The rush toward Asia-Pacific FTAs

Japan Times ^ | 07/17/2013 | Michael Richardson

[TexGrill]

SINGAPORE – Following the recent launch of free trade negotiations between the United States and the European Union, there are now three mega-trade-and-investment liberalization blocs being shaped in various parts of the world.

Each is different in geographic coverage. But all have substantial economic clout. So whichever is first to conclude a credible agreement will have a significant impact on international trade and geopolitics.

With multilateral negotiations under the World Trade Organization stalled, the big bloc negotiators are, by default, setting key rules and standards for global commerce in the 21st century. This is important. All three mega-blocs are often referred to as free trade arrangements. But in practice, they would be preferential trading groups discriminating against nonmembers.

Of course, the three top economies — the U.S., China and Japan — have to be big players in this game. Each seeks stronger influence and market access, particularly in Asia, where economies, trade and investment have been expanding fast for several decades.

From a global perspective, economic activity breaks down into three segments: 6 percent growth in emerging markets (with Asia, minus Japan, playing a lead role); 2 percent growth in the U.S.; and no growth in the EU.

Still, the U.S.-EU deal would span the Atlantic, stimulating growth by integrating the world’s two largest trading zones. They account for nearly 50 percent of global GDP, at least for now. The other two proto-free trade agreements (FTAs) are tied to Asia.

[TexGrill]

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