha Round of multilateral trade negotiations also reached an impasse. Against this backdrop， some small and middle-sized economies that firmly support trade liberalization and economic globalization decided to commit to smaller-scale multilateral trade liberalization practices. Regional and sub-regional， bilateral and multilateral free trade negotiations have since sprung up gradually.

With the addition of Brunei in 2005， P3-CEP developed into the Trans-Pacific Strategic Economic Partnership Agreement （TPSEP）.

Washingtons wishes

In 2008， the George W. Bush administration expressed the United States interest in joining TPSEP negotiations and gradually promoted it into a proposed Trans-Pacific Partnership （TPP）. In 2009， the U.S. Government led by President Barack Obama officially announced participation in TPP talks. So far， 12 countries have joined the negotiations over a total of 21 rounds.

Though the United States was a latecomer in TPP negotiations， it has used its influence to dominate the scene and pressure all participants to reach a framework agreement by the end of this year. The Obama administrations enthusiasm for the proposed agreement is driven by both trade and strategic concerns. The United States is determined to forge the TPP into a high-quality， high-standard and broad-based free trade agreement. In addition to traditional trade and investment liberalization issues， the TPP will also involve regulation of financial services， government procurement， intellectual property protection， state-owned enterprises， market access， environment， labor issues， and so on， which will not only facilitate the expansion of U.S. exports but also set new standards for global trade.

The TPP will also serve as an important part of the Obama administrations “Pivot to Asia” strategy， attempting to shift the direction of the booming East Asian economic integration by luring regional economies into the U.S.-led Asia-Pacific regional institutional construction. By excluding China from the TPP， the United States intends to dilute Chinas increasing influence in the region.

Washington attaches great importance to the Asia-Pacific region and places high hopes on the TPP， hence its moves to prevent the rise of any regional economic group that excludes the United States. Ultimately， Washington wishes to reshape the global trade pattern based on its own will. While pushing hard for TPP negotiations， the United States has also sped up negotiations with the EU on the Transatlantic Trade and Investment Partnership， seeking a U.S.-EU free trade zone. The United States also leads the global Trade in Service Agreement negotiations. If the United States fulfills its plans， the layout of global trade will undergo a major transformation.

The TPP has marked a change from the traditional negotiation mode of mutually exchanging market access， attempting to set new rules for regional economic integration—a feature that regional economies recognize for its potential longterm significance. However， most Asia-Pacific economies are unwilling to put all their eggs into one basket. On the one hand， they welcome TPP negotiations； and on the other hand， they also actively participate in bilateral trade negotiations and multilateral talks within frameworks such as the Association of Southeast Asian Nations （ASEAN）， the East Asia Summit， ASEAN+1 and ASEAN+3. These negotiations vary in terms of their respective standards and scope， representing a diverse array of free trade experiments in the region.

Regional solutions

In 2006， Japan proposed the Comprehensive Economic Partnership in East Asia on the basis of East Asian cooperation， attempting to compete with Chinas proposal of an East Asia Free Trade Area on the basis of the ASEAN+3 group（ASEAN plus China， Japan and South Korea）. Both initiatives are aimed at establishing an East Asian community. When TPP negotiations gained momentum， some East Asian economies including Japan， Singapore， Malaysia， viet Nam and the Philippines joined the talks； but in the meantime， to maintain its lead role in East Asian cooperation， ASEAN as a whole began to promote negotiations for the Regional Comprehensive Economic Partnership （RCEP）.

With the ASEAN Free Trade Area （FTA） at the core， the RCEP is a proposed free trade agreement between the 10 ASEAN members and six economies with which ASEAN has existing FTAs including China， Japan， South Korea， India， Australia， and New Zealand. The RCEP will feature broader and deeper engagement with significant improvements of the existing five ASEAN+1 FTAs， while recognizing the individual and diverse conditions of participating economies. It aims to create a high-quality， modern FTA that will add new elements including trade in services， intellectual property protection and competition policies on the basis of existing FTAs. While member economies hold talks on the RCEP， bilateral free trade negotiations are underway between ASEAN and its partners， as well as talks on a China-South Korea free trade agreement and a China-Japan-South Korea FTA.

Although TPP and RCEP members mostly overlap one another， the United States and China—the worlds two largest economies—have only participated in one of the two platforms respectively. Therefore， the two platforms will unavoidably compete for the dominance in regional trade liberalization efforts. While the threshold of the RCEP is relatively low and market openness among member states is high， some regional economies such as Japan， viet Nam and the Philippines might focus more on TPP negotiations owing to their own strategic considerations as well as current strained relations with China， which have somewhat weakened their resolve to promote the RCEP process.

The Asia-Pacific region has been dubbed the worlds “Rim of Hope.” The focus of global economic development and strategic security are shifting rapidly to the east. However， due to differences in culture， social systems and economic development levels within the region， both the TPP and RCEP face difficulties in coordinating various interests. Perhaps neither the TPP nor the RCEP can become the sole dominant platform for Asia-Pacific regional trade liberalization， but there is possibility for the two to integrate with each other. China hopes the RCEP agreement could be reached by the end of 2015， but also stressed that it is open to the TPP and believes that the two are not mutually exclusive but could rather stimulate each other. In addition， the Obama administration also publicly expressed that China is welcome to join the TPP.

The upcoming 2014 APEC leaders meeting in Beijing could play an active role in promoting the integration of the TPP and RCEP by promoting the Free Trade Agreement of the Asia- Pacific （FTAAP）. As the most important regional cooperation organization， APEC first proposed the FTAAP as early as in 2004. In 2006， APEC leaders Hanoi Declaration made the FTAAP a long-term vision for study. China has chosen“Jointly Build a Future-Oriented Asia-Pacific Partnership” as the theme of this years APEC leaders meeting. It is hoped that the meeting could officially launch a feasibility study of the FTAAP， by which it can create substantial progress in regional economic integration， taking a key step toward building a trans-Pacific cooperation framework that benefits all.

Perhaps in the future， when people review the process of trade and investment liberalization in the Asia-Pacific， they will see that the TPP and RCEP were the two wheels of the FTAAP that APEC drove in the late autumn of 2014 in Beijing.

Most participants of the TPP and RCEP would prefer to see one negotiation process that promotes others rather than an intertwined mass of preferential trading arrangements and rules of origin that create a confounding web of interests. Above all， they know clearly that any discriminatory and exclusive multilateral institutional arrangement would critically damage the economy and strategic security of the AsiaPacific region. They do not want the choosing of sides to encourage the trend of intra-regional competition. Ultimately， the future of regional trade and investment liberalization as well as regional security depends largely on the mutual cooperation and coordination between the worlds two largest economic powerhouses .