APEC began in November 1989 when senior ministers from 12 countries met in Canberra, Australia and agreed to follow-up annual meetings in Singapore and South Korea. The original 12 included Australia, Brunei, Canada, Indonesia, Japan, Malaysia, New Zealand, Philippines, Singapore, South Korea, Thailand and the U.S. China, Hong Kong and Taiwan joined in 1991, Mexico and Papua New Guinea in 1993, Chile in 1994, and Peru, Russia and Vietnam in 1998. President Clinton in 1993 invited economic leaders to Washington State to push the stalled Uruguay Round of WTO trade policy talks. APEC leaders meeting in Bogar, Indonesia in 1995 adopted the Bogar goals, which have not been met, of free investment and trade for developed economies by 2010 and developing economies by 2020.
APEC officially supports a Free Trade Area of the Asia-Pacific (FTAAP), partially because of the slow movement of the Doha Round, but the effort has suffered due to a lack of political will. It has been eclipsed recently by the Trans Pacific Partnership Free Trade Agreement (TPP FTA) now being negotiated by Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam and the U.S. The TPP countries have had nine rounds of negotiations, and President Obama will update the economic leaders on the progress of the talks. The U.S. already has FTAs with four of the countries – Australia, Chile, Peru and Singapore. President Obama has labeled the FTA as a “high standards” agreement on environmental and labor issue, as well as intellectual property rights, state owned enterprises and government procurement. Some policy analysts believe that China will eventually join the FTA and standards have to be high to resolve some current issues.
The expected big news at the meetings is that Japanese Prime Minister Yoshihiko Noda will likely announce his country will formally ask to join the TPP FTA negotiations. It will be a major development for Japan after declining other opportunities to join agreements because of resistance from farmers, accounting for about 1.0 percent of GDP, who expect to lose major import protections. Support in the Japanese Diet (parliament) is marginal, at best. If Japan can work within the TPP agreement, it would likely also be able to negotiate other agreements such as one with the EU. Other APEC countries have also expressed some interest in joining the talks and may give more consideration if Japan joins negotiations.
While Japan may be interested in joining the talks, other political leaders have expressed some skepticism. The Chairman of the Ways & Means Committee of the U.S. House of Representatives and ranking Democratic Member and the Chairman of the Finance Committee in the Senate and ranking Republican Member recently sent a letter to U.S. Trade Representative (USTR) Ron Kirk urging him to consult with Congress and stakeholders in advance of a decision. The committees handle trade issues in their respective bodies. They recognize Japan as a long-time ally, but believe that many trade barriers are deeply embedded in the economy and have persisted despite WTO trade rules and bilateral engagement.
U.S. agriculture has a major stake in any trade policy activities at APEC. The letter on Japan specifically mentions “agricultural products including beef.” The Foreign Agricultural Service of USDA provides forecasts for U.S. exports for 14 of the 20 other countries in APEC. They account for the four largest importers of U.S. agricultural products with China and Canada tied for the top at $19.0 billion each for fiscal year (FY) 2012, Mexico at number three at $17.0 billion and Japan fourth at $14.5 billion. The 27 countries of the EU are collectively the fifth largest market at $11.0 billion. South Korea is the sixth largest importer at $6.5 billion, just under the $7.2 billion expected to go the Middle East and above the $4.8 billion of shipments to North Africa. Other APEC markets expected to be above $1.0 billion in FY2012 include Taiwan at $3.5 billion, Hong Kong $3.3 billion, Indonesia $3.0 billion, Philippines $2.0 billion, Vietnam and Thailand with $1.5 billion each and Russia at $1.4 billion. Those 14 countries will account for $95.1 billion of U.S. agricultural exports in FY2012, 69.4 percent of the expected total.
The APEC Business Advisory Council has already met and asked economic leaders to consider the potential problems of global supply chains. They pointed to the problems that developed after the earthquake and tsunami in Japan. Emergency preparedness has to include keeping supply chains open. This is particularly important for agriculture as some APEC countries increasing rely on imported food.
USTR Kirk speaking to the U.S. Chamber of Commerce in Washington, DC in late October said the Administration had three priorities for the APEC meetings: promoting green growth, strengthening regional economic integration and expanding trade, and advancing regulatory cooperation and convergence. U.S. agriculture probably has the greatest interest in regulatory cooperation and convergence. Safety standards on beef with respect to BSE, ractopamine in pork and approval of the use of biotech crops are three issues that come to mind, but there are many more. If global food supply chains are to operate efficiently, regulatory harmonization and increased efficiencies in trade facilitation are critical. U.S. agriculture considers these as costly for exporters, but importing countries throughout Asia should see them as consumer costs that can be removed.
Mr. Kirk said that good regulatory practices language has also already been proposed in the negotiations in the TPP FTA. This should help keep regulatory practices from becoming non-tariff barriers. This will be particularly importance if the TPP FTA attracts other major agricultural importers as members.
All this energy on trade in the Asia-Pacific region may cause reconsideration of the stalled Doha Round of WTO talks, much like happened in 1993 for the Uruguay Round. If that does not occur, existing trading relationships, bilateral trade agreement in force and the in-progress talks on the TPP FTA will all benefit.
Ross Korves is the Economic Policy Analyst for Truth About Trade and Technology