Professor and Doctoral Supervisor, Department of Diplomacy and Foreign Affairs Management, China Foreign Affairs University

YANG CHAO

Department of Diplomacy and Foreign Affairs Management, China Foreign Affairs University

2016 APEC SUMMIT: BUILDING A REASONABLE INSTITUTIONAL FRAMEWORK FOR ASIA-PACIFIC FREE TRADE ZONE

SU HAO

Professor and Doctoral Supervisor, Department of Diplomacy and Foreign Affairs Management, China Foreign Affairs University

YANG CHAO

Department of Diplomacy and Foreign Affairs Management, China Foreign Affairs University

The APEC Economic Leaders' Meeting of 2016 has concluded in Peru. This year's meeting was held under the theme of “Quality Growth and Human Development”, on which the members discussed the institutional economic cooperation in Asia-Pacific region. APEC has played an active role in promoting the cooperation between developed nations and developing nations in the region, but it also once fell into stagnation because of the differences between these two types of economies. In recent years, the developing nations in the region have grown stronger in economy, and the initiative of Free Trade Area of the Asia-Pacific (FTAAP) are being implemented. These have injected new momentum and vitality into regional economic cooperation, earning new opportunities for institutional cooperation framework.

On November 20, 2016,Chinese President Xi Jinping attended the 24th APEC Economic Leaders' Meeting and delivered an important speech.

THE FRAMEWORK OF ASIA-PACIFIC REGIONAL ECONOMIC COOPERATION

APEC is an official regional economic cooperation mechanism founded after the Cold War, and remains the only officialplatform for the economic cooperation in Pacific-rim region till today.

First, it is a formal mechanism for official cooperation. The basic mechanism is: the APEC Ministerial Meeting (AMM), which is held annually for foreign ministers and economic/trade ministers of all members, serves as the core of the mechanism; after 1993, the APEC Economic Leaders' Meeting has been held every year for the top leaders of members, for institutional and functional purposes at the highestlevel. In addition, APEC founded “Business Advisory Council” as a permanent agency, and APEC CEO Summit complement the cooperation.

Second, on 1994 Economic Leaders' Meeting held in Bogor, “Bogor Goals”were set for trade and investment liberalization. It was decided that developed members would realize trade and investment liberalization by 2010, and developing member by 2020. Some developed members also conceived a“Asia-Pacific Free Trade Area”. However, due to the sharp difference in political and economic terms between members, this goal fail to come into truth as scheduled. But the principal of“trade and investment liberalization”has become the direction of APEC development.

Third, developed members once regarded “trade and investment liberalization” as the core of cross-regional cooperation, while developing members focused on “economic and technological cooperation”. This has resulted in a new cooperation mode of “doublewheel engine”.

Fourth, such cooperation is of great significance for the growth of both developed and developing economies. The former upgrade their industries and gain monopolies in high-end industries through outbound investment and industrial transfer; and the latter pursue primary economic development and industrialization through echeloned labor division, starting with lower-end industrial development.

The purpose of APEC is to guarantee the comprehensive development of regional economy, promote interdependence of economies, establish and enhance open multi-lateral trade institution, mitigate regional trade and investment barriers, and protect the common interest of people in the region. At the same time, however, some developed members attempt to dominate the organization. In addition, self-interested members and loose cooperation arrangements make the organization lack of momentum and suffer from gloomy future.

NEW POSITION AND DRIVING FORCE OF ASIA-PACIFIC ECONOMIC COOPERATION

We need to stay true to our mission. Asia-Pacific regional economic cooperation should not be determined by comparative benefits, but should valueabsolute benefits. It should not be used as a tool for suppressing rivals, but should serve as a platform for win-win cooperation. It should not be dominated by developed nations, but should be jointly guided by all members. In fact, economies in Asia-Pacific region have become even more interconnected and interdependent than any time before. The world is entering a new globalization process, which demands new position and new momentum for Asia-Pacific economic cooperation.

