Despite the different nature of their negotiations, a study prepared by the Policy Support Unit of the Asia-Pacific Economic Cooperation has explored how APEC and the Trans-Pacific Partnership (TPP) can be mutually beneficial.

APEC, consisting of 21 economies, is formulating best practices for regional and bilateral free trade agreements (FTAs), and, ultimately, a Free Trade Area of the Asia-Pacific (FTAAP), while nine of those countries are currently involved in negotiating the extended Trans-Pacific Partnership (TPP) – the United States, Australia, Peru, Vietnam, Malaysia, New Zealand, Chile, Singapore and Brunei.

The TPP negotiations are intended to yield a ‘high-quality’ FTA, covering not only tariffs and non-tariff barriers to trading in goods, services and investment, but also such regulatory issues as intellectual property rights, telecommunications, e-commerce and labour. However, that process is already fuelling debate on, for example, the effectiveness of the TPP itself as one of the stepping stones for an FTAAP, and the mutual relevance of APEC and TPP.

The study suggests, however, that the two processes may complement and feed into each other. On the one hand, work developed within APEC can contribute positively into the TPP negotiations. On the other hand, TPP can also assist in strengthening regional economic integration in the APEC region.

In particular, the importance of keeping APEC’s nature, and not changing it to an FTA-negotiating role, is highlighted, as that could affect APEC’s key advantage as the most relevant consultative forum in the Asia-Pacific.

It is pointed out that the non-binding nature of APEC allows it to explore issues that would otherwise not be discussed by its members, and that it is better suited to keep its voluntary character and continue on its current role as incubator of ideas for the TPP, amongst others; while the TPP is relevant for APEC as one of many avenues to strengthen regional economic integration across the APEC region.

The report shows how the work undertaken in APEC since its inception provides useful guidance and reference for the participants in the current TPP negotiations. Thanks to APEC, many ideas have matured after being discussed and analysed by its members before being implemented.

It sees the TPP as a boost to the APEC agenda, no matter APEC’s condition as a nonbinding and non-negotiating forum, since current TPP negotiations have the potential to generate a substantial outcome that allows APEC to achieve great progress in strengthening its regional economic integration work programme, meeting its goals of free and open trade and investment, and promoting economic convergence across the APEC region.

In that context, if successful, an expanded TPP could be a good opportunity to have a large number of APEC members under a single FTA, representing an attractive stepping stone towards the realization of the FTAAP. However, the study also emphasizes that nobody currently knows how APEC members will finally give shape to an FTAAP - it might involve an enlargement process by having the TPP, Association of Southeast Asian Nations or another initiative as a starting point.

October 27, 2011

Source: Tax News