The APEC Summit closed on Nov. 20 with the 21 member states adopting a statement reiterating their intent to realize a Free Trade Area of the Asia-Pacific (FTAAP). In light of the impending inauguration of Donald Trump, an advocate of protectionist trade policies, as U.S. president, although the APEC states appeared to be united in the promotion of free trade, the effectuation of the TPP accord, which forms the foundation of free trade in the region, now hangs in the balance. Prospects remain uncertain for the formation of a free trade zone in Asia and the Pacific.
The FTAAP is supposed to build on existing agreements, such as the TPP or the Regional Comprehensive Economic Partnership (RCEP). This was also affirmed at the APEC Summit.
Japan and the U.S. took the lead in the TPP negotiations and succeeded in reaching a basic agreement last October, ahead of the other comprehensive trade deals. The idea was to involve China — which is not participating in the TPP that stipulates high rates of tariff abolition and other economic rules – eventually in the process of developing the TPP into a FTAAP. China was wary of the Japan-U.S. attempts to grab the initiative in this process.
However, now that the TPP is about to suffer a setback, China is certain to strive to regain lost ground. It is believed that it will step up efforts in the RCEP negotiations for fear of moves by Japan and the U.S.
As a matter of fact, President Xi Jinping stated at the APEC Summit that, “China is opposed to all forms of protectionism. It will support the early realization of a FTAAP.” He demonstrated China’s determination to play a proactive role in building an Asia-Pacific free trade zone.
However, a Japanese government source observes that liberalization of tariff under the RCEP is limited, so “it is not a high-quality free trade agreement.”
The original goal was to reach a RCEP agreement in 2016, but due to serious conflicts of interest among the participating nations, the negotiation process is at a standstill, and “a new target date could not even be decided,” according to a source on the negotiations.
Along with the TPP, Japan is also participating in the RCEP talks. However, it firmly stands for a FTAAP based on the TPP with a high-level of liberalization.
The early effectuation of the TPP accord is now unlikely, while the fate of its rival, the RCEP, is also uncertain. The process of forming an Asia-Pacific free trade zone is in a desperate strait, with the possibility of coming to a halt. A government source says that, “We can only hope that Mr. Trump will change his mind.” (Slightly abridged)