Currently, the driving force of trans-Pacific economic development is shifting from developed nations to developing nations. Regional economic relations are transforming from an unbalanced status where developed nations dominate developing nations to a balanced status where the two parties are coordinated and compatible. It is noteworthy that the members jointly decide to establish a free trade area based on all existing free trade treaties in the region on the 18th APEC Meeting held in Yokohama in 2010. This decision outlined the prospect of trans-Pacific economic cooperation, and was explicitly acknowledged on the 2014 Meeting in Beijing. This marks a new starting point of Asia-Pacific crossregional cooperation, and updated the function and status of APEC.

The theme of the 22nd Meeting held in November 2014 in Beijing was“Shaping the Future through Asia-Pacific Partnership”. In his remarks, Chinese President Xi Jinping emphasized that “all the economies in the region need to work together to build an Asia-Pacific partnership of mutual trust, inclusiveness, cooperation and win-win progress, and this will inject new energy into the economic development of both the Asia-Pacific and the world.” Since then, “mutual trust, inclusiveness, cooperation and win-win progress” was set as the guiding principle of Asia-Pacific partnership. The Meeting adopted “The 22nd APEC Economic Leaders' Declaration—Beijing Agenda for an Integrated, Innovative and Interconnected Asia-Pacific” and“Statement on the 25th Anniversary of APEC—Shaping the Future through Asia-Pacific Partnership”. These two outcome documents marked a historical turning point in the evolvement of APEC. China and other APEC members have proposed dozens of initiatives on practical cooperation in regional economic integration, innovative development, reform and growth, and connectivity. In particular, in terms of regional economic integration, all members decided to kick off and promote FTAAP, and developed The Beijing Roadmap for APEC's Contribution to the Realization of the FTAAP, which was a milestone. In addition, APEC Connectivity Blueprint for 2015-2025 adopted on APEC Beijing Summit set a vision of software, hardware and people connectivity by 2025, pointing out how to remove the bottleneck in Asia-Pacific development.

The 23rd APEC Meeting in November, 2015 in Manila, the capital of the Philippines, was held under the theme of “‘Building Inclusive Economies, Building a Better World”. President Xi Jinping delivered a speech entitled“Deepening Partnership for a Prosperous Asia-Pacific”. He pointed out that“We should build an open Asia-Pacific economy by advancing integration. APEC should play a leading and coordinating role to strengthen the mechanism for the sharing of information on regional trade agreements, promote their coordinated development, and establish an institutional platform for the building of an open Asia-Pacific economy.” On APEC Manila Meeting, 2015 Leaders' Declaration was released, and a statement supporting multilateral trade mechanism was adopted.

On the APEC Beijing Meeting, China announced to donate USD 10 million to APEC and provide trainings for 1,500 people from developing members. To translate its commitment on building the capacity of APEC, so far, China has provided the first sum of donation of USD 2.8 million, and trained nearly 1000 people. APEC now has become the incubator of FTAAP, thanks to China's contribution. Meanwhile, developing economies in the region are the new engines for cooperation under APEC framework.

ASIA-PACIFIC ECONOMIC COOPERATION NEEDS APPROPRIATE INSTITUTIONAL FRAMEWORK

Trans-Pacific cooperation needs an institutional framework, in which all mechanisms are in coordination to promote the development of FTAAP. The 24th APEC Meeting held in Lima, the capital of Peru, provided an institutional framework for Asia-Pacific economic cooperation.

The theme of APEC Lima Meeting was “Quality Growth and Human Development”, and at its conclusion, the 24th APEC Economic Leaders' Declaration was issued. The Meeting had two highlights: consolidating the role of Asia-Pacific region as an engine for global economy, and promoting regional integration with openness and inclusiveness. On the APEC CEO Summit held in Lima, President Xi Jinping delivered a keynote speech entitled“Enhanced Partnership for Greater Momentum of Growth”. He proposed a “Plan of China” for Asia-Pacific and world economic development with four keywords: integration, connectivity, innovation and cooperation. He proposed to promote an open and integrated economy, to enhance connectivity to achieve interconnected development, to boost reform and innovation to create more internal driving force, and to promote win-win cooperation to forge strong partnership. China put forward that as we were approaching the deadline of Bogor Goals by 2020, all members need to plan long-term cooperation visions and draw a grand scroll for Asia-Pacific cooperation through regional economic integration and connectivity based on development and opening-up.

