HONOLULU, Hawai’i -- As international attention focuses on the economic situation of the EU - the rollercoaster political-economic ride of events unfolding in Greece and Italy and the G20 summit in Cannes - and domestic attention focuses on the Occupy Wall Street movement and the XL Keystone Pipeline protests, President Obama shifts gears this week to the Asia Pacific region.
On Tuesday, the Asia Pacific Economic Cooperation (APEC) summit kicked off in Honolulu, Hawai’i.
Running through Sunday, November 13, the summit brings together 21 Pacific Rim economies.
Established in 1989, in the face of the perceived collapse of communism, APEC seeks to promote free trade in the Asia Pacific region. In particular, the current APEC meeting seeks to pave the way for a Free Trade Agreement of the Asia Pacific (FTAAP) region.
In a talk given at the University of Hawai’i East-West Center today, Secretary of State Hillary Clinton referenced the importance of transatlantic systems for the 20th-century. She stated “The 21st-century will be America’s Pacific Century.”
The Asia Pacific region continues to increase in economic might -- witness China’s offer to bail out the EU a mere two weeks ago – President Obama is attune to these geopolitical shifts.
Together, the 21 member economies account for over half of global GDPs, purchase over half of US goods and form almost half of world trade.
Seven of the U.S.’s top 15 trade partners are located in the APEC region.
President Obama has sought agreements to benefit from the region since the very outset of his presidency.
A Harbinger of Things to Come: The Korea-US Free Trade Agreement (KORUS FTA)
On February 10, 2011, the United States and South Korea signed two agreements – amendments to the Korea U.S. Free Trade Agreement (KORUS FTA) ratified on June 30, 2007.
The agreements - the most significant the U.S. has signed in over 16 years, since the North America Free Trade Agreement (NAFTA) - reduce Korean tariffs on U.S. goods exported to Korea.
They were approved last month by Congress on October 12, 2011 and await the decision of the Korean National Assembly.
The Office of U.S. Trade Representative stated that “under the FTA, nearly 95% of bilateral trade in consumer and industrial products will become duty free within five years .. and most remaining tariffs would be eliminated within 10 years.”
Additionally, the KORUS FTA will also allow greater access to the Korean financial market.
“As the first U.S. FTA with a North Asian partner,” the Office of U.S. Trade Representative stated, “the KORUS FTA is a model for trade agreements for the rest of the region, and underscores the U.S. commitment to, and engagement in, the Asia-Pacific region.”
In other words, the KORUS FTA is a harbinger of possible things to come.
Christine Ahn, Executive Director of the Korea Policy Institute, stated that “the proposed KORUS FTA undermines South Korean democracy in significant ways: it undermines approximately 180 South Korean laws.”
“In particular,” Ahn continued, “the KORUS FTA has two really negative effects: first in the pharmaceutical industry and second in the agricultural arena. Korea has a universal health care system. While it is not like Sweden’s healthcare system, it does provide basic care for everybody. As part of it, Korea has a strong generic pharmaceutical industry. Concerns abound that the KORUS FTA would drive up costs so much, that universal healthcare would be untenable and Korean health care would essentially be privatized.”
“The FTA would also negatively impact agriculture,” Ahn stated, “As anyone who has been following the World Trade Organization knows, Korean farmers have already been intensely affected by their policies.” At the 2003 WTO meeting in Cancún, Korean farmer Lee Kyung-Hae committed suicide at the frontline barricades to underscore the desperate situation of Korean farmers.
“The KORUS FTA would deepen this impact,” Ahn stated. “According to the Korean government’s own figures, 45% of Korean farmers would be displaced from their farms because they would not be able to compete with the U.S. subsidized agricultural industry. We have already seen this type of effect of FTAs in Mexico under NAFTA.”
