Can you believe it? Government members of the world’s most unsuccessful regional ‘free trade’ agreement—the Asia Pacific Economic Cooperation (that’s it … there’s no noun)—meeting in Busan, Korea, have criticized regional agreements as a threat to trade! Yet every one of this group is negotiating, or trying to negotiate at least one and probably a handful of regional agreements as they issue this press release. What a bunch of wankers!
Here’s the FT’s quote from the statement.
“Criticised by business leaders and alarmed by the possible failure of next month’s world trade talks in Hong Kong, Asia-Pacific governments are acknowledging for the first time the dangers of the tangled “spaghetti bowl” of bilateral trade deals they have spawned in the past few years. “We’re hearing from our business community that with all these different FTAs [free trade agreements] in the region, it’s getting hard for them to do business,” said a senior trade negotiator attending this week’s annual meeting of the Asia-Pacific Economic Co-operation forum (Apec).”(FT)
Of course, this is right, in principle. It is likely that business finds the maze of regional agreements creates new transaction costs. Multi-national businesses, some of them only SME’s at most, in fact have to integrate this confusing mess in their supply chains. That’s one of the themes of my book *Global Trade Advocate*
But there are commercial techniques for managing these costs. Also, there are often some offsetting benefits from regional agreements that could be augmented if all such agreements complied with “gold standard” practices (e.g. the Australia-US Free Trade Agreement or the Australia-Singapore and US-Singapore agreements). Collective adherence to best practice will minimize the transaction costs due to even overlapping rules of origin and reduce the potential for trade diversion.
Governments in the APEC region must strike a balance between the costs and the benefits of regional agreements, with the assistance of business, and not content themselves with this hypocritical moralizing by press release that is, at best, a rotten deception when their current trade negotiating programs are considered.
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