APEC mulling vast FTA, while pounding protectionism

APEC mulling vast FTA, while pounding protectionism

Yokohama:Free trade is the big issue in Yokohama this week, 150 years after US Commodore Matthew Perry’s “black ships" arrived in the port city and forced Japan to open up to the rest of the world.

Foreign and trade ministers from the 21-member Asia-Pacific Economic Cooperation (APEC) forum begin talks on Wednesday about taking steps towards creating a vast, and even legally binding, free trade area.

They are also expected to adopt a long-term vision for economic growth in the region that is “sustainable, balanced, inclusive, innovative and secure", the APEC secretariat said.

The Free Trade Area of the Asia-Pacific (FTAAP) would include the world’s three biggest economies - the United States, China and Japan - and some of the fastest-growing emerging markets, such as Indonesia, Thailand and Mexico.

The ministers are also expected to express concern about trade protectionism, with the recovery from the 2008 global financial crisis still uneven and uncertain, and once again declare their support for the long-stalled Doha round of trade liberalisation talks.

“It is time to move to the end game," Australian trade minister Craig Emerson said on Tuesday about the Doha talks.

An earnest call to urgently revive the comatose talks, launched in 2001 and once targetted to end in 2005, has been an annual feature of APEC meetings for years.

Some APEC members see the FTAAP as the fallback option should the Doha round ever be declared well and truly dead.

It would be easily the world’s biggest FTA. APEC economies account for 53% of world economic output, 44% of world trade, and 40% of the planet’s population.

Perry’s historic voyages to Japan in the 1850s in black-hulled steamships launched an unprecedented period of trans-Pacific trade in the 19th century and brought Japan out of its 200-year period of isolation.

Proponents of an FTAAP say it would do something similar, by preventing a line from being drawn down the middle of the Pacific between an emerging East Asia trade group and NAFTA, or the North American Free Trade Agreement.

A Japanese government official said on Monday APEC officials were debating whether to make the FTAAP a legally binding agreement - the first time the toothless organisation has ever considered giving itself real powers.

Currency Wars

The ministers are meeting ahead of a G-20 summit of rich and emerging economies in Seoul on Thursday and Friday and a weekend summit of APEC leaders in Yokohama.

The G-20 leaders will be eager to show they have not lost the cooperative spirit forged during the depths of the financial crisis. The APEC leaders, for their part, always put on a show of of solidarity and bonhomie even if their declarations are long on rhetoric and short on substance.

The goodwill may not last long. Plenty of fingers are being pointed in the run-up to the meetings over what is being called the “currency wars". China warned on Tuesday the US Federal Reserve’s $600 billion bond-buying programme could destabilise the global economy and inflate asset bubbles.

Both US President Barack Obama and China’s President Hu Jintao will be at the summits in Seoul and Yokohama.

Host Japan has its own headaches with China.

Ties have been strained since September when Japan detained a Chinese trawler captain whose boat collided with Japanese coast guard ships near a chain of disputed islands that are close to vast potential oil and gas reserves.

Japan’s Prime Minister Naoto Kan has sought a bilateral meeting with his Chinese counterparts to sort out the spat. Beijing said on Monday it has made no plans for a meeting.