Trade Forum Meeting
Lima, May 17-19 2002

The PECC Trade Forum launched a new work program focusing on trade and investment issues in APEC and the WTO and on regional trading arrangements at its inaugural meeting in Lima on 17-19 May 2002. The meeting attracted widespread support from leading analysts and researchers from nearly all PECC economies and from the World Bank, the Inter-American Development Bank, the Organization of American States and the UN Economic Commission for Latin American and the Caribbean.

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The highly successful meeting was hosted by PERU PECC and the Universidad del Pacifico, coordinated by Prof. Fernando Gonzalez Vigil,of Centro de Estudios APEC, who also leads the Forum's work on regional trading arrangements.

In the “Trade and Investment Issues in WTO and APEC” sessions, the “Singapore Issues” and the “Rules Issues” of the WTO dominated the sessions. There are opportunities for APEC (directly) and PECC (indirectly though APEC) to make substantive contributions to the development of the WTO agenda on these issues.

In the Regional Trading Arrangements sessions, lessons are learnt from the experiences of the Latin American RTAs, and emerging patterns are identified in the East Asia. Issues of designs and rules are also discussed. The section of the meeting on regional trading arrangements was intended to follow up the successful seminar on this subject held in Bangkok in June 2001

Trade Forum Program

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Sessions on “Trade and Investment Issues in WTO and APEC”

“Rules Issues” sessions
Fisheries Subsidies
 The meeting reviewed the current state of progress on agricultural trade issues in the WTO, and agreed to establish a study group to work on these issues. It was noted that the agricultural trade issues need to be considered in conjunction with issues of rural development, food security and technology transfer. It was further noted that in the APEC Food System, APEC have leaders have already endorsed an initiative that links these concerns.

Anti-Dumping
The meeting heard an exposition of issues raised by current anti-dumping regimes, particularly in the context of developing economies. These included concerns over consequences in terms of final and intermediate consumer effects, productivity, employment, competition, efficiency, investment and total welfare. There was consensus that anti-dumping rules and their application need to be more ‘competition-friendly’ in support of APEC goals and principles i.e. they should come within the scope of the competition principles.

Services Trade liberalization session
Papers were presented on the overall state of play in services trade in APEC and the WTO, on transparency issues, on the relative scope for horizontal and sectoral commitments, and on the application of competition and investment disciplines in the services field.

Agriculture session
The meeting reviewed the current state of progress on agricultural trade issues in the