APEC Vaporware: Free Trade Area of the Asia-Pacific

Put 'er there, pal, put 'er there (which is precisely nowhere).

This is a quick interjection since I've already made a lengthier post on the unlikely resurrection of an APEC-based Free Trade Area of the Asia-Pacific (FTAAP) proposal originally dreamed up by the Americans that got nowhere...only to be revived by the Chinese to counter another American-led FTA initiative in APEC, the Trans-Pacific Partnership (TPP). To be sure, Beijing has scored some cheap PR points that the media has mistakenly picked up by flogging FTAAP anew: "APEC Leaders Endorse China-Led Free Trade Zone" says the Voice of America. "APEC Summit: Chinese Trade Pact Plan Backed by Leaders," the British Broadcasting Corporation chimes in.

If you actually read the text of the leaders' declarations, however, the FTAAP reality is much more modest. What APEC leaders have actually said is that they will commission a study that will be done by 2016 on the prospects for an FTAAP:

Launch a collective strategic study on issues related to the realization of the FTAAP by building on and updating existing studies and past work, providing an analysis of potential economic and social benefits and costs, performing a stocktake of RTAs/FTAs in force in the region, analyzing the various pathways towards the FTAAP, assessing impacts of the “spaghetti bowl” phenomenon on economies, identifying trade and investment barriers, identifying challenges economies may face in realizing the FTAAP, and considering any recommendations based on the study’s findings. The CTI Friends of the Chair Group on Strengthening REI and Advancing FTAAP, led by member economies, will organize and lead a task force to undertake the study and will seek contributions from interested APEC economies, the APEC Policy Support Unit, ABAC [APEC Business Advisory Council], PECC [Pacific Economic Cooperation Council] and APEC Study Centers. The linkage with the second term review of Bogor Goals will be strengthened while carrying out this study. The CTI and SOM will review progress annually, finalize the report, along with any recommendations, arrived at by consensus, and submit them to Ministers and Leaders by the end of 2016.

All the APEC honchos agreed to, then, is to ask a bunch of folks in an alphabet soup of APEC-related bodies to write some report due at the end of 2016. Big deal. There is no guarantee that they will act on the completed report, let alone begin negotiations for an FTAAP. To consider this statement on the FTAAP as a "victory" for China is stretching matters very far indeed.

Actually, the FTAAP proposal is not only rather ineffectual but does not necessarily favor either the US or China's visions for a pan-regional FTA. Instead, the text does the diplomatic thing in stating that either the US-led Trans-Pacific Partnership or the China-led Regional Comprehensive Economic Partnership (RCEP) may be building blocks to including all member economies in an FTAAP:

The FTAAP should aim to minimize any negative effects resulting from the proliferation of regional and bilateral RTAs/FTAs, and will be pursued by building on current and developing regional architectures. Greater efforts should be made to concluding the possible pathways to the FTAAP, including the TPP and RCEP.

It beats me how they'll avoid trade diversion by doing nothing to discourage the proliferation of pan-regional FTAs, but for FTAAP itself, it's much ado about nothing. It's APEC pencil-pushing--vaporware--at its finest.