APEC and FTAAP: Three Pathways and Six New Members

Malcolm Cook
Senior Fellow, Institute of Southeast Asian Studies

APEC leaders’ tightening embrace of the Free Trade Area of the Asia Pacific proposal first floated by the APEC Business Advisory Council in 2004 offers APEC a unique opportunity for renewal and strengthening through expansion.

In 2010, APEC leaders ordered APEC to become “an incubator of an FTAAP by providing leadership and intellectual input into the process of its development” with the guiding principle that FTAAP should build on existing regional trade liberalization processes involving APEC members. (http://www.apec.org/Meeting-Papers/Leaders-Declarations/2010/2010_aelm.aspx ). These are the so-called pathways to an FTAAP. In 2014, FTAAP became the centrepiece of an APEC leaders meeting for the first time with leaders committing to “launch a collective strategic study on issues related to the realization of the FTAAP” that is scheduled for leaders consideration at APEC 2016. (http://www.apec.org/Meeting-Papers/Leaders-Declarations/2014/2014_aelm.aspx ).

If the collective strategic study chooses to be bold, it should consider APEC membership expansion as a means to best fulfil the organization’s FTAAP incubator role. Membership expansion could provide APEC a rare win-win-win outcome by enhancing its FTAAP incubator role, expanding the geographical and global value chain scope of its trade facilitation work (APEC’s greatest strength and contribution to regional economic integration) and strengthening APEC organizationally.

Three regional trade liberalization processes involving APEC member economies presently can act as pathways to an FTAAP. In order of progress to date, they are the Pacific Alliance involving three APEC members and two non-members (Colombia and Costa Rica), the TPP process involving 12 APEC members and no non-members, and the ASEAN-based RCEP process involving 12 APEC members and four non-members (India, Myanmar, Laos and Cambodia).

Expanding APEC membership to include all economies presently involved in the three already paved pathways to an FTAAP would address the significant membership mismatch of 1.4 billion people between the existing APEC membership and the larger number of economies presently on the FTAAP pathways. It is hard to see how APEC can act as an effective incubator without including the six FTAAP pathway participants that have yet to be granted APEC membership.

Bringing in FTAAP’s missing 1.4 billion into APEC would also dramatically increase the number of people that could benefit from APEC’s significant trade facilitation successes and the open, voluntary, non-binding APEC environment that is conducive to trade facilitation progress. India, Myanmar, Cambodia and Laos are likely to be the next major frontiers for the value chains that bind APEC economies together further bolstering the benefits they may derive from APEC membership and that APEC would derive from their inclusion.

Finally, the inclusion of these six new members based on their present participation in the FTAAP pathways would, for the first time, provide APEC a clear membership criterion directly derived from APEC’s origins as a trade and investment liberalization body. Borrowing a leaf from ASEAN, APEC could consider making APEC membership a pre-requisite for participation in FTAAP negotiations just as ASEAN has made the successful conclusion of an ASEAN+1 agreement the pre-requisite for non-ASEAN members to join the RCEP process.   

Membership expansion has long been taboo in APEC circles. It is time to shed this increasingly constraining inhibition and APEC’s “collective strategic study on issues related to the realization of the FTAAP” is a good place to bravely go where APEC has feared to tread since 1998.