SYDNEY - A free trade zone within the Asia-Pacific region will lead to further integration and globalization, however, APEC member economies must first overcome economic protectionism.
Feasibility and cost-benefit studies of a free trade zone covering all APEC members, agreed as part of a proposed Free Trade Area of the Asia-Pacific (FTAAP) at the 2014 APEC summit in Beijing, are currently being assessed on schedule for delivery next year.
A free trade zone encompassing the 21 APEC members, who currently account for over 50 percent of global GDP, should potentially be implemented no later than 2025 if agreements can be reached, just under 20 years after its original proposal.
The economic integration of the APEC members under FTAAP will be more effective for trade than the US led Trans Pacific Partnership (TPP), but only if all members can work together, Director of the Institute of Global Finance at UNSW, Professor Fariborz Moshirian, told Xinhua.
Economic modelling in 2014 shows global income gains from the FTAAP would be more than eight times higher than the TPP.
"The main reason is that China is included in the former, but excluded in the latter," James Laurenceson, deputy director of the Australia China Relations Institute said.
Moshirian argues that in an ideal world, negotiations for regional agreements like the proposed FTAAP would go through the World Trade Organization where decisions are economically driven.
"That's the key issue," Moshirian said.
However, in the wake of the failed World Trade Organization (WTO) Doha trade negotiations that stumbled because complex issues couldn't be resolved, nations are now forming regional trade blocks, which are politically charged.
"That's the nature of the business," Moshirian said, arguing an effective WTO can bring nations together.
The largest hindrance to free trade members are going to face is the fight between nationalism and globalism, leading to wide scale economic protectionism which has been seen in country to country, or bilateral agreements.
"The solution is to have more regional integration like what we see in Europe," Moshirian said.
"Free trade by itself in the absence of integration creates nationalism, and that's why you see certain industries become too sensitive to let go politically in every country."
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