APEC Leaders Pledge Support For Asia-Pacific Free Trade Area

by Mary Swire, Tax-News.com, Hong Kong

03 December 2008

Leaders from Asia-Pacific nations gathered recently at the Asia Pacific Co-operation Forum summit in Peru to discuss how to counter the current economic climate through dropping international barriers to trade.

APEC leaders pledged to co-operate with one another to solve the crisis – most notably they agreed not to erect any protectionist barriers to investment or trade in goods and services and agreed to hold off on any new export restrictions.

The 21-member forum described the recent economic climate as "one of the most serious economic challenges we have ever faced,” and said trade was crucial to resolving the economic crisis. Their declaration at the meeting mirrored measures called for at the G20 meeting – to make a unified effort to stimulate investment – through spending, lending and the removal of prohibitive tax legislation.

They also called for better regulation and governance of their financial industries. However, some resentment was aired when touching on this subject, particularly by many developing economies regarding the United States’ failure to regulate its financial sector effectively, which ultimately led to the downturn.

All APEC leaders pledged co-operation in the implementation of an Asia-Pacific free trade agreement, but a speedy actualisation of the proposal was harder for some leaders to envisage. The Chinese leader Hu Jintao was optimistic of a quick resolution to the downturn believing that China would be on the way to recovering within 18 months. China said that it would begin to research into the possibility of the FTA immediately. The Australian Prime Minister Kevin Rudd, however, thought that Hu’s perspective was somewhat too optimistic, believing discussions of this magnitude would not be a short-term fix.

Trade talks have previously been hampered by disputes between China, India and the US, amongst others, who have been unwilling to compromise in some areas. There has been no mention as yet of what allowances they would be willing to offer if trade talks were to go further but the leaders did pledge to support the proposals in principle.

The twenty-one APEC members are: Australia, Brunei, Canada, Chile, China, Hong Kong, Indonesia, Japan, Republic of Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, Philippines, Russia, Singapore, Chinese Taipei, Thailand, United States and Vietnam.

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