China's proposition was acknowledged by all parties, orienting the path towards prosperity. It is noteworthy that APEC Peru Meeting was built on the consensus and goals reached on the former two meetings, emphasizing the improvements in open economy, the support for multilateral trade system and the pursuit for FTAAP. On the meeting, all members discussed how to develop the institution, so as to promote the co-operation. According to the Leaders' Declaration, members have designed a reasonable institutional arrangement for FTAAP. These efforts were also embodied in the two annexes: Lima Declaration on FTAAP and Collective Strategic Study on Issues Related to the Realization of FTAAP, which included the basic institutional framework design for FTAAP under APEC.

First, APEC Lima Summit confirmed that APEC was the major tool for FTAAP development. Members have agreed to translate the vision of FTAAP into reality with the guiding tenets set by Beijing Roadmap, so as to further APEC regional economic integration. They reiterated the primary goal of realizing seamless and overall connectivity and integration of Asia-Pacific region by 2025.

Second, the Meeting adopted major guiding documents. Leaders endorsed the Collective Strategic Study on Issues Related to the Realization of FTAAP, which was the fruit of joint studies of all members, and endorse the Recommendations of the Study as the Lima Declaration on FTAAP. As a result, the stepby-step work plan for building FTAAP.

Third, the Meeting identified basic principles for cooperation. Asia-Pacific economic integration should be based on the principle of openness, inclusiveness, mutual benefit and win-win cooperation. Economic restructuring can inject more vigor into the sustainable development of Asia-Pacific region. Mutual trust, inclusiveness and winwin cooperation underlies Asia-Pacific partnership.

Fourth, the Meeting defined the macro framework of FTAAP. Free trade agreements may challenge the overall economic integration, as their liberalization standard and coverage are different from one another. Therefore, we have promised again that FTAAP should be built on all existing regional free trade arrangements, including RCEP, and should be realized through all possible paths. We welcome the contribution of other regional integration arrangements to FTAAP.

At the 2016 summit in Lima, APEC leader sestablished the general framework for the creation of a free trade area and reaffirmed the Bogor Goals. The picture shows the container terminal of Yangshan Port in the Shanghai Free Trade Zone.

Fifth, the Meeting re-affirmed Bogor Goals for free trade area development. Bogor Goals, which pursue free and open trade and investment in Asia-Pacific region, were one of the most significant milestones in the history of APEC. Although some delay has happened, the Goals still guide the development of FTAAP as a core objective.

Sixth, the Meeting identified connectivity as the core concept of FTAAP. It required to remove the bottleneck in regional connectivity and implement the APEC Connectivity Blueprint for 2015-2025. Therefore, it made the followup work plan, clarified the basic factors for building quality infrastructures, and promised to translate the concept of connectivity into action. We need to align the connectivity development at both sides of the Pacific Ocean, enabling it to drive the development of real economy in a broader scope. Infrastructure, rules and people-to-people exchanges are the three pillars of connectivity.

Seventh, it identified official cooperation mechanisms. Under the framework of APEC, ministers and officials are able to discuss issues on Ministerial Meetings, High-Level Policy Dialogues, Finance Ministers' Meetings, Senior Officials' Meetings, Committees, Working Groups and SOM Task Groups.

Eighth, the Meeting identified major cooperation fields. All parties should take the diverse economic and social situations of all economies and embrace specific measures to boost trade in service and investment and make service industry more competitive. The Meeting adopted Phase Two of the Supply Chain Framework Action Plan (SCFAP) 2017-2020 to enhance trade facilitation and link up supply chains within APEC. Furthermore, the Meeting adopted APEC Services Competitiveness Roadmap as Annex B of the Leaders' Declaration.

Of course, these frameworks and measures are just primary and basic steps of the institutional development under APEC. There is still a long way to go. After all, FTAAP conforms to the direction of new globalization, the fundamental interest of APEC members and the common wish towards development and prosperity of people living in Pacific-rim region.

10.19422/j.cnki.cn10-1398/d.2017.01.011