The Political Economy of a Free Trade Area of the Asia-Pacific

Vinod K. Aggarwal

Business Asia, 2007

What are the prospects for a free trade area in the Asia-Pacific (FTAAP)? This article addresses this question from the perspective of the political economy of US trade policy and the current role of the Asia Pacific Economic Cooperation Forum (APEC). Although such an agreement may well be beneficial from a narrowly economic standpoint, the reality of US trade politics, of relations between Northeast Asian economies, and of APEC’s relative institutional weakness make it highly unlikely that an FTAAP will come to fruition in the short to medium term, regardless of whether the Doha Round of the World Trade Organisation (WTO) is successful or not. Moreover, even the tactical use of an FTAAP to advance the WTO agenda is likely to backfire and simply further undermine prospects for successful completion of the Doha Round. Instead, I suggest that APEC should play an active role in monitoring the proliferation of bilateral trade agreements in the region and work to promote the multilateral trade agenda.

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