Asia-Pacific free trade area seen adding $2.5T to economy

The proposed Free Trade Area of the Asia Pacific (FTAAP) is expected to add about $2.5 trillion to the world economy by 2025, according to Pacific Economic Cooperation Council (PECC).

The FTAAP, which is being pushed by China and the United States, is a bigger agreement that will build on the expected liberalization gains from the recently concluded Trans Pacific Partnership (TPP) Agreement and the proposed Regional Comprehensive Economic Partnership (RCEP).

“Apec (Asia-Pacific Economic Cooperation) has set out a bold goal for achieving free and open trade and investment in the region 21 years ago. Since then, the idea of a FTAAP has become a long-term vision for the region,” noted Ambassador Tang Guoqiang, co-chair of the PECC.

“The conclusion of the negotiations for the TPP has completed one part of the jigsaw puzzle of a more deeply integrated region. The challenge now is how to bring all of the region’s economies into a single trade system,” added Ambassador Don Campbell, co-chair of PECC.

The TPP is expected to generate an additional $225 billion to the world economy by 2025, while the RCEP is estimated to generate some $645 billion.

The TPP is a landmark agreement that eliminates or reduces tariffs, lowers the cost of trade, and sets new and high standards for global trade while addressing next-generation issues.

It is envisioned to promote economic growth, create jobs, raise living standards, reduce poverty, promote good governance and enhance labor and environmental protections.

The 12 TPP members—Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam—announced the conclusion of their negotiations in October.

These 12 countries have a combined population of 800 million, and projected to account for 40 percent of the world’s gross domestic product and 30 percent of world trade.

RCEP, meanwhile, refers to a separate free trade agreement being negotiated among the 10 member-states of the Asean and its six trading partners namely Japan, China, Korea, Australia, New Zealand and India.

Alan Bollard, executive director of the Apec secretariat, meanwhile, noted that the Apec doesn’t want to see different trade agreements going off in different directions, given that there are some 150 trade agreements in force in the region.

“It is very complicated. We see the FTAAP study as the way we can judge where all those initiatives are going. We’ll bring [all trade agreements] into the study, see how they fit together, and move forward from there,” Bollard said.