LOOKING BEYOND DOHA, APEC TRADE MINISTERS SEEK TO SIMPLIFY FTA ‘SPAGHETTI BOWL’
Trade ministers from the 21 Asia-Pacific Economic Cooperation member countries are looking beyond the Doha Round negotiations to examine ways to boost trade across the region, though they maintain that the struggling multilateral talks remain their top priority.
At a 5-6 July summit in Cairns, Australia, the ministers repeated their call for progress in the WTO negotiations. Similar appeals have been a standard feature of APEC summits in recent years.
A larger section of the joint communiqué released at the end of the meeting focused on how the liberalisation and facilitation of trade and investment across the region could help create "an enabling environment for economic growth." The ministers said that they discussed "the possibility of developing a Free Trade Area of the Asia-Pacific (FTAAP) as a long term prospect," and agreed to examine the implications of a region-wide accord.
More immediately, they addressed the plethora of bilateral and regional free trade agreements (FTAs) in the region, acknowledging that these came with "the possibility of trade diversion." The recent proliferation of such accords, particularly pronounced in East Asia, has been criticised by economists and companies for creating a complex ’spaghetti bowl’ of overlapping trade rules that raise the transaction costs of doing business and erode the principle of non-discrimination (see BRIDGES Weekly, 19 January 2005, and related ‘in brief’, this issue). The APEC ministers "instructed officials to examine, in close cooperation with the business sector, the scope for a rationalisation of preferential rules of origin and other relevant provisions of such agreements."
APEC members nevertheless remained convinced that "high-quality and comprehensive RTAs/FTAs can advance economic openness in the region and strengthen regional economic integration." They said that following the model agreement language for FTA chapters developed by the group would lead to greater consistency and coherence. Officials are currently working to expand the model template.
The ministers also endorsed a new trade facilitation plan that will aim to reduce trade-related transaction costs by a further 5 percent by 2010. These efforts will focus on customs procedures, standards, e-commerce, and the mobility of businesspeople.
APEC’s longstanding ‘Bogor goals’, adopted in 1994, call for the full liberalisation of trade and investment flows by 2020. APEC members account for roughly half of world trade and 60 percent of global GDP.
The APEC ministers’ communiqué is available at http://www.apec.org/apec/news___media/webcast/060707_aus_mrt_end.html.
ICTSD reporting.
INDONESIA, JAPAN TO SIGN FREE TRADE AGREEMENT
Indonesia and Japan are set to sign a free trade agreement that will eliminate tariffs on over 90 percent of bilateral merchandise trade, a Japanese official announced on 6 July. The deal will be finalised when Japanese Prime Minister Shinzo Abe travels to Jakarta next month.
Under the terms of the proposed agreement, Indonesia will eliminate 96 percent of duties on Japanese exports in value terms, beginning with the immediate removal of import duties on high-quality steel products from Japan, as well as all tariffs on Japanese fruit, such as apples and grapes. Indonesia also agreed to phase out over five to 10 years all tariffs on Japanese electronics, autos, and auto parts.
Japan, meanwhile, will immediately eliminate import duties on forest products, shrimp, and most industrial goods from Indonesia, and will accept up to 1000 tons of Indonesian bananas duty free every year for five years. Such changes will eventually amount to the elimination of tariffs on 93 percent of Indonesian exports to Japan.
So-called ’sensitive’ farm products such as rice, wheat, and meat will not be covered by the agreement.
The proposed deal also includes an energy security partnership clause that will oblige Indonesia to honour all existing energy-supply contracts with Japan, even if it imposes broad restrictions on oil and gas exports. Indonesia is currently Japan’s largest supplier of natural gas, third-largest supplier of coal, and sixth-largest supplier of crude oil.
In return for Jakarta’s concessions on energy, Tokyo has offered to increase technical assistance in areas such as energy-saving measures and coal-to-liquid technology.
Japan has also agreed to host more Indonesian nurses and other care workers, although the exact number of workers who will be allowed entry has yet to be decided.
"Indonesia and Japan agree to sign FTA," ANTARA NEWS, 6 July 2007; "Japan, Indonesia to sign FTA in August," ASSOCIATED PRESS, 6 July 2007; "RI-Japan EPA final draft turned into legal document," ANTARA NEWS, 9 July 2007.