Dr. Tan,
Mr. Wanandi,
Ambassador Tang,
Distinguished Guests,
Let me first wish everyone a happy lunar new year. It is my pleasure to welcome you to Singapore and today’s Conference.
Regional Economic Integration Discussions Timely
This is an ideal time for an exchange of ideas on regional economic integration. We are into a new APEC year, with China at the helm after Indonesia’s able 2013 chairmanship. There is renewed WTO momentum following the Bali Ministerial Conference in December. In parallel, regional economic architectures have grown in recent years. It is therefore timely for conversations on ensuring that multiple avenues to trade liberalisation are complementary, effective and cohesive. Fundamentally, all our efforts must work towards strengthening the multilateral trading system.
Next Step is Towards the FTAAP
APEC has always been forward-thinking. APEC Leaders alluded to a vision for a Free Trade Area of the Asia Pacific, or FTAAP, as early as 2004 (in Chile). This was in response to suggestions from APEC’s business arm, the APEC Business Advisory Council, who foresaw benefits of such a large FTA. In 2010 (in Japan), APEC Leaders concretised the vision by outlining “pathways to FTAAP”. Already then, they envisioned the FTAAP to be a comprehensive, high quality agreement, developed and built on ongoing regional undertakings, which address “next generation” trade and investment issues.
This vision is even more relevant today. It must be reignited through a revival of the discussions we have been having, on and off, on the FTAAP, over the past ten years. Discussions must be robust at all platforms – policy-makers, businesses, and academics alike.
While discussions would naturally involve intricate complexities, the challenge should not be seen as too overwhelming for APEC. APEC economies already belong to several regional initiatives. Our current journeys should place us in good stead to take the next step towards the FTAAP.
Today, I will share some of my thoughts on how we can proceed. I hope this will be the start of more discussions.
a. First, we need to be vigilant in implementing our 2020 Bogor Goals and 2015 commitments. These are (i) the Supply-Chain Connectivity Initiative, (ii) the Ease of Doing Business Action Plan, and (iii) tariff reduction on Environmental Goods. These are milestones towards realising the FTAAP. China’s 2014 chairmanship will be crucial for achieving our 2015 targets. Faltering on this means we falter in our path towards our FTAAP aspirations.
b. Second, we must ensure that our current agreements are of the highest quality possible. Regional architectures like the ASEAN Economic Community (AEC), the Pacific Alliance, the RCEP, and the TPP are all mutually reinforcing pathways to the FTAAP. These pathways must be of high-standard to lead to a credible and meaningful FTAAP.
c. Finally, we need to explore ways to bring the various paths together smoothly. We need to continue conversations on the principles our Leaders outlined in their 2010 “Pathways to FTAAP” declaration. We need to start answering fundamental questions on the principles upon which the FTAAP will be based. Important principles such as:
(i) One, how do we ensure that the FTAAP is comprehensive and current in scope. We can, for instance, ensure complete product coverage for market access. We can also incorporate issues from our most contemporary agreements into the FTAAP. What is the best way to do this?
(ii) Two, how do we ensure that the FTAAP is of superior quality. What is the best way to bring over ambitious and beneficial portions of our individual agreements into the FTAAP? As a regional grouping, our economies would benefit from cumulative rules of origin. Also robust transparency and trade facilitation principles to minimise non-tariff barriers among us. Can we use model chapters or articles to achieve this? How do we guarantee that there is also no backtracking of existing commitments?
(iii) Three, how do we ensure a robust modality for negotiations? Can we lock-in a single undertaking principle for negotiations? Also inclusivity for the participation of all APEC economies. Can APEC’s capacity building arm be tapped on to make all economies ready?
These are some key principles we must collectively consider and agree upon, for further and concrete steps towards the FTAAP.
Using Experiences of Current Regional Economic Integration Architectures on the Way to the FTAAP
Today, APEC economies are involved in several regional architectures, like the Pacific Alliance and ASEAN. We should leverage on our achievements and start our FTAAP journey from high ground.
a. ASEAN, for instance, is progressing well, towards the ASEAN Economic Community (AEC), having completed about 80% of their economic integration measures. ASEAN’s commitments are progressively incremental, and tracked using a scorecard mechanism. ASEAN can use this experience to contribute to the FTAAP.
b. The Pacific Alliance has progressive initiatives like the integrated Latin American stock exchange market (the MILA); an Air Services Agreement; and the progressive elimination of almost all tariffs. APEC members who are in the Pacific Alliance can play a leadership role in discussions on financial cooperation and deeper integration in the Asia Pacific.
c. The RCEP and TPP will be current agreements when concluded. The RCEP could potentially transform the region into an integrated market of over 3 billion people, with a combined GDP of more than USD 17 trillion, or about a third of the world’s current annual GDP. The TPP will include 21st century issues, like e-commerce, intellectual property, competition, and regulatory coherence. Both agreements must inform and feed into the FTAAP.
From these we can see that while the FTAAP will be highly complex and challenging to negotiate, we are not starting from a zero base.
Regional Initiatives Must Support the Multilateral Trading System (MTS)
As we pursue regional and plurilateral initiatives, however, it is crucial that our top priority remains the multilateral trading system. The aim of our regional work, including the FTAAP, must be to create a positive domino effect of opening up more and more markets for global trade liberalisation.
Indeed, although the WTO succeeded in delivering some Doha Development Agenda (DDA) outcomes in Bali, substantive results were modest. Regional economic integration will remain important in sustaining the global trade liberalisation momentum. In parallel with APEC’s own integration agenda, APEC economies can help further the WTO’s agenda by playing a leadership role in implementing multilateral commitments; bringing market access initiatives to the WTO; and exploring new trade-related issues.
Conclusion
Conferences like these are thus useful. They provide stakeholders a platform to share views, perspectives, and expertise on issues that are critical to the global economy. The PECC is invaluable in bringing together eminent persons from industry, government, and academic circles to jointly brainstorm ideas that assist and mould APEC’s future work. APEC’s policy-makers will benefit from journeying with our academic and business arms towards our collective vision. Your ideas and feedback are thus welcomed and imperative to the process.
On this note, I wish you fruitful discussions in these two days, and a fulfilling year ahead.