The Australian Associated Press—oblivious to the “dangling participle(link to a dictionary of grammar)”:http://www.tiscali.co.uk/reference/dictionaries/english/data/d0081865.html’s wry insight—confusedly report that bq. After years of courting the 10-member grouping, and being stymiedby Malaysian leader Mahathir Mohamad, ASEAN economic ministers plan to invite Australian Prime Minister John Howard and his NZ counterpart Helen Clark to a leaders’ meeting in Laos in November to discuss the plan. (“ninemsn”:http://news.ninemsn.com.au/Business/story_56181.asp) The Australian government will be tempted to respond positively and quickly to an invitation from ASEAN because it will be seen by some as a sort of re-instatement of our “regional credentials” after the embarrassing rebuff of the 2000 Chiang-Mai Ministerial meeting when Heads of State from ASEAN countries rejected the recommendations of their own officials to begin negotiations with Australia and New Zealand. But before it goes any further—particularly on the extension of an already complex regional arrangement such as AFTA—the Australian government should consider how the different regional agreements in which we already participate work together. It should have a plan to ensure that the collection of ‘regional agreements’ we are helping to create repeats, at far as possible, a pattern of liberalization and market integration that could be extended region-wide in the Pacific.
The Australian government surveys a broadening ‘free trade’ agenda in the Pacific region. In addition to the prospects of a closer integration agreement with ASEAN, it has agreements with New Zealand and Singapore. It is ready to ratify agreements negotiated in the past few months with Thailand and the USA. It is preparing to negotiate with China – which is simultaneously negotiating with ASEAN and New Zealand. Finally (for the present) there is the possibility that Australia could revisit its formal relations with Japan, to repair the near non-sequitur of the [[dead-endPolicy last Howard-Koizumi talks]]. Closing this circle with a tangent as well as an arc, ASEAN proposes negotiations[⇒ related story] not only with China but also India. The prospect is little more than a tangle of separately negotiated trade agreements; but it need not be. With imaginative diplomacy on the part of Australia, the tangle could be re-configured to a design not unlike the ambitious goals of the “APEC regional agenda”:http://www.apecsec.org.sg/apec/about_apec.html of ‘regional free trade by 2020’. I suggested[⇒ related story] such a policy agenda in an ‘op ed’ contribution to the AFR in mid-February. There is a key difference between the current collection of FTAs and the APEC agenda that makes such a “Pacific-wide” free trade zone feasible now, where APEC has stalled. APEC was founded on a promise of ‘unilateral liberalization’ by each Member economy that, predictably, turned out to be (nearly) empty. The idea that, for example, the USA would consider offering other APEC members, including China, ‘free trade’ by 2010 and await China’s ‘non-reciprocal’ implementation of the same policy by 2020 was little more than ivory-tower fantasy. It assumed that an analytical observation (that most small countries liberalize their trade barriers, eventually, on a unilateral basis) could be made the basis of a political program. The current regional negotiations are, by contrast, based on reciprocal obligations that contain a firm program of access improvements embedded in a bilateral contract. But there’s a second difference, too that is more in APEC’s favor. APEC sought a uniform standard of liberalization among members; a single ‘free trade’ ideal. That ideal has tangible benefits that a series of reciprocal pacts, each one crafted for the interests of members will be hard-put to achieve. A collection of overlapping regional agreements will badly undershoot the potential identified in the APEC idea if it embodies—as a result of the different terms and coverage and rules of origin in each pact—the sort of stultifying complexity, ‘tailoring’ of protection and schedule reversals that has dogged AFTA itself since 1992.
Peter Gallagher is a leading Australian consultant on trade and public policy.[bio].
"I can help you with strategies for, and analysis of, international markets, law and regulations, trade agreements, export policies, import restrictions… I also offer reports, conferences and master-classes for government officials and industry associations on international trade research."
Email: Peter Gallagher