FTA Movements in the Asia-Pacific Region.

(From Journal of Japanese Trade & Industry (JJTI))

Byline: Hatakeyama Noboru

Free trade agreements (FTAs) have been proliferating since the 1990s. After the setback of the World Trade Organization (WTO) Ministerial meeting in Cancun, Mexico, FTAs are now in full bloom, including those in the Asia-Pacific region. In this region, there are six star players in the FTA games, namely Singapore, Thailand, China, India, Australia and the United States.

Singapore has been the most aggressive player in formulating FTAs in this region. Singapore is a member of the ASEAN Free Trade Area (AFTA), and has also concluded FTAs with New Zealand, Japan, the European Free Trade Association (EFTA), Australia and the United States. In addition, Singapore has been negotiating FTAs with Mexico, Canada and India, and has been studying the feasibility of FTAs with South Korea and Sri Lanka. Singapore already has FTAs with 22 countries if the member countries of AFTA and EFTA are counted one by one. If the ongoing negotiations and studies are concluded, Singapore would have a total of 27 FTAs. Mexico has FTAs with 32 countries, and in this regard, Singapore may be viewed as a "Mexico in Asia" in terms of FTAs. It is quite understandable for such a metropolitan state as Singapore to try to become a hub in this region. Thailand has suddenly become very enthusiastic about FTAs under the strong leadership of Prime Minster Thaksin Shinawatra. Of course Thailand is an important member of AFTA, and has had an FTA with Laos since 1991. Thailand also concluded an FTA with Australia recently, has made framework agreements for FTAs with Bahrain, Peru and India, and has been negotiating with them. Thailand will enter FTA negotiations with the United States soon, and is studying an FTA with New Zealand. Thailand seems to want to play a central role in this region as a parts and components supplier and assembler for neighboring countries with hardly any trade barriers between them.

China was not interested in FTAs until it was stimulated by the fact that Japan and Singapore agreed to launch a study on a possible FTA in December 1999. In November 2000, the then Premier of China, Zhu Rongji, proposed studying an FTA between ASEAN as a whole and China. His apparent intention was to expose Chinese industries to international competition in order to reform them. He wielded strong leadership in this regard, and China was quick enough to agree with ASEAN in November 2002 on a rather ambitious framework agreement for an FTA between them.

According to this framework agreement, an FTA between China and ASEAN will come into force for trade in goods from June this year. The tariffs of both economies will be reduced on the basis of the schedules they have agreed upon. In 2010 this process will be completed by substantially eliminating all the mutual tariffs between China and the six advanced countries in ASEAN. Vietnam, Cambodia, Laos and Myanmar will be given another five-year grace period until 2015. Since Japan is supposed to complete an FTA with ASEAN as a whole in 2017, China is two years ahead of Japan.

India ...