Growing Together: Economic Integration for an Inclusive and - escap

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CHAPTER TWO 43 Towards a broader integrated market for movement of natural persons, such in the Japan-Philippines FTA, which covers the movement of medical caregivers to Japan subject to a limit. Economic integration in the region has progressed the most under the ASEAN process, which will deepen further with the implementation of complementary agreements to AFTA, such as the ASEAN Framework Agreement on Trade in Services (AFAS), the ASEAN Industrial Cooperation (AICO) scheme, the ASEAN Investment Area (AIA), and the formation of the ASEAN Economic Community planned for 2015. Following the ASEAN lead, SAARC adopted the South Asian Agreement on Trade in Services (SATIS) in 2010 to complement SAFTA, and is working on an investment agreement. Agreements such as AFTA, SAFTA, BIMSTEC-FTA, Pacific Island Countries Trade Agreement (PICTA) and the Asia-Pacific Trade Agreement (APTA) provide room for special and differential treatment (SDT) to least developed countries, offering them longer periods to tariff elimination, along with special measures regarding rules of origin (ROO). The Asia-Pacific network of FTAs and RTAs as summarized in figure II.10 presents a picture of a dense web of trade arrangements criss-crossing the region, mostly within the subregions but also linking the subregions, such as ECOTA linking some Central Asian countries with some South and West Asian countries and BIMSTEC linking the South Asian countries with some South-East Asian countries. However, the region does not have a seamless larger market as most of the agreements are bilateral or subregional in nature. It is also not conceivable to coalesce these agreements into a broader arrangement due to different scopes and coverage and rules. One of the key components of a scheme of economic integration is to create a larger integrated market through trade liberalization and trade facilitation that enables businesses in the region to be restructured on the most efficient basis and to exploit the economies of scale, scope and specialization. This process of efficiency-seeking industrial restructuring could have substantial welfare gains for participating countries. The benefits of extended markets could be particularly significant for smaller and poorer economies, as observed in chapter one. The diversity in the levels of development across the region makes regional economic integration particularly fruitful as the synergies between factor endowments, production structures and specializations provide for mutually beneficial exchanges. Similar synergies exist between countries in the region and others outside the region, and recent initiatives such as the Trans-Pacific Partnership (TPP) expect to take advantage of them (see box II.2). In terms of integration across the subregions, the engagement of ASEAN with neighbouring countries around the grouping as dialogue partners has produced ASEAN+1 FTAs with Australia, China, India, Japan, the Republic of Korea and New Zealand. The dialogue partners have also been involved in bilateral deals among themselves, such at the India- Japan and the India-Republic of Korea comprehensive economic partnership agreements. The dialogue process has also led to broader groupings. These include the East Asia Free Trade Agreement (EAFTA) proposed within the framework of ASEAN+3 Summit; and the Comprehensive Economic Partnership of East Asia (CEPEA) proposed in the framework of the East Asia Summit (EAS) combining ASEAN+6 countries. CEPEA brings together 16 of the largest and fastest-growing economies. A RTA among them could create the third pole of a multi-polar global economy, along with NAFTA and the European Union. 53 The feasibility studies of the EAFTA and CEPEA were conducted in parallel by the track-II study groups and their reports were presented to the leaders at the twelfth ASEAN+3 Summit and the fourth East Asia Summit, which were both held in Hua Hin, Thailand in October, 2009. In addition, independent simulation studies using computable general equilibrium
BOX II.2. Trans-Pacific Partnership The Trans-Pacific Partnership (TPP), also known as the Trans-Pacific Strategic Economic Partnership Agreement, is a trade agreement currently under negotiation among the following nine countries: Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore, the United States and Viet Nam. It aims to be a comprehensive agreement covering the main pillars of a free trade agreement, including trade in goods, rules of origin, trade remedies, sanitary and phytosanitary measures, technical barriers to trade, trade in services, intellectual property, government procurement, competition policy, and engagement with small- and medium- enterprises. Formal discussions of TPP were launched on the sidelines of the 2002 Asia-Pacific Economic Cooperation (APEC) Leaders’ Meeting in Los Cabos, Mexico, by official leaders of Chile, Singapore and New Zealand. Four rounds of negotiations were held between 2003 and 2005. At the fifth round of negotiations in April 2005, Brunei Darussalam took part as a full negotiating party after which the trade bloc became known as the Pacific-4 or P4. In September 2008, the United States announced that it would begin negotiations to join TPP in 2009. In November 2008, Australia, Viet Nam, and Peru announced that they would also be joining the P4 trade bloc. In October 2010, Malaysia announced that it had also joined the TPP negotiations. Canada, Japan, the Philippines, the Republic of Korea, and Taiwan Province of China have also expressed interest in TPP membership. The first round of formal negotiation was held in Melbourne on 15-18 March 2010. From March 2010 to November 2011, nine rounds of TPP negotiations and four meetings on the sideline of APEC meetings were held. In late 2011, three additional countries, Japan, Canada and Mexico, announced their intention to join. One of the concerns about the TPP is how to relate the new agreement to existing RTAs. Several TPP countries already have multiple agreements in place and many of them are agreements between TPP members. As each agreement has different rules of origin, it is not so easy to simply “stitch them all together” in a new agreement. Three possible models are possible to deal with this problem: (1) the TPP agreement would supersede existing bilateral RTAs between members; (2) the TPP would exist side-by-side with all the existing agreements and business would be allowed to choose whichever agreement gives them the greatest benefits; or (3) the TPP would become a hybrid agreement in which some sections of the TPP replaced existing agreements in some areas while other portions of existing RTAs that were not covered or covered differently would continue to exist. Early discussions in the TPP suggested that the first option was preferable. Assuming that the new TPP deal provides better, wider-ranging liberalization and coverage than existing agreements, businesses would likely take advantage 44
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iv Growing Together articulates a n
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vi The following experts prepared t
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viii CONTENTS (continued) Page Chap
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x FIGURES I.1. Real rates of growth
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xii TABLES I.1. Transitions from mi
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xiv ABBREVIATIONS (continued) CEPA
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xvi ABBREVIATIONS (continued) RCM R
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xviii The term “Pacific” in thi
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xx opportunities for all social gro
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CHAPTER SIX 135 Towards an inclusiv
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CHAPTER SIX 137 Towards an inclusiv
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139 Annex Technical notes Photo by
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143 Annex Technical notes of the ag
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References 145 Photo by Warren Fiel
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References 147 __________ (2009). E
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References 149 Brenner, Cath (2009)
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References 151 __________ (2010b).
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References 153 Hertel, T., ed. (199
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References 157 Quah, Danny (2010).
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