The Potential of the Pacific Alliance in Asia-Pacific Integration Conference on The Pacific Alliance and the Multilatinas: Strategies to Approach the Asia-Pacific EAFIT Medellin Eduardo Pedrosa Secretary General Pacific Economic Cooperation Council The views expressed here are his own and do not necessarily reflect those of the PECC nor its members.
Presentation Outline About PECC The Concept of the Asia-Pacific The Current Economic Context The Trans-Pacific Trade Relationship Contemporary Developments in the Asia- Pacific Implications for the Pacific Alliance
What PECC Is A network of individuals from academia, business and government (in private capacity) organized into 26 member committees committed to enhanced Asia- Pacific regional cooperation for mutual economic benefit A forum for non-governmental research and dialogue on critical economic issues facing the region A vehicle for catalytic policy ideas and informed opinion to reach policymakers and leaders in Asia-Pacific economies
PECC s Member Committees Mongolia Canada China Korea Japan USA Hong Kong, China Chinese Taipei Thailand Vietnam Philippines Malaysia Brunei Darussalam Singapore Indonesia Mexico Ecuador Colombia Peru Australia New Zealand Chile
The Asia-Pacific Concept
The Asia-Pacific
The Asia-Pacific as a region Asia-Pacific is a construct Traces its roots to ideas of Japanese economist Kiyoshi Kojima Rise of Japan in 1950s and 1960s and importance of region to Japan and reaction to integration in Europe Kojima s proposal for a Pacific Free Trade Area led to formation of the Pacific Trade and Development Conference (PAFTAD) in late 1960s At same time businesses in the region networking through the Pacific Basin Economic Council (PBEC) founded in the 1960s This led to creation of Pacific Economic Cooperation Council (PECC) in 1980 And then to APEC in 1989 All of this traces its intellectual roots to Kojima s original proposal for a Pacific Free Trade Area (PAFTA).
UN ESCAP Members
UN ECLAC Members
The Development of Asia-Pacific Regionalism? Kojima PAFTA Idea 1964 PAFTAD 1968 PBEC 1967 ASEAN 1967 PECC 1980 APEC 1989 TPP Launched 2005 ANZCERTA 1983 NAFTA 1994 AFTA 1993 ASEAN+1s 2005-2009 FTAAP??? RCEP Launched 2011
Defining the Asia-Pacific today All PECC members All APEC members All members of the East Asia Summit
Current Economic Context
Current Economic Context Regional and Global GDP Growth
The New Normal?
The Scale of the Region: Growth of East Asian Economies 30.000 27.489 US$ billions 25.000 20.000 15.000 10.000 13.865 US$13,624 5.000 0 2008 2018
GDP per capita: PA and ASEAN 60.000 50.000 40.000 30.000 20.000 12.162 10.000 9.931 0 CHL COL MEX PER BRN CAM IDA LAO MYS MYA PHL SGP THL VNM
Comparison of consumption expenditure USA ASEAN PA Miscellaneous goods and services Restaurants and hotels Education Recreation and culture Communication Transport Health Furnishings, household equipment and maintenance Housing, water, electricity, gas and other fuels Clothing and footwear Alcoholic beverages, tobacco, and narcotics Food and nonalcoholic beverages 5,0 7,3 4,3 3,7 4,6 6,0 4,9 5,2 6,4 2,4 3,7 1,6 1,4 2,5 6,9 6,8 3,9 5,1 2,8 2,6 3,5 2,4 1,7 3,3 1,3 1,7 1,7 4,5 11,6 8,6 12,6 9,6 10,0 12,7 14,8 19,6 0 2 4 6 8 10 12 14 16 18 20 % of GDP
Trans-Pacific Trade Relationship
