The ongoing talks about creating a free trade area, covering the Asia-Pacific region, need strategic reviewing. It may end up an exclusionary and bloc-oriented accord. It may go against the Doha Round of multilateral trade negotiations. Consultations with the World Trade Organization, the Asia-Europe Summit and G20 forum are necessary.
The trans-Pacific FTA gathers momentum with Japan's decision to participate in the talks as an observer last week. As expected, the United States is proactive in the proposal. Under the Trans-Pacific partnership (TPP), only nine countries on the Asia-Pacific rim are moving to create a free trade area. They set the deadline of next November to remove existing tariffs among themselves by 2015 before moving toward a full-scale FTA accord.
Brunei, Chile, New Zealand and Singapore were original TPP members when they formed the group in 2005. Five additional countries, Australia, Malaysia, Peru, the United States, and Vietnam, joined the group. The nine countries are among the 21 members of the Asia-Pacific Economic Cooperation (APEC). It is neither under an APEC initiative nor does it fall within the APEC agenda.
TPP's success hinges on three principles. It should open its door to all APEC members, including China. It should be compatible with the WTO-initiated free trade rules. It should not invite the ire of the other regional blocs like ASEAN, ASEM, G20 and other multilateral organizations or blocs.
President Lee Myung-bak has indicated that Korea will consider joining the group. U.S. President Barack Obama has made it clear to conclude the TPP negotiations in order to shape a high-standard and broad-based regional pact.
China seems to be nervous over the TPP as Washington might exploit the deal to check the emergence of the world’s second largest economy.
It will be encouraging to see the joining of all-inclusive Asia-Pacific countries in creating a regional free trade area. Namely the APEC will evolve toward the Asia-Pacific free trade area, which should be linked to other regional free trade areas, including Europe. All bilateral, regional and multilateral FTAs must be mutually compatible, inclusive and universal.
The TPP should give impetus to the successful conclusion of the Doha Round of multilateral trade negotiations. It may take time for all APEC members to join the regional free trade bloc. Some of the APEC countries could initially launch the pact, and the rest of the nations will join it later.
Once the FTA is launched in the Asia-Pacific region, about 40 percent of global trade will be made without tariffs and quotas. This will become an engine to stimulate the global economy now in a painful transition from the most serious downturn since the Great Depression in 1939.
Seoul seems to have little to lose through its participation in the TPP since Korea wants to become an FTA hub. A successful conclusion of Korea-U.S. FTA will add impetus to Seoul’s joining the TPP.