A Post 2010 Trade Agenda for the Asia-Pacific: PECC-ADBI-IDB Conference

"America and Europe cannot be the strong engines for global trade and investment for some time to come, and the need for new sources of growth from domestic and regional markets has made regional economic integration more appealing than ever", Masahiro Kawai, Dean and CEO of the Asian Development Bank Institute (ADBI), said at a two-day conference entitled "A Post 2010 Trade Agenda for the Asia-Pacific" held at ADBI on 6-7July 2010. The conference was jointly organized by the Pacific Economic Cooperation Council (PECC), ADBI and the Inter-American Development Bank (IDB). Policy makers and leading trade scholars from Asia-Pacific Economic Cooperation (APEC) economies participated in the conference that discussed various aspects of regional economic integration in Asia-Pacific.

Yorizumi Watanabe, professor at Keio University (Tokyo), assessed the role of the World Trade Organization (WTO) in light of the stalled Doha Development Agenda (DDA) and the proliferation of regional trade agreements (RTAs). The discussion that followed underscored the importance of the WTO as a rules-based institution, but it was believed that much of the potential trade gains would result from the various regional trading arrangements. Discussing "Climate Change and Trade", Gary Hufbauer, senior fellow at Peterson Institute of International Economics (Washington DC), suggested temporary 'peace clauses' in leading WTO members' national climate legislations and in exercising WTO countermeasures while the United Nations Framework Convention on Climate Change (UNFCCC) and WTO negotiators make headway on establishing multilateral rules. He predicted that in the absence of binding international agreements, countries are likely to adopt a wide range of policies which are tailored to fit a multitude of differing circumstances.

Shujiro Urata, professor at Waseda University, provided an analysis of the investment environment in the Asia-Pacific region based on business environment surveys carried out by the World Bank and the World Economic Forum, surveys of Japanese firms with FDI in the Association of Southeast Asian Nations (ASEAN), and current FDI laws in the region. He concluded that services sectors, more than manufacturing sectors, need to be further liberalized, and that facilitation measures (i.e., increasing transparency, simplifying procedures, etc.), more than liberalization measures, pose as greater barriers for inward investments. Jane Drake-Brockman, former Australian WTO negotiator, made the case for quickly concluding the DDA and starting a new services negotiation divorced from other sectors, to avoid the services sector being held hostage by an impasse in negotiations on agriculture. Sherry Stephenson, director at the Organization of American States (OAS), pointed out a "limited opening for labor" in many preferential trade agreements entered into by APEC economies, especially in free trade agreements (FTAs) between developing APEC partners. She did note some innovations in dealing with the movement of natural persons, however, such as the inclusion of certain categories of technicians or of spouses. She suggested that a possible APEC-wide FTA could be a catalyst and a significant vehicle for actual labor market opening, particularly when professional or technical categories are included in the agreements with no quota limitations.

In discussing various East Asian FTAs, Ganeshan Wignaraja, principal economist at the Asian Development Bank (ADB), showed that gains from ASEAN+6 FTAs are larger than those from ASEAN+3. Chia Siow Yue, senior economist at the Singapore Institute for International Affairs, raised the issue of the future inclusion of Hong Kong, China, Taipei,China, and Mongolia in the integration process.

Antoni Estevadeordal, manager of the Integration and Trade Sector at Inter-American Development Bank (IDB), brought the Latin American and Caribbean (LAC) perspective into the discussion. Fernando Gonzalez-Vigil, professor at the Universidad del Pacifico in Peru, discussed the Trans-Pacific Partnership (TPP) negotiation and argued that TPP can be a strong platform for Asia-Pacific economic integration.

Deborah Elms, assistant professor at Nanyang Technological University, gave an in-depth discussion of the TPP negotiation among potential partners, namely Singapore, New Zealand, Chile, Brunei Darussalam, the United States (US), Australia, and Peru. She analyzed the much touted "21st Century", "high quality agreement" that is being viewed as a potential template for a future Free Trade Area of Asia and the Pacific (FTAAP). Peter A. Petri, professor at the Brandeis International Business School, underscored the fact that TPP is an important vehicle for US presence in the region. But a comment from the floor raised the issue that TPP might just serve US interests and could undermine the ASEAN-centric integration process in East Asia.

Soogil Young, president of National Strategy Institute (Korea), provided a Northeast Asian perspective on East Asian economic integration and argued that the processes of forming a "PRC-Japan-Korea (CJK) FTA" and of forming an "ASEAN+3 FTA" should advance simultaneously. Zhang Jianping, senior fellow at the National Development and Reform Commission (NDRC) (People's Republic of China), argued that mutual strategic, political, and economic trust should be promoted as these are the most critical factors for successful East Asian integration. Yokiko Fukagawa, professor at Waseda University, argued that realizing a CJK FTA presents a serious challenge because of lingering 'distrust', particularly between Japan and the PRC.

Djisman Simundjuntak, professor at Prasetiya Mulya Business School (Jakarta), gave ASEAN's perspective on regional integration. He pointed out the deep social and economic gaps among countries in the region that hinder deep integration and hamper ASEAN leadership in larger regional FTAs. He underscored the importance of ASEAN+3 FTA as a core 'attractor'.

In his keynote address, Mahendra Siregar, Indonesian vice-minister of trade, emphasized the need for ASEAN to look beyond the trade agenda and bewailed its weak institutional structure. Vinod Aggarwal, professor at the Haas School of Business of the University of California at Berkeley, provided a framework for analyzing Asia Pacific institutions formed from various trade and economic agreements. Rob Scollay, professor at University of Auckland, analyzed the various impediments to the different tracks of regional integration.

A concluding panel reiterated points of consensus, such as the importance of WTO-DDA and building an ASEAN Economic Community. It also summed up the issues and areas where views were still unclear or divided, such as whether East Asia FTA (EAFTA) (equivalent to ASEAN+3) should be realized first, or whether the Comprehensive Economic Partnership in East Asia (CEPEA) (equivalent to ASEAN+6) should be put in place simultaneously, and whether East Asia should join the TPP initiative. A lively discussion about the centrality of ASEAN in the different FTA configurations ended the conference.