1. A DVANCING THE R EALIZATION OF APEC’ S FTAAP Chen-Sheng Ho, Ph.D. Associate Research Fellow Chinese Taipei APEC Study Center Taiwan Institute of Economic Research 1

2. Purpose of Presentation Relate the latest development in APEC to realize the FTAAP. Analyze the APEC Beijing FTAAP Roadmap Provide suggestions to advance the FTAAP 2

3. Latest Development in APEC “The Beijing Roadmap for APEC’s Contribution to the Realization of the FTAAP” Attached as Annex A of the 2014 APEC Leaders’ Declaration. Stated six major views of Leaders toward the FTAAP. CTI’s Friends of the Chair Group on REI and the FTAAP (REI-FTAAP FotC Group) Created the Task Force for the “Collective Strategic Study on Issues Related to the Realization of the FTAAP.” Developed the Terms of Reference (TOR) of the Study: 1. The Task Force is comprised of all APEC economies. 2. The Task Force members will oversee the drafting of one or more chapters of the Study. 3. The Task Force will consult with the PSU, ABAC, PECC and APEC Study Centers. 4. The Task Force will develop the first draft of the Study before SOM1 2016. 3

4. Latest Development in APEC ABAC FTAAP Study Agreed the undertaking of the Study at ABAC1 2015. Provide business perspective on the FTAAP. Approve the final report to Leaders by ABAC4 2015. 4

5. The 2014 APEC Beijing FTAAP Roadmap General Points APEC agreed to examine the FTAAP idea as a long-term prospect in 2006. In 2010, APEC Leaders generated the notion of “Pathways to FTAAP.” The 2010 idea was that an FTAAP should be realized as a comprehensive free trade agreement (FTA) that will be built through regional undertakings, such as ASEAN+3, ASEAN+6 and the Trans-Pacific Partnership (TPP). 5

6. The 2014 APEC Beijing FTAAP Roadmap APEC Leaders’ Common Views The FTAAP will support and complement the multilateral trading system. The FTAAP should be comprehensive, high quality and address next generation trade and investment issues. APEC will attain the Bogor Goals by 2020. The Bogor Goals will advance APEC’s contribution to the eventual realization of the FTAAP. The FTAAP will be realized outside of APEC, parallel with the APEC process. APEC should maintain its non-binding and voluntary cooperation principles. The FTAAP should aim to minimize any negative effects resulting from the proliferation of RTAs/FTAs and will be pursued by building on regional architectures. Greater efforts should be made to concluding the possible pathways to the FTAAP, including the TPP and RCEP. APEC will assist APEC economies with participating in ongoing regional undertakings and preparation for the realization of the FTAAP. 6

7. Analyzing the Main Points of the FTAAP Roadmap Point 1: The FTAAP will support the multilateral trading system. The Roadmap has not specified how APEC will support the multilateral trading system. APEC needs to relate how the FTAAP will support the multilateral trading system. APEC has always expressed support for the multilateral trading system. APEC’s open regionalism idea is about strengthening APEC’s regional economic integration and the WTO. APEC could add more APEC members that are also WTO members. The FTAAP would become larger and would promote the inclusive and trade liberalizing spirit of the multilateral trading system. 7

8. Analyzing the Main Points of the FTAAP Roadmap Point 2: The Bogor Goals will advance the realization of the FTAAP. The Roadmap has not explained clearly how the Bogor Goals will move forward the FTAAP. The APEC structure has strengthened substantially in recent years with the existence of active APEC fora, so that they would be able to address the FTAAP issues. The APEC structure has also been enhanced by the ability of APEC members to build consensus. This characteristic would play an important role in achieving the FTAAP. 8

9. Analyzing the Main Points of the FTAAP Roadmap Point 3: The FTAAP will be realized outside of APEC. The Roadmap has not elaborated on the idea that the FTAAP will be realized outside of APEC, parallel with the APEC process. Leaders have stated that APEC will continue to adhere to the non-binding and voluntary principles. Since a free trade agreement (FTA) is binding in nature, it is only logical that the FTAAP will be negotiated outside of APEC. Leaders are implying that the FTAAP could be a FTA, so that the FTAAP is to be negotiated outside of APEC. Leaders have stated that the FTAAP will be paralleled with the APEC process and APEC will provide guidance to the FTAAP. This point is about maintaining APEC’s linkage to the FTAAP. APEC could clearly state that the FTAAP would be an FTA, so that it would be negotiated outside of APEC to maintain the non- binding and voluntary principles of APEC. APEC would need to ensure that all APEC members are also members of the FTAAP, so as to show that APEC would play a major role in the realization of the FTAAP and to strengthen their linkage. 9

10. Analyzing the Main Points of the FTAAP Roadmap Point 4: The FTAAP will build on regional architectures. The Roadmap has not stated how the FTAAP will be linked with the regional architectures (pathways), TPP and RCEP. One possibility is that a race would take place between the TPP and the RCEP to see which one is selected to be the only pathway to the FTAAP. Another possibility is that both the TPP and the RCEP would be considered by APEC to be viable pathways to the FTAAP. If the FTAAP would be negotiated as a FTA, one way for the FTAAP to incorporate both would be for APEC to choose some parts of the TPP rules and some parts from the RCEP rules. For example, the FTAAP could follow the Bogor Goals spirit. Developed and developing economies could have different market access schedules. The FTAAP could include all the Chapters that are found in the TPP and the RCEP. The FTAAP could include capacity building programs to assist developing economies. 10

11. Analyzing the Main Points of the FTAAP Roadmap Point 5: The FTAAP will be pursued as a Free Trade Agreement (FTA) The Roadmap reaffirms the 2010 idea that the FTAAP will be a FTA but the Roadmap has not clearly stated that the FTAAP will be a FTA now or in the future. APEC could consider the FTAAP to be an informal idea that promotes an Asia-Pacific free trade area like the Bogor Goals. APEC could also realize the FTAAP through a FTA. 11

12. Suggestions to advance the FTAAP The APEC FTAAP study and the ABAC FTAAP study should elaborate on the Leaders’ views stated in the 2014 APEC Beijing FTAAP Roadmap. Specifically, the APEC and ABAC studies could consider the following suggestions: APEC would clearly state that the FTAAP would be realized in the form of a FTA. The Beijing FTAAP Roadmap has mentioned that the FTAAP will be negotiated outside of APEC, which implies formal negotiations. APEC must ensure that all APEC members are also members of the FTAAP, since APEC has reached the consensus to achieve the FTAAP. The economic benefits to APEC would be substantial when all APEC members are participating in the FTAAP. 12

13. Suggestions to advance the FTAAP Specifically, the APEC and ABAC studies could consider the following suggestions: APEC would need to add more WTO members to APEC. The FTAAP would become larger and would promote the inclusive and trade liberalizing spirit of the multilateral trading system. APEC would ensure that the TPP and the RCEP are pathways to the FTAAP. APEC’s FTAAP agreement could be a hybrid agreement that includes parts of the TPP and parts of the RCEP. 1. The developed economies and developing economies would have different market access schedules, just like the Bogor Goals. 2. The FTAAP would consist of all the chapters from the TPP and the RCEP. 3. The FTAAP would include the development of capacity building programs to assist developing economies, which is in line with the APEC process. 13

14. Suggestions to advance the FTAAP Specifically, the APEC and ABAC studies could consider the following suggestions: APEC would continue to strengthen the APEC structure. The focus would be to ensure the existence of active APEC fora and to enhance the ability to build consensus. As a result, the FTAAP negotiations could be less contentious. 14

15. Thank You 15