Bridges Weekly Trade News Digest • Volume 12 • Number 31 • 25th September 2008
US Looks to Join Trans-Pacific Trade Agreement
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The US is set to join a free trade agreement with Brunei, Chile, New Zealand and Singapore, US Trade Representative Susan Schwab announced on Monday.
“This high-standard regional agreement will enhance the competitiveness of the countries that are part of it and help promote and facilitate trade and investment among them, increasing their economic growth and development,” Schwab said in a statement.
The ‘Comprehensive Trans-Pacific Strategic Economic Partnership’ agreement, which was completed in 2005 as the first trade deal involving Pacific Rim countries, immediately abolished 90 percent of tariffs on goods traded amongst the parties, and will eliminate duties on all traded products within 12 years.
While the Bush administration has been negotiating with the four countries regarding financial services and investment for several months, the first round of negotiations for US accession to the trade pact will take place early next year in Singapore.
New Zealand Trade Minister Phil Goff stated that the US is the “most powerful and the largest economy in the world and gives the partnership critical mass and momentum to move forward,” reported Agence France Presse.
Moreover, a number of other Asia-Pacific countries - notably Australia, Peru and Vietnam - have expressed interest in joining the trade pact.
“While the United States is the first additional country to seek to join the four original members of the Trans-Pacific Strategic Economic Partnership, we are confident that other countries in the region will ultimately embrace the benefits of participation,” Schwab said in an official statement released on Monday.
The US decision will provide new momentum to the long-term objective of the 21-member Asia-Pacific Economic Cooperation (APEC) group to forge a free trade area in the Pacific Rim by 2020. The accord, which will likely be left to the next US president to complete, has the potential to form the core of a future broader agreement among Pacific nations.
However, the announcement to launch further talks comes at a time when Congress is showing reluctance to approve free trade deals with Colombia, Panama and South Korea.
The US already has bilateral trade agreements with Chile and Singapore, but not Brunei or New Zealand. New Zealand approached the US regarding a free trade deal in 2003, when Washington was in trade talks with Australia, New Zealand’s primary economic partner. But the US-New Zealand deal never went through, as the two nations were at odds over the war in Iraq and New Zealand’s refusal to let nuclear-powered ships into its ports.
The trans-Pacific region accounts for nearly 60 percent of world GDP and almost half of all global trade.
ICTSD reporting; “Australia, Peru, Vietnam want to join trans-Pacific free trade deal,” AGENCE FRANCE PRESSE, 23 September, 2008; “US to negotiation joining Pacific 4 trade pact - Schwab,” REUTERS, 22 September, 2008; “US, NZ to talk on trade deal,” REUTERS, 19 September, 2008.
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