Growth in Intra-Regional Trade 6.000 5.568 5.000 CAGR: 9.2 percent 4.000 3.000 2.000 1.000 1.244 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 US$ billions
Growth in trade among emerging Asia- Pacific economies 25% 20% CAGR 2003-2013 20,4% 15% 10% 5% 5,5% 11,8% 12,3% 0% Advanced to advanced Advanced to emerging Emerging to advanced Emerging to emerging
West Pacific s Top 20 Imports and Pacific Alliance Share US$ millions 500.000 400.000 300.000 200.000 100.000 0 0,5% Petrol from crude 0,1% Circuit boards 0,3% Petrol from 0,2% Computer circuits 2,5% Iron ore 0,1% Other NES World 1,2% LNG 0,4% Light petroleum oils PA Percent of Total 0,0% Memory boards 0,4% Computer parts 0,6% Coal 0,1% LCD parts NES 1,9% Cars 1500cc-3000cc 1,7% Mobile phones 1,3% Mobile phone parts 0,2% Pharmaceuticals 1,1% Storage units 0,0% Soya beans 46,4% Copper ore 47,7% Cathodes from copper 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0%
Pacific Alliance Top 20 Exports and West Pacific s Share US$ millions 70000 60000 50000 40000 30000 20000 10000 0 0,1% 66,5% 50,6% 3,1% World Western Pacific (% of total) 1,7% 0,4% 9,1% 14,6% 5,4% 0,0% 4,9% 0,1% 5,4% 0,0% 3,8% 0,0% 4,1% 1,4% 5,2% 0,0% Vehicles principally Processing units Signal Receivers Unroasted Coffee Silver Light petroleum oils Ignition wiring sets Telephone parts Computers Bituminous coal Trucks < 5tonnes Petrol from Mobile phones Cars 1500cc-3000cc Unwrought Gold Computer/TV Screens Copper ore Cathodes from copper Petrol from crude 70% 60% 50% 40% 30% 20% 10% 0%
Western Pacific-Pacific Alliance Trade Summary Western Pacific s biggest imports energy, cars, minerals (iron ore, copper) Pacific Alliance members percentage share of Western Pacific imports low except for copper and copper products (close to 50% of total imports) Pacific Alliance s biggest exports energy, minerals (copper, gold), cars Western Pacific s percentage share of Pacific Alliance exports low except for copper and copper products, some energy products, some cars, coffee Huge POTENTIAL for transpacific trade
Contemporary Developments in the Asia-Pacific
An APEC Retrospective 2014 25 th Anniversary of APEC Watershed moments: 1993 first APEC economic leaders meeting 1994 Bogor Goals 2004-2006 the Free Trade Area of the Asia-Pacific Originally adverse to creation of a trade bloc What changed?
20+ years since UR Completion 180 160 140 120 Members Duration 20 years since UR completion the longest stretch of time without a new global trade agreement under the GATT/WTO system. 100 80 Regional and bilateral trade agreements are now filling this vacuum. 60 40 20 0 Apr-47 Apr-49 Sep-50 Jan-56 Sep-60 May-64 Sep-73 Sep-86 Nov-01 Geneva Annecy TorquayGeneva II Dillon Kennedy Tokyo Uruguay Doha
RTAs Notified to the WTO 300 RCEP (2012) 250 ASEAN-Japan 200 150 100 50 Australia-New Zealand Closer Economic Relations Trade Agreement (1983) ASEAN Free Trade Area (1992) North American Free Trade Area (1994) ASEAN-China P4 (TPSEP) (2002) ASEAN-Korea (2003) 0 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Developments in Regional Integration Asian Track = RCEP Post Asian-crisis response to weak support from APEC and major partners to improve the region s capacity to deal with shocks Trans-Pacific = TPP Accelerate progress towards APEC s goals of free and open trade and investment. Sustain US economic engagement in the region. What about the Pacific Alliance?
