Published: Tuesday November 10, 2009 MYT 6:52:00 PM

Singapore calls for Asia-Pacific free trade area

SINGAPORE (AP): Singapore called Tuesday for creating an ambitious Asia-Pacific free trade area comprising about half of global trade, as it warned nations that any backsliding on trade liberalization would be disastrous.

The call by Singapore Foreign Minister George Yeo came ahead of a summit of the 21-member Asia-Pacific Economic Cooperation forum that is expected to discuss free-trade proposals.

Among those attending the Nov. 14-15 leaders' summit are President Barack Obama, Chinese President Hu Jintao and Japanese Prime Minister Yukio Hatoyama, who lead the three biggest economies in the world.

"Creating consensus is often excruciating difficult. But 21 economies, meeting regularly, can set the pace and the direction for the whole world," Yeo said at a panel discussion to mark APEC's 20th anniversary this year.

"And we can do it whether it is for financial reform or climate change or the global trading agenda. It would help us 21 economies to create a much better world," he said, adding that he is looking at a timeframe of two or three years.

Yeo noted that the seeds for the Asia-Pacific free trade area were sown by the creation of the Trans-Pacific Partnership among Singapore, Chile, New Zealand and Brunei. The United States, Australia and Vietnam are said to be considering joining it.

Yeo acknowledged that creating a region-wide free trade area would be "very difficult to negotiate" among APEC members, some of whom are worried that their interests would be dwarfed by the United States and China.

"But let's keep pushing in that direction through bilateral and regional free trade agreements, creating a positive, competitive dynamic," said Yeo, a former trade minister.

But such a deal is still many years away. APEC itself has failed to achieve its goal, announced in Bogor, Indonesia, in 1993, to achieve free trade and investment by 2010 among developed countries. APEC's goals and decisions are nonbinding on members.

"The Trans-Pacific Partnership is something we should think about very carefully because to achieve those (Bogor) goals, what we really want is a free-trade area of the Asia-Pacific" region, Yeo said.

Despite APEC's shortcomings, it seems to have contributed greatly toward free trade in the region.

Between 1989 and 2007, APEC's total exports increased from $1.2 trillion to $6.2 trillion, an annualized average growth rate of 9.5 percent compared to the world average of 8.9 percent. The average tariff rates in APEC fell from 17 percent to 5 percent now.

Statistics show that the share of exports and imports within the APEC region is marginally larger than comparable estimates for the European Union - and much greater than those of the North American Free Trade Area or Southeast Asian trade area.

Yeo and other speakers at the discussion said the region cannot rest on its laurels, especially at a time when the countries are barely recovering from the global economic crisis.

"We could not imagine in 1969 that we would have what we had in 1989. But just as history can move forward it can also move backward or sideways," he said. "Look ahead 20 years. Let us not assume we can just coast along.

"Unless we keep pushing the positive agenda, the negative nay-sayers will overwhelm us in time," he said.

Chilean Foreign Minister Mariano Fernandez Amunategui said APEC countries should promote free trade rather than rely on stimulus packages to bolster their economies.

"We are not now thinking of a new stimulus package. Our economy is recovering," he told reporters. "We think that more than a stimulus package, we should push for more free trade."

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