APEC Leaders Seek Pacific-Wide Free Trade Zone
From tiny Brunei to rising powerhouse China, the 21-member Asia-Pacific Economic Cooperation forum unanimously pledged to avoid raising more trade barriers and to roll back those they may have erected in the midst of crisis.
"We reaffirm our unwavering commitment to achieving free and open trade and investment in the region," the leaders said in a declaration released after their two-day summit ended Sunday. "We must take steps to build a foundation for stronger, more sustainable and more balanced growth in the future."
The show of unity contrasted with the discord over currencies seen days before at a Group of 20 summit held in South Korea. But worries over the frailty of the recovery seemed to lend urgency to the push for freer trade.
"The recovery is not solid, and imbalances are causing great uncertainty," Chinese President Hu Jintao told the other leaders, according to a text of his speech. "The employment situation in developed countries is grim, and emerging markets face inflationary pressures and asset price bubbles."
The leaders agreed to "take concrete steps toward realizing a Free Trade Area of the Asia-Pacific," according to their declaration, with Japanese Prime Minister Naoto Kan saying the rough target year was 2020.
Such a sprawling free trade zone -- which would slash tariffs on imports of everything from automobile parts to food -- would encompass all 21 economies, covering more than half the world's economic production and two-fifths of its trade.
This goal should build on regional groupings such as the Trans-Pacific Partnership, a U.S.-backed free trade agreement that nine APEC members are negotiating, and ASEAN Plus 3, which groups the 10-nation Association of Southeast Asian Nations with Japan, China and South Korea, the statement said. It would not be forged through APEC, which has no negotiating power.
But achieving such a huge free trade zone is a highly complicated endeavor given the region's diversity, vested interests opposed to opening markets, and broader sources of friction.
The U.S., Australia, Malaysia, Vietnam and Peru are negotiating to join the TPP bloc, which currently brings together the small economies of Chile, New Zealand, Brunei and Singapore.
Cutting tariffs and reducing other trade barriers can boost economic growth by giving companies easier access to other markets, both to sell their products and to invest. Greater trade and investment can create jobs, but competitive pressures can also threaten livelihoods.
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