Free Trade. But Not For All.

Related entries: Economy, General, News, Trading

While the US and EU are increasingly taking a protectionist stance against China and its ever-growing exports, others closer to home are seeking to develop free trade agreements. I noted New Zealand’s efforts here, but since then there has been a lot of news on the issue. PanAsian Biz included details of a People’s Daily article about a possible free trade area between China and India, while IHT focused on APEC:

    “Leaders of the 21 economies of the Asian-Pacific Economic Cooperation forum are expected to issue an urgent request for reviving stalled World Trade Organization talks and review progress on meeting the grouping’s free-trade goals… Senior officials meeting behind closed doors in preparation for the summit…also discussed the possibility of setting up a free-trade area encompassing the entire Asian-Pacific region.”

For those who may have missed out on APEC news in the past, the group covers “2.6 billion people, roughly half of world trade and 55 percent of the world economy”. While China is the dominant power at APEC, it is clearly not the only one. And this is not the only free-trade discussion they are in. Welcome ASEAN:

    “Beijing’s growing leverage was evident at last month’s commemoration of 15 years of formal ties between China and leaders from the 10-member Association of Southeast Asian Nations, or ASEAN. China and ASEAN have their own plans for a free-trade area, and China-ASEAN trade has soared to more than US$103 billion (€81 billion) last year from US$8 billion in 1991.”

Now, in addition to ASEAN (not to mention Hong Kong’s Closer Economic Partnership or CEPA), we also have CAFTA and EAFTA (as reported in Nation Multimedia):

    “In economic cooperation, significant changes have been taking place. This can be seen from the agreement on establishing the China-Asean Free Trade Association (CAFTA). China and Asean have planned to fully realise CAFTA in 2011. Related to this, China is trying to promote the idea of an East Asia Free Trade Area (EAFTA).”

Japan’s Research Institute of Economy Trade and Industry (RIETI) carries some analysis from ZHANG Yunling, Director of the Institute of Asia-Pacific Studies from the Chinese Academy of Social Sciences. In a presentation (in October 2005) he noted that while, China uses WTO as its central platform for trade liberalization, regional trade arrangements are also an “economic priority”. In addition to APEC, The Shanghai Organization and Northeast Asia, he notes CAFTA as well as the following bilateral agreements that were “under negotiation”:

    • China-New Zealand (2004)
    • China-Chile (2004)
    • China-Australia (2005)
    • China-Pakistan (2005, with the Early Harvest Program beginning 2004)
    • Cooperation Council for the Arab States of the Gulf (GCC) (2004)
    • South African Custom Union (2004)

Still more bilateral agreements that were “under preparation” included:

    • China-Iceland (2005)
    • China-South Korea (2005)
    • China-Brazil (2005)
    • China-India (2005)

There is, of course, no certainty about where these plans will go, and deals will be driven by differing political and economic interests. However, it is clear (and increasingly heard spoken in these parts) that traditional US and EU-centric approaches to trade policy must start to account for these moves by China and others in Asia. Closing the door to cheap imports will not solve long-term structural problems for traditional industries in developed economies, and is likely to harm consumer interests. Getting greater access to China’s growing domestic markets may however help redress the balance. Free trade is unlikely, to say the least, but a less protectionist approach may benefit all sides.

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3 Responses to “Free Trade. But Not For All.”

  1. China Hearsay: China law, business, and economics commentary Says:

    […] gingly, turned its attention back to Asian economic integration, please read a much better post by Jeremy Gordon. Excellent write-up that makes me feel lazy for not better supporting my p […]

  2. Jeremy Gordon Says:

    An update on the China-India discussions today, the Financial Expresss: “NEW DELHI, NOV 20: India on Monday ruled out a free trade agreement with China for the time being, but instead said a comprehensive economic cooperation agreement (Ceca) was worth examining….”. See full article here:
    http://www.financialexpress.com/fe_full_story.php?content_id=146969

  3. Jeremy Gordon Says:

    Now a free trade agreement has been signed with Pakistan. People’s Daily reports: “China and Pakistan signed a free trade agreement (FTA) on Friday, which is projected to triple the current bilateral trade to reach 15 billion U.S. dollars within five years. Under the agreement, China and Pakistan will begin to reduce or eliminate tariffs of all products in two phases.”

    Source: http://english.people.com.cn/200611/24/eng20061124_324918.html

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