Free Trade Agreements and Regional Trading Agreements
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APEC recognises the important role Regional Trading Agreements (RTAs) and Free Trade Agreements (FTAs) can play in trade liberalisation in the APEC region.

In 2005 APEC Leaders included the promotion of high-quality RTAs and FTAs as an element of the Busan Roadmap towards the Bogor Goals and committed APEC to developing model measures for commonly accepted FTA chapters.

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Senior officials continue to provide updates at each of their meetings on the most recent developments on FTAs/RTAs in the region.

Discussions on the possible pathways to an FTAAP continue. APEC senior officials will continue to build on work on next generation trade and investment issues by sharing progress achieved towards implementing the identified issues by Novemebr 2013. They will also undertake further study on the impact of local content requirements on regional integration and economic growth, and discuss possible ways through which economies can promote job creation and competitiveness goals in ways that enhance, rather than distort trade.

The CTI will continue with implementation of the Action Plan Framework for REI Capacity Building Needs Initiative where tailored programs supporting APEC’s work to strengthen and deepen REI, and facilitating the realisation of FTAAP will be undertaken.  The objectives of the framework are:  (i) narrow FTA capacity gaps among member economies, (ii) enhance trade policy capacity by sharing best practices, and (iii) identify challenges to FTAAP and explore possible ways to overcome them.

Promoting high quality RTAs/FTAs
In 2008 the Committee on Trade and Investment (CTI) completed its work on model measures by concluding five chapters, including a chapter on Customs Administration and Trade Facilitation that was developed by the APEC Business Advisory Council (ABAC). This brings the total number of chapters to 15 (see Appendix 2 of the 2008 CTI Annual Report). These model measures will serve as a reference for member economies seeking to negotiate RTAs/FTAs and will assist in promoting consistency in RTAs/FTAs across the region. The initiative builds upon the APEC Best Practices for RTAs/FTAs which also serve as a useful guide for APEC members when undertaking RTA/FTA negotiations.

In 2009 the CTI explored possibilities for the model measures for trade facilitation to be expanded in order to provide more specificity and content. A comparative listing of the 2005 APEC model measures for trade facilitation, the 2008 ABAC model measures for trade facilitation and customs facilitation, and the trade facilitation chapter from the Canada-Costa Rica FTA was compiled for this exercise. The CTI noted the possible contribution of comparative listing to future work on APEC's Second Trade Facilitation Action Plan (TFAP II) and on the Supply-Chain Connectivity (SC) Framework.

Identifying Convergences and Divergences
In 2009, the Convergences/Divergences Study of APEC FTAs was updated by expanding the scope from 30 to 42 intra-APEC FTAs/RTAs and deepening the coverage to include a new chapter on electronic commerce.

In 2010, an overview and a matrix of a new chapter analysis on cooperation were completed by Thailand. The analysis of the cooperation chapter showed that a broad convergence among the cooperation chapters of the analyzed FTAs is highly feasible. Most of the objectives, forms/activities, mechanism/work programme of cooperation are common in content.

The 14 chapters covered previously were: market access, rules of origin, customs procedures, environment, investment, trade remedies, competition policy, cross-border services, sanitary and phytosanitary measures, technical barriers to trade, government procurement, intellectual property, labor and dispute settlement. The updated information has been uploaded to the APEC FTA database of the Convergence and Divergence Study at

Regional Economic Integration (REI) and a Free Trade Area of the Asia Pacific (FTAAP)
Accelerating regional economic integration (REI) has been one of the key priorities for APEC since 2007 and this work is advanced mainly by Senior Officials, the CTI and its sub-groups. Two Trade Policy Dialogues (TPD) on a Free Trade Area of the Asia-Pacific (FTAAP) were held in 2009 to help members better understand the economic benefits and technical and policy implications of the establishment of an FTAAP. The TPDs covered: possible pathways to an FTAAP (for example, by docking and merging FTAs/RTAs based on APEC studies of the levels of convergence and divergence in FTAs between members); the "next generation" trade and investment issues that should go into a 21st century trade agreement; and the suggestion from ABAC that Senior Officials should start work on a timeline.

In response to Leaders and Ministers instructions in 2009 to intensify work on initiatives to promote greater convergences among economies in key areas of APEC’s REI agenda, a TPD was held in May 2010 on investment and standards/technical barriers to trade (TBT). This TPD contributed to the development of the Road Map on Investment through discussion of (i) the core elements in the work undertaken by the United Nations Conference on Trade and Development (UNCTAD); and (ii) findings of the Convergences/Divergences Study as possible contributions to the development of the APEC Investment Principles. The discussion on standards/TBT was aimed at raising awareness of the gamut of methods in which overcoming Non-Tariff Measures (NTMs) could be facilitated. The need for better alignment of standards and increased understanding through regulator collaboration was emphasized.

In 2009, Korea led a study on the economic impact of a possible FTAAP and identified specific benefits and challenges for APEC economies. To take forward the results of this study, the CTI endorsed a proposal on “Capacity Building Needs for Strengthening REI” which sought to conduct a survey primarily targeted at helping developing member economies identify their capacity building needs, including upgrading of negotiation skills, for establishing larger-scale FTAs/RTAs. Taking the outcomes of the survey analysis into consideration, the report recommended the development of detailed action plans and implementation of a tailor-made program for capacity-building in possibly cooperation with relevant international organizations, such as OECD, IDB, UNCTAD, ESCAP, WTO, and ADB to facilitate work process and maximize the effects. Consideration of these recommendations, including the development of an action plan, will be taken up by the CTI in 2011.

In 2010, APEC Leaders reaffirmed their commitment at their Yokohama meeting to pursue stronger and deeper REI by addressing barriers to trade and investment and by taking concrete steps toward realization of a Free Trade Area of the Asia-Pacific (FTAAP). Leaders also agreed that “APEC will make an important and meaningful contribution as an incubator of an FTAAP by providing leadership and intellectual input into the process of its development, and by playing a critical role in defining, shaping, and addressing the ‘next generation’ trade and investment issues that FTAAP should contain” and that “APEC should contribute to the pursuit of an FTAAP by continuing and further developing its work on sectoral initiatives in such areas as investment; services; e-commerce; rules of origin; standards and conformance; trade facilitation; and environmental goods and services”.

In 2011, three “next generation trade and investment issues” were identified: (i) facilitating global supply chains; (ii) enhancing small and medium-sized enterprises (SMEs) participation in global production chains; and (iii) promoting effective, non-discriminatory, and market-driven innovation policy.  APEC Leaders agreed to advance a set of policies to promote effective, non-discriminatory, and market-driven innovation policy to set a model for innovation in the region as the best path toward fostering innovations that will increase productivity and ensure economic growth. They also decided on areas of cooperation that could be included in trade agreements to enhance the participation of small and medium-sized enterprises (SMEs) in global production chains.

In 2012, APEC Leaders remained committed to addressing next generation trade and investment issues to further integrate APEC economies and expand trade throughout the region. They welcome addressing transparency as a new next generation trade and investment issue, and the endorsement of the APEC Model Chapter on Transparency for RTAs/FTAs to be used as a guide by APEC economies.

Catherine WONG (Ms)
Program Director
APEC Secretariat
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