Asia Pacific Trade Initiatives Russia Chinese Taipei Hong Kong, China APEC RCEP TPP India AEC Laos Cambodia Myanmar China Korea Indonesia Philippines Thailand Japan Brunei Malaysia Singapore Vietnam Canada USA Mexico Chile Peru PA Colombia Australia New Zealand Papua New Guinea
The ASEAN Economic Community ASEAN ECONOMIC COMMUNITY SINGLE MARKET AND PRODCTION BASE COMPETITIVE ECONOMIC REGION EQUITABLE ECONOMIC DEVELOPMENT INTEGRATION INTO GLOBAL ECONOMY Free flow of goods Free flow of services: Free flow of investment Freer flow of capital Free flow of skilled labor Priority integration sectors Food, agriculture, and forestry Competition policy Consumer protection Intellectual property rights Infrastructure development Taxation E-commerce SME development Initiative for ASEAN Integration Coherent approach toward external economic relations Enhanced participation in global supply networks
Asian Trade Initiatives ASEAN Free Trade Area (1992) China-ASEAN Free Trade Agreement Korea-ASEAN Free Trade Agreement Japan-ASEAN Free Trade Agreement ASEAN-ANZ Free Trade Agreement India-ASEAN Free Trade Agreement Regional Comprehensive Economic Partnership (2015)
The Trans-Pacific Partnership A landmark, 21 st -century trade agreement, setting a new standard for global trade and incorporating nextgeneration issues Building on original P4 agreement commitment to the Asia Pacific Economic Cooperation (APEC) goals and principles 12 negotiating parties, including 3 of the PA s members 19 rounds, 9 Chief Negotiators meetings, 13 Ministerial meetings, 1 leaders meeting
PA in the Region The Pacific Alliance as a platform for economic and trade integration with a projection into the Asia-Pacific region Rapid progress on economic integration but projection into the Asia-Pacific, issues? Institutionalization MOU Who will sign? Attending APEC or other who will go?
Moving Towards an FTAAP We will take concrete steps toward realization of a Free Trade Area of the Asia-Pacific (FTAAP), which is a major instrument to further APEC's regional economic integration agenda. An FTAAP should be pursued as a comprehensive free trade agreement by developing and building on ongoing regional undertakings, such as ASEAN+3, ASEAN+6, and the Trans-Pacific Partnership, among others. APEC Leaders Statement, Yokohama 2010
Concrete Steps? we endorse the Beijing Roadmap for APEC s Contribution to the Realization of the FTAAP. Through the implementation of this Roadmap, we decide to accelerate our efforts on realizing the FTAAP on the basis of the conclusion of the ongoing pathways, and affirm our commitment to the eventual realization of the FTAAP as early as possible by building on ongoing regional undertakings We agree to launch a collective strategic study on issues related to the realization of the FTAAP APEC Leaders Statement, Beijing 2014
Income Gains from Regional Trade Initiatives
Implications for the Pacific Alliance
What do you think is the likelihood of success in concluding the following proposed agreements over the next 3 years? 40% 33,9% 33,0% 20% 18,8% 18,8% 22,5% 19,1% 8,4% 0% -20% -18,8% -22,7% -22,1% -22,9% -22,9% -40% -32,5% -60% -59,3% -80% ASEAN Economic Community Trans Pacific Partnership China-Japan- Korea Regional Comprehensive Economic Partnership Pacific Alliance Trans Atlantic Trade and Investment Partnership WTO DDA Not likely Likely
ASEAN-Pacific Alliance? September 2014: ASEAN-PA Ministerial in New York promote cooperation between the two groupings through other frameworks, including FEALAC May 2015: ASEAN Committee of Permanent Representatives and PA Ambassadors, agreed to explore cooperation in areas such as: Trade and investment Agriculture Energy Logistics SMEs Financial services and Tourism
What s next? ASEAN has MOUs/Cooperation Agreement with: United Nations, ILO, ADB, ESCAP, EU (Dialogue Partner) GCC 2009 Joint Vision 2009 MOU Between Secretariats 2010-2012: Action Plan Suggestions: Joint Expert Group? ASEAN-BAC, PA-BAC?
Percent of respondents who selected don t know for various trade initiatives 25,0% 20,0% 17,1% 21,8% 21,1% 15,0% 10,0% 5,0% 11,3% 7,9% 11,1% 7,5% 0,0% AEC TPP CJK RCEP PA TTIP DDA
Percent of respondents by sub-region who selected don t know for the Pacific Alliance Percent of respondents by sub-region who selected don t know for the Pacific Alliance 45% 40% 40,8% 35% 30% 28,6% 25% 20% 15% 21,8% 18,4% 16,3% 12,0% 10% 5% 0% All North America Northeast Asia Oceania Pacific South America Southeast Asia
Conclusions Global economic context extremely challenging slower growth, protectionist sentiments Huge opportunity for PA in growing Asia- Pacific market Opportunity to boost growth through regional economic integration
Conclusions Lessons from PA members for FTAAP Coverage? Treatment of next generation issues Modalities/structure Asia-Pacific as a construct - concept still being defined Integration at a crossroads or has it gone full circle back to Kojima? Various configurations and permutations Opportunity for PA through engagement: ASEAN FTAAP