Doha still the priority

Cebu City -- A successful end to the Doha round remains the primary wish of Asia-Pacific business leaders but a free trade area encompassing the entire region should be considered if world trade talks collapse. This position is expected to be adopted by the APEC Business Advisory Council (ABAC) as it ends its 10th anniversary meeting today, and will be presented to Asia Pacific Economic Cooperation leaders when they meet this November in Hanoi. While the ABAC will continue to push for the successful completion of World Trade Organization (WTO) negotiations, it will also urge APEC leaders to consider creating a Free Trade Area of the Asia-Pacific (FTAAP) as an alternative way of achieving the Bogor goals of free and open trade and investment, ABAC chairman Hoang Van Dung yesterday said in a telephone interview. "The [working] groups have reached a compromise. We are wary about the lack of progress of the Doha Round. So we will urge the leaders to finish the negotiations as soon as possible," he said. "Secondly, we have a study on [the feasibility of] the FTAAP. We think this is worthwhile to consider and we will urge the leaders to look at this as an alternative," Mr. Dung added. An APEC-wide FTA would link Asia and the Americas, creating a trade zone that will control over half of global trade. APEC has been dodging the FTA proposal because some leaders believe the successful conclusion of the Doha Round is more important. At the ABAC meeting here, calls were made anew to consider a regional trade arrangement in the absence of a WTO agreement. Mr. Dung, who is also the first vice-chairman of the Vietnam Chamber of Commerce and Industry, said Asia-Pacific business leaders are wary at the moment about the challenges posed by the proliferation of free trade agreements (FTAs) and regional trade agreements (RTAs). Different trade policy orientations, he said, have created a complex network of rules leading to the so-called "FTA spaghetti or noodle bowl" effect, he said. "We are concerned with too many FTAs. There are 21 FTAs among the [APEC] members and seven more are coming soon. This creates concern for the business sector because of the increasing transaction costs. And many of these FTAs have different rules, especially on the Rules of Origin," he said. This was stressed on Sunday by Dr. Supachai Panitchpakdi, secretary general of the United Nations Conference on Trade and Development (UNCTAD). "It is very important that APEC assesses the messy patchwork of FTAs. Can they live with these? Have they resulted in a net benefit or a net loss?," he asked. An analysis of the different FTAs/RTAs within APEC was presented by the Marshall School of Business of the University of Southern California on Saturday. It showed that while the FTAs are consistent with WTO provisions and facilitate the lowering of tariffs across the board, they have so-called "WTO plus" provisions that create divergence, increase the complexity of trade, and increase the cost of doing business. The ABAC -- created in 1995 to advise APEC leaders on business sector’s concerns -- started the process of examining the feasibility of an APEC-wide free trade area when it recommended the creation of a high-level task force to look into this option in 2004. Mr. Supachai also advised the APEC to encourage its member economies to go the full path of unilateral liberalization, noting that China and India liberalized trade on their own and not because of bilateral or multilateral commitments. He also said the APEC should adopt a regional aid-for-trade program to facilitate the participation of poorer economies in the regional trading system. "The European Union has a structural adjustment financing scheme to prepare the new members of EU ... a regional grouping [such as APEC] can even be more effective because the problems are less complicated." Aid-for-trade is incorporated in the Doha Round but Mr. Supachai said APEC should help ensure that aid-for-trade "is in place notwithstanding Doha." Aid-for-trade comprises technical assistance, capacity building, investments in trade-related infrastructure, assistance such as fiscal support, etc. Another area that APEC should look into is the migration of workers, given how their remittances have grown to four times the size of official development assistance. "Migration has become an important issue for the UN. In the next meeting in September, we will discuss financial regulations as well as the need to ensure that migrants’ rights are enforced," Mr. Supachai said. The UNCTAD chief , who also advised APEC to have a bigger voice in deliberative bodies such as the WTO, said he is optimistic the Doha Round will be resuscitated because "I don’t think the world can afford not to have Doha succeed." Yet he warned against making too rosy assumptions of Doha outcomes, among these that the benefits to be gained will be in the hundreds of billions of dollars. "We should atop making exaggerated calculations of benefits. A figure mentioned has been $100 billion and another, $200 billion, which have been ridiculed. How much depends on various factors," he said. In the same way, Mr. Supachai warned against too negative outcomes, such as a 0.5% average additional gross domestic product (GDP) growth. "The additional growth benefit for Asia has been placed at 0.4% to 0.8% or an average of 0.5%. The calculation for Asia is 6% GDP growth in the next two years, so an additional 0.5% GDP does not sound that much for all the trouble for Doha," he pointed out. -MARITES S. VILLAMOR, Business World Cebu Bureau Chief with a report from Judy T. Gulane