APEC and the new Trans-Pacific Partnership

AT the summit of leaders of states and territories that straddle the Pacific Ocean, the most important topics that should have been discussed are countries that do not belong to the 21-member Asia-Pacific Economic Cooperation (APEC) bloc—Iran and eurozone nations, particularly Italy and Greece.

China was a hot topic, but only because the host of this year’s summit, United States President Barack Obama, seemed to blame the Chinese currency, the yuan—it is devalued (undervalued is more appropriate term) by 20 to 25 percent, according to him—for the current joblessness in America and the diminished competitiveness of US exports vis-à-vis China.

China, by the way, has the biggest representation in APEC, thanks to a technicality—mainland China, Chinese Taipei (Taiwan), and Hong Kong. In this particular group, members are economies, not states or countries.

That is not counting Singapore, which is veritably a Chinese city, and Malaysia, which has an economically dominant Chinese community.

So when Obama brings up a topic as sensitive as revaluing the yuan, he naturally goes nowhere.

China is also being cajoled into contributing to a European rescue fund for debt-ridden eurozone countries—Portugal, Ireland, Italy, Greece, and Spain, or PIIGS.

China has $3.2 trillion reserves, arguably the world’s largest foreign currency cash hoard. Additionally, Taiwan has $400.77 billion; Hong Kong, $277.2 billion; and Singapore, $242.28 billion.

The US has $146.58 billion foreign reserves—paltry by the standards of rich APEC members like Japan ($1.137 trillion) and Russia ($516.8 billion).

Eurozone nations, meanwhile, have combined reserves of just $886.35 billion, which is not even enough to pay for Italy’s $2.6-trillion debt.

It seems that collectively, the 17 countries of the euro are technically bankrupt. Their bloc owes more in foreign debts than what they earn from their exports of goods and services and income from foreign dividends and royalties. That is why they need to create a financial firewall or total bailout fund of one trillion euros ($1.4 trillion). China is supposed to contribute substantially to this rescue fund.

As of June 30, 2010, the US has foreign debts of $14.8 trillion; the European Union (EU), $13.72 trillion; the United Kingdom, $8.98 trillion; Germany, $84.7 trillion; France, $4.69 trillion; Italy, $2.23 trillion ($2.6 trillion today); and Spain, $2.16 trillion.

After nearly a quarter century, APEC still has to assert its relevance and explain what it is all about. The original idea, it seems to me, is that APEC is supposed to promote harmony and increased trade in the world’s most dynamic region.

The Asia-Pacific bloc’s 21 members span four continents and collectively account for 40 percent of the world’s population, 54 percent of the world gross domestic product (GDP), and 44 percent of total world trade.

To me, those who benefit the most from APEC are businessmen who are able to secure an APEC card—a visa-free travel card that speeds up processing at immigration counters in the bloc’s member economies.

As for the peoples of APEC, they have been battered by two major financial crises—the 1997 Asian Financial Crisis that was triggered by the run in Thailand and the 2008 financial meltdown and recession that was triggered by the subprime mortgage collapse in America.

All is not lost with APEC, though. Actively being pursued is the Trans-Pacific Partnership (TPP), an ambitious, next-generation Asia-Pacific trade agreement.

“The TPP will boost our economies, lower barriers to trade and investment, increase exports, and create more jobs for our people, which is my number-one priority,” Obama said when he addressed the APEC summit on November 12 in his home state of Hawaii.

“Along with our trade agreements with South Korea, Panama and Colombia, the TPP will also help achieve my goal of doubling US exports, which support millions of American jobs,” he added.

Japanese Prime Minister Yoshihiko Noda has expressed his country’s interest in the TPP. Obama readily welcomed the Japanese participation, noting that “eliminating the barriers to trade between our two countries could provide a historic opportunity to deepen our economic relationship, as well as strengthen Japan’s ties with some of its closest partners in the region.”

The TPP, the prestigious Economist magazine wrote also on November 12, “has suddenly emerged as the most promising trade liberalization initiative since the Doha Round of world trade talks stalled in 2008. On November 11, Japan, the world’s third-largest economy, announced its intention to join America and eight other countries in negotiating what its advocates hope would emerge as the new gold standard for free trade in the world’s most dynamic economic zone.”

The ten-country deal, according to Reuters, will cover a market 40 percent bigger than the EU. The agreement calls for free movement of almost everything, except labor.

With the eurozone in shambles, The Economist pointed out, the TPP “would further shift the world’s center of economic gravity from the Atlantic Ocean to the Pacific.”

Noda’s “decision may spur other big economies, such as Canada, to make renewed efforts to join the negotiations, which currently include America, Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam. If America and Japan can pull off such a deal, the TPP could challenge China’s own free-trade push in the region, which revolves around the Association of Southeast Asian Nations (Asean), South Korea and Japan, rather than the Pacific Rim,” the magazine said.

“By joining with America, Japan also hopes to influence global technological standards in industries like electric cars and clean energy, rather than having those heavily swayed by China,” it added. –TONY LOPEZ, Manila Times

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