The proposed Free Trade Area of the Asia-Pacific (FTAAP) is a regional free trade agreement across the Asia-Pacific area that would result in vastly increased commercial activity and economic growth. The growth in trade and economic expansion could potentially surpass the projected growth of other similar regional free trade areas, such as the ASEAN Plus Three. The FTAAP would eliminate trade tariffs between 21 member economies of the Asia-Pacific Economic Cooperation (APEC) forum, an entity whose territory spans from Australia to Canada, and from the Russian Federation to Peru.
FTAAP – Decades in the Making and Still Not Quite There
Any dissection of the FTAAP must begin with an understanding of the APEC forum. APEC is comprised of 21 economies in the Pacific Rim. Together, they promote free trade policies in the Asia-Pacific region, and have done so since 1989 when the forum was first established. Its creation came in response to the increasing interdependence of economies within the Asia-Pacific region. Additionally, APEC was seen as the Asia-Pacific answer to the growing number of nascent trade blocs cropping up regionally in other parts of the world at that time. The members also hoped that consolidating their economies via a mutually beneficial forum would prevent the prospect of Japan – already a highly industrialized G8 member – from achieving economic dominance in the region. Essentially, APEC strives to engender economic harmony and prosperity in the Asia-Pacific region by championing open and free trade and increased economic integration.
The forum is responsible for the first official talks about creating the FTAAP. This discussion took place at the forum’s 2006 summit; however, the first mention of the FTAAP was mooted decades earlier – in 1966, the Japanese economist Kiyoshi Kojima pitched the idea of an Asia-Pacific free trade agreement. Although his idea gained no momentum initially, it did set the first stone on a path that has led to serious FTAAP talks; today it is no longer an idealistic concept, but more of a tangible agreement that gathers steam with every round of talks.
That said, the FTAAP still has a few stumbling blocks to hurdle before it can become a reality. Ironically it is other existing, or in-the-works, trade agreements that are stifling its progress. In 2007, the Southeast Asia and the Asia-Pacific region were home to some 60 free trade agreements, another 117 were undergoing negotiation. By 2012, ASEAN+6 states had notched up 339 free trade agreements, and many of them were bilateral. All of this means that this raft of trade agreements has led to a muddled state of affairs, whereby conflicting interests and overlapping deals make a single, uniform agreement for the whole region a more difficult task. The FTAAP is the one-size-fits-all solution to this economic conundrum. However, unravelling the existing deals and forming one holistic agreement that meets the interests of all parties involved is easier said than done.
How can the FTAAP Become a Reality?
At the end of 2014, APEC leaders displayed a renewed sense of purpose relating to the FTAAP, endorsing the ‘Beijing Roadmap for APEC’s Contribution to the Realization of the Free Trade Area of Asia-Pacific FTAAP’ in order to “translate the vision of the FTAAP into reality”. The roadmap is charged with conducting an extensive examination of the conditions which hinder and help any conclusion to the FTAAP, and the study has until the end of 2016 to reveal its findings. The APEC forum hopes that this methodical study will show them the way to turn the FTAAP from a tricky but desired prospect, into a real free trade agreement for the Asia-Pacific region.
If you are interested in learning more about trade co-operation in the Pacific Rim region beyond the FTAAP, then read the GED Project team’s take on the Pacific Alliance.
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