Successful realization of the Trans-Pacific Partnership could put the Asia Pacific Economic Cooperation (APEC) forum back on the path of trade liberalization, restore its vitality, provide an institutional locus for transpacific agreement, and avoid any risk of a breakdown in relations between the two sides of the Pacific. In his keynote address to the APEC 2010 symposium on December 9, PIIE Director C. Fred Bergsten urges APEC members to negotiate and implement a Trans-Pacific Partnership as the first and major step toward a Free Trade Area of the Asia Pacific and thereby achieve the Bogor goals of free and open trade and investment in the Asia Pacific set out by APEC leaders 15 years ago.
Bergsten cautions that Asia is headed toward the creation of an Asian economic bloc that would discriminate against the United States. Asian countries have increasingly focused on deepening monetary and trading arrangements within the region, which has led to a "spaghetti bowl" of bilateral and subregional preferential trade pacts. APEC faces a major challenge in making sure that this Asian bloc that is developing does not draw a line down the middle of the Pacific—in the famous words of former Secretary of State James Baker. The Trans-Pacific Partnership would be a stepping-stone toward a transpacific economic agreement that avoids the risk of drawing this line and would integrate the economies across the Pacific Rim, engaging the United States fully with the Asians and reducing the risk to the United States, both in economic and foreign policy terms, of an exclusive Asian bloc.
President Barack Obama's commitment in Tokyo during his recent visit that the United States would engage directly and actively in the Trans-Pacific Partnership process gives APEC a huge opportunity to get back on the track of trade liberalization, where it has been floundering since its spectacular performance during the 1990s. During its dynamic leadership years of 1993—97, APEC set out the ambitious Bogor goals, took the lead in negotiating the highly significant Information Technology Agreement, and accelerated the momentum of global trade liberalization by agreeing to launch a program of early voluntary sectoral liberalization. APEC now has an opportunity to get back on track with the Trans-Pacific Partnership and the prospects that it has for success over the next few years.
The current Trans-Pacific Partnership includes only four small countries—Singapore, New Zealand, Brunei, and Chile. However, Australia, Peru, and Vietnam are now participating actively in the process. Both Canada and Korea are also considering joining the initiative if the United States did so. Bergsten suggests that Japan—as part of its leadership of APEC in 2010—should directly engage in the Trans-Pacific Partnership talks, in fact join the initiative, and thus give it further and decisive momentum. The United States and Japan should work closely to move the process forward in 2010 and perhaps bring it to a successful conclusion: a signing of the Trans-Pacific Partnership at the Honolulu Summit in the fall of 2011.