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APEC cautiously supports China-backed free-trade zone

BEIJING: A Pacific Rim summit on Saturday voiced cautious support for a vast free-trade zone proposal being pushed by China in the face of reported resistance from the United States, which is promoting its own regional trade pact.

China’s promotion of the Free Trade Area of the Asia-Pacific (FTAAP) idea — and the narrative of Sino-US trade rivalry on the issue — has loomed as a major agenda item at the diplomatic gathering in Beijing.

A joint statement by foreign ministers of the 21-member Asia-Pacific Economic Cooperation (APEC) forum called for steps to be taken to “translate the FTAAP from a vision to reality”.

But it agreed to launch a “strategic study” on FTAAP, avoiding China’s calls for a “feasibility study” on the concept.

The wording of next week’s final summit communique has been toned down in a compromise by Beijing after the United States objected to use of the term, according to a report by the Hong Kong’s South China Morning Post (SCMP).

It quoted a US official saying Washington objected “because when you use the word feasibility study, it’s used in trade talks as implying the launch of a negotiation towards a free-trade agreement.”

The ministers’ statement also made no mention of a 2025 target date for realising the FTAAP, which had been floated earlier.

The same language is expected in the joint communique Tuesday at the end of a two-day summit of top leaders hosted by Chinese host President Xi Jinping and including US President Barack Obama plus his Russian counterpart Vladimir Putin.

The FTAAP will be mentioned only in an annex to the communique, and not the main statement, the SCMP said.

Beijing is hosting APEC — which accounts for 40 percent of the world’s population, almost half its trade, and more than half its GDP — for the first time since 2001, and is using the gathering to underline its growing global economic clout.

China is now the world’s second-largest economy following the United States, and is increasingly pushing for a greater say over the global trade and economic architecture.

 ‘Spaghetti bowl’

In the run-up to the APEC gathering, Chinese media have aggressively pushed for the FTAAP to be accelerated as a solution to the current “spaghetti bowl” of competing regional free-trade proposals, an apparent swipe at the US-backed Trans-Pacific Partnership (TPP).

The US has been trying to secure agreement on the TPP, a grouping of 12 nations including Japan, Australia, Malaysia and Mexico — but notably excluding China.

All 12 also belong to APEC, and the TPP constitutes the economic component of Washington’s much-touted “rebalance” of strategic attention to the Asia-Pacific.

The SCMP quoted an unnamed Chinese official as saying: “The US wants to impede FTAAP, and they want to promote TPP during APEC. This is really annoying for us.”

Some Chinese analysts have viewed the US effort as a way to thwart the FTAAP and thus counter Beijing’s growing influence in the Pacific Rim — concerns Washington has dismissed.

The APEC ministers statement endorsed “a step-by-step approach, with the goal of establishing the FTAAP as early as possible by building on ongoing regional undertakings”, but also referring to its “eventual realisation” and couching it in cautious and vague diplomatic language.

It instructed that the “strategic study” be completed by end-2016.

The Chinese official quoted by the paper said Washington had insisted on holding TPP talks on the sidelines of APEC but had eventually agreed to keep such efforts low-profile.

Wang Shouwen, an assistant commerce minister, had said in April that China wanted an FTAAP “feasibility study”, but added there “will be no conflict” between the proposal and other free-trade initiatives in the region. (AFP)

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