U.S. Moves to Lay Groundwork for Asia-Pacific FTA

(World Trade Interactive)

The U.S. announced September 22 that it will launch in early 2009 talks on joining an existing free trade agreement among New Zealand, Chile, Singapore and Brunei. U.S. officials made clear that this initiative is intended to be the foundation for a broader Asia-Pacific free trade area that includes the U.S., as opposed to the many regional agreements now being negotiated that do not.

The Office of the U.S. Trade Representative indicated that the United States’ primary motivation in joining the so-called P-4 agreement is to strengthen its economic ties to the Asia-Pacific region. This region is a key driver of global economic growth, a USTR press release stated, representing nearly 60% of global gross domestic product and roughly 50% of international trade. The average GDP growth rate in the rapidly growing and dynamic countries in this region was 5.3% in 2007, compared with the world average of 3.8%, and the International Monetary Fund estimates that it will remain higher through at least 2013. Since 1990, Asia-Pacific goods trade has increased by 300% and global investment in the region has increased by over 400%.

In recent years, however, the U.S. has been excluded from most of the trade liberalization efforts that have proliferated throughout Asia, which the USTR states “will increasingly hurt U.S. manufacturers, agricultural producers, services providers and workers.” The U.S. has been looking for ways to counter this situation, working primarily through the Asia-Pacific Economic Cooperation forum of which it is a member. While APEC has agreed to consider the U.S. idea of a Free Trade Area of the Asia-Pacific, it has been understood that this is more of a long-term effort, given among other things the wide differences in economic development levels among APEC member countries. Click here for the complete article.