US has shown no interest to solve the WTO issues rather focusing on regionalization. The international trade in manufactured goods increased from $95 billion to more than $12 trillion in the last 50 years. The United States has enjoyed a position of super power among the nations because of its foreign trade, military modernization, educational system, multi cultural ambiance and its ability to harmonize and profit from cultural influence from different parts of the world. Since APEC’s birth in 1989 it has grown to encompass 21 members and represents the most economically dynamic region in the world, accounting for 40. % of the world’s population, 54. 1% of world GDP and 43. 7% of world trade. China has gradually replaced the U. S. as the main export market for Southeast Asian countries and now has trade deficits of tens of billions of US dollars with neighboring countries and regions. Japan who is the major dominant player in the Asian region is losing its power to china. If China continues to grow at the rate projected by the trends, then it is very likely that in the next twenty years, there will be a major reallocation of power among the world leaders.
China will have enough wealth industry, and technology to rival the United States for the position of leading world power. With the rise of China, Asia pacific region has received growing attention in recent years as a region that is integrating successfully into global economy. China needs to solve its domestic problems and needs to change its political strategy in the near future to balance its power with US. China should actively participate in various agreements and should bring new ideas to the table making win-win policy for all. To win the power game china should play active role politically, militarily and culturally.
It should build strong diplomatic relation with other nations and need to solve its human right problem and need to solve the economic disparity problem in the country. This paper discusses several issues related to Free Trade and its impact on the global economy and sustainability. The first part gives details about the situation and the achievement of APEC. The second part discusses China’s gaining economic integration in the Asian region, while the third part discusses about the role of china in the region followed by the future of APEC. Key words: FTA, APEC, Global Power, Reform, Trade ;amp; Investment, Global Power
Introduction APEC is a premier forum for facilitating economic growth, cooperation, trade and investment in the Asia-Pacific region. Since APEC’s birth in 1989 it has grown to encompass 21 members spanning four continents, and represents the most economically dynamic region in the world, accounting for approximately 40. 5% of the world’s population, 54. 1% of world GDP and 43. 7% of world trade. The forum was created to cooperate on regional trade and investment liberalization and facilitation with the objective to enhance economic growth and prosperity in the region and to strengthen the Asia-Pacific community.
APEC is a unique organization which has been revolving around dialogues with no binding obligation in contrast to the EU and NAFTA. APEC member countries have already had several meetings with no fruitful results. Therefore APEC still faces a bigger task to make matters work at the regional level rather than just mere talks among the nations. Although its existence was never more than a talk-shop among the members, the diversity and coverage of extensive geographic area gives its relevance at a regional collaboration.
Since the Osaka meeting in 1995, APEC is expanding its reach in new areas of international interaction and increasing its activities on the national level. When APEC was founded in 1989, it was not more than a loose discussion forum, and many claim that this is what APEC is still today. Since 1989 APEC not only widened its membership (from 12 to 21 in 1998) but also in scope. Due to the high diversity of its members, APEC has a completely different situation than most other regional groupings. Member economies of APEC do not share cultural ties.
Unlike trade agreements in South America or European Union, the Pacific region has no common history and does not share any big historical trauma. The 21 APEC Member Economies consist of Australia; Brunei; Canada; Indonesia; Japan; Republic of Korea; Malaysia; New Zealand; Philippines; Singapore; Thailand; United States joined in 1989, Chinese Taipei; Hong Kong; People’s Republic of China joined in 1991, Mexico, Papua New Guinea joined in 1993, Chile joined in 1994 and Peru, Russia and Vietnam joined in 1998. It is well known that after the collapse of USSR, Russia’s membership for APEC was supported by US despite protest from Australia.
The beginning of the 21st century was stimulated by communications and transportation technology experienced a push for greater global integration. In the beginning, the push was focused on protecting the rights of investors and corporations and gradually it came for relation among nations. International trade and investment since then are looked as the key factors that can advance the world’s social and environmental well-being when managed within a political framework that aligns market forces with the public interest, and preserves the right of the public to determine what constitutes their interests.
Emergence of Global production markets and broader access to a range of foreign products for consumers and companies, particularly movement of material and goods between and within national boundaries has increased significantly. The international trade in manufactured goods increased more than 100 times (from $95 billion to more than $12 trillion) in the last 50 years. The United States has enjoyed a position of being the super power among nations, in part because of its strong intellectual, economy and military power.
With the influence of globalization and with the help of US economy, the People’s Republic of China has experienced some tremendous growth within the past decade. If China continues to grow at the rate projected by the trends, then it is very likely that in the next twenty years, there will be a major reallocation of power among the world leaders. China will have enough wealth, industry, and technology to rival the United States for the position of leading world power. With the rise of China, Asia Pacific region has received growing attention in recent years as a region that is integrating successfully into global economy.
The major regional economic integration in the last century was mainly in three regions, America, European Union and The Asia Pacific regions. The EU had more than 50 years of experience for the integration during the cold war. In the early 40’s the Benelux (Belgium, Netherland and Luxembourg) union was formed for cultural, economic and geographic grouping and in the early 1950 these countries joined West Germany, France and Italy to form the European Coal and steel community which was the earliest version of European Union.