If the KORUS FTA is a sign of possible things to come, so, too, are the uprisings against it. Historian and political scientist George Katsiaficas states in his forthcoming book Asia’s Unknown Uprisings: “massive protests took place against the [KORUS] FTA in December 2006” and “polls showed over half of all Koreans opposed the agreement.”
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Connecting the Dots: Australia-US FTA
Like the KORUS FTA, the U.S.-Australia Free Trade Agreement was passed before Obama took office but augmented during his tenure, and again, with the intention to increase free trade in the Pacific region.
Passed on January 1, 2005, the FTA was intensified in 2009, when working groups were established to facilitate agricultural trade.
President Obama is scheduled to travel from the APEC summit – first to the East Asia summit in Bali, Indonesia then - on to Australia, in order to discuss not only aspects of the trade agreement but also the establishment of military bases, in a further sign of geopolitical shifts.
Announcing the U.S.-Australia FTA, the Office of the U.S. Trade Representative laid bare the relationship between these bilateral and planned multilateral agreements, as it continued on to state: “in September 2008, the United States announced its intention to begin negotiations to join the Trans-Pacific Strategic Economic Partnership agreement” also known as the Trans-Pacific Partnership (TPP).
President Obama, during his first visit to Asia in November, 2009, underscored his commitment to the Trans-Pacific Partnership (TPP), a multilateral free trade agreement seeking to liberalize the economies of the Asia-Pacific region or “to serve as a vehicle for Trans-Pacific economic integration.”
In a letter sent to Congress on December 14, 2009, Ron Kirk, U.S. Trade Representative, stated that President Obama joined the TPP “with the objective of shaping a high-standard, broad-based regional pact.”
While the TPP is not an official part of APEC, its meetings and negotiations have taken place parallel to the APEC summits since 2002.
Emissaries for Corporations
In the eyes of APEC critics, the summit has governments acting as emissaries for corporations, drawing up agreements that benefit big business but not small, independent businesses.
Tuesday, finance ministers met to discuss regional financial issues. And CEOs met in the APEC Business Advisory Council (ABAC). The 63 member council, which includes up to three business representatives for each of the 21 member economies, has drawn up a list of recommendations to present to heads of state, in order to improve trade in the Pacific region.
These suggestions include removing tariff barriers and reducing regulatory barriers to trade. In particular, the U.S. would like tariffs on renewable energy components, such as solar panels and wind turbines, to be reduced.
Today through Saturday, a CEO summit talks place in conjunction with APEC. It includes heads of state as well as at least 23 CEOs from companies such as Time Warner Cable, Sybase, DHL, COFCO, Bank of China, Boeing Company, Gazprom, Caterpillar, General Electric, Google, Lockheed Martin, Cathay Financial Holdings, and Johnson and Johnson.
A Free Trade Agreement of the Asia Pacific (FTAAP) Region?
APEC and the TPP seek to pave the way for a Free Trade Agreement of the Asia Pacific (FTAAP) region.
At its previous meeting, the TPP’s nine negotiating partners – four countries with which the U.S. has free trade deals, Australia, Chile, Peru and Singapore, as well as Brunei, Malaysia, New Zealand, and Vietnam - set themselves the goal of outlining an agreement by this week’s APEC meeting.
The first step could be to formalize the TPP as a regional trade agreement. Canada, Japan, the Philippines, South Korea and Taiwan have expressed interest in TPP membership.
Secretary of State Hillary Clinton will travel on from the APEC summit to the Philippines, Thailand and Indonesia – countries in the Asia Pacific region that have not yet signed on to the Trans-Pacific Partnership.
Japan’s Prime Minister Yoshihiko Noda is considering joining but its farmers are concerned that they will be devastated by the move. Like in South Korea, in Japan, memories of the financial crisis that effected much of southeast Asia beginning in 1997 linger. Noda intends to announce his decision Friday.
The talks face a further and larger hurdle: the U.S. wants nations in the region, in particular China, to lower tariffs imposed on U.S. renewable energy products.