Let’s Make APEC 2014 About Free Trade

By Charles Finny

With the Republicans back in control of both the House and Senate in the US there are positive signs that the dysfunction apparent in recent years on the hill may be ending.  With both President Obama and the Republican Leadership stating a desire to work together on matters of national importance APEC 2014 and ancillary meetings offers a real opportunity for this new spirit of bipartisanship to deliver two outcomes that are of enormous importance to the health and prosperity of the US economy – a high quality outcome in the 12 nation Transpacific Partnership Trade Agreement, and a commitment to advance the concept of an APEC wide FTA – the Free Trade Agreement of the  Asia Pacific.  Rather than being in conflict as some are suggesting, the two are, in my view, complimentary.

An outcome on TPP is not possible when TPP Leaders meet on 8 November, but President Obama can give the negotiates a big push forward if he announces that he will be seeking, as one of the first actions of the new congress in early January, a negotiating authority to conclude a high standard TPP.  By “high standard” I mean an agreement that is as comprehensive as possible and which liberalises as much trade as possible.  A high standard FTA does not contain big areas of exclusion and does not stop short of achieving tariff and quota free outcomes.  Japan, Canada and maybe others have been arguing for exclusions or end points at what are still relatively high tariff levels.  The US should state very clear that such an outcome is unacceptable.  It should be unacceptable as the exclusions or residue tariffs will be in product areas like dairy and beef where the US has major export interests.  A high quality outcome in these product areas is therefore going to deliver increased process and more jobs for the US economy.

If the Obama Administration can be given a negotiating authority in January this will be a green light to the other 11 governments that the negotiations are entering the end game.  This will allow bottom lines to be revealed and, if all goes well, we could have a signed agreement by the middle of 2015.  It would be a major achievement both for President Obama and the new Leaders of the House and Senate.

At the same time the strong Chinese Leadership being shown on the FTAAP should also be welcomed by all APEC members.  FTAAP by its size is on a much slower track than TPP, but it is not a distraction from TPP.  Indeed, one day it could be achieved by an expansion of the TPP.  APEC Leaders should be committing to a FTAAP as a goal for the APEC members within the next ten years.  Such an outcome will send a useful signal globally about APEC’s direction of travel, and it will show that APEC continues to aspire to be the engine for global growth for many years to come.