Benelux countries started the union to unify the economic activity for a sustainable community. They have also established Benelux Court of Justice in Brussels which now guarantees the uniform interpretation of common legal rule. After seeing several successes in the integration the European countries are now on the way to integrate the political union ex. , The United States of Europe. The United States has seen economic success in integrating Canada and Mexico. The North American Free Trade Agreement (NAFTA) was made between the USA, Canada and Mexico that created a trilateral trade bloc in North America.
This agreement removed most barriers related to trade and investment among the countries. However, this trilateral trade bloc is still at an early stage when compared with the European Union. In one way NAFTA can be seen as a way for the US to fulfill its own dream. President Bush also during his tenure unveiled the Enterprise of the Americas Initiative (EAI), a hemispheric program that he projected would establish a free-trade zone stretching from “Anchorage to Tierra del Fuego,” expand investment nd provide a measure of debt relief to the countries in Latin America and the Caribbean. The US is a much bigger nation and much more powerful compared to its counterpart. The US has taken the leadership of the continent and it has paid them during their economic success. Asia-Pacific Economic Cooperation (APEC) which was formed in 1989 has not witnessed much result compared to the NAFTA and EU territories of APEC show huge economic differences among nations. APEC is more heterogeneous than homogeneous while resource allocation is also not uniform among the APEC nations.
But after the era of communism, China strengthened itself and it now ranks number one in export among global community overtaking Germany recently. China has transformed itself into an industrial nation and it’s the right time for it to integrate Asian countries. China has also started Free Trade Agreement with many nations and is on the process of joining the Association of Southeast Asian Nations (ASEAN) and ASEAN Free Trade Area (AFTA). Japan which is the major dominant player in the Asian region is losing its power to China. China has also taken several steps in recent days to gain power.
China also dominates the region trough ASEAN Plus Three FTA. It has also started activities to take initiative in the East Asia region without the support of USA which is indirectly supported by Japan to suppress China’s Power in the region. Japan supports USA in several trade related issues. US wants to build ASEAN one and Pacific one free trade area with its own leadership. However in the last decade we have seen that the World Trade Organization (WTO) has failed to achieve its goal and there was no solution, also US has shown no interest to tackle the WTO issues.
Japan has also started to train several countries for its benefit. ASEAN Plus Three (ASEAN, China, Japan, South Korea) and ASEAN Plus three Plus Three (ASEAN, China, Japan, South Korea, India, New Zealand, Australia) countries are now trying to build East Asian Community. In the recent 2009 APEC conference in Singapore, USA made several progress related to its own benefit, also, the 2010 APEC conference will be in Japan – its allied nation and in 2011 it will be in USA. These three consecutive ears will be a best chance for US to benefit maximally from the trade activities as it can influence the trade related activities in its own interest. Also, US through supports from Singapore and Japan will prepare a better model based on its own leadership. US initiative has also started which can be seen from the Obama’s Administration. They are trying to gain support from Asia pacific Free trade through which US can export more. In the Singapore conference different countries have received different agendas related to deregulation and financial support.
Next year Japan can collect much information and can prepare a new model for the Asia pacific and then after the US conference can provide some conclusion. So far NAFTA has not seen much success and if Asian countries and USA join one FTA then it will benefit US as it is more competitive than others. In Asia, Japan is facing aging problem and is losing power in the continent. USA in Asia is trying to support its allies to make a new model that could benefit itself. China could face several challenges if USA holds more dominant power in the Asian region.
After the Global Financial Crisis China has come at par with the USA but it would be difficult for China to compete with USA unless it makes itself superior in economic power and strong military power (might) on land, sea and in the air. China needs to observe and act strategically on specific issues that it needs to strengthen itself domestically and globally. To become a major powerful nation, first it needs to solve its domestic problems and secondly to develop its economy and social welfare. It needs to strengthen its Ground, Water, Sea and Nuclear Power.
Once it strengthens these areas, other nations including US would find it more difficult to attack China. It can also get more benefit from other countries. Once it achieves power automatically the smaller nations will follow China rather than USA ex. South Korea, Singapore etc. China also has strong interest in the Korean peninsula and therefore in the near future South Korea can not depend on USA. Finally, China should learn to strengthen its domestic power. Being the 2nd leader of the G2 it should try to make Yuan as a key currency in the global market and it should play more global role than it is playing now.
China can also show to the world that its development will continue and it should also develop its own model ex. USA, Russia etc in the last decade and then only it can come at par be to USA. APEC Situation APEC compared to EU and NAFTA differs in several aspects. Most of the APEC nations were occupied by western nations and they have exploited many APEC countries. Western countries believe that it’s very difficult for these countries to be united as one as there is no dynamism among the citizens.
People’s way of thinking, lack of motivation and other factors have changed their way of life and economic development. They have always depended on other countries and have taken no initiative for their countries. They have lacked strong leadership. After the Second World War most of the countries were independent and General Agreement on Tariffs and Trade (GATT) was established in the wake of other new multilateral institutions dedicated to international economic cooperation. A comparable international institution for trade, named the International Trade Organization (ITO) was successfully negotiated.
The ITO was to be a United Nations specialized agency and would address not only trade barriers but other issues indirectly related to trade, including employment, investment, restrictive business practices, and commodity agreements. But the ITO treaty was not approved by the United States and a few other signatories and never went into effect. 20 years ago an attempt through APEC was made for economic partnership under one leadership in the Asia Pacific region. Modern colonization like that of US and Japan has benefited both countries in many aspects. APEC provides a better platform for all the participating countries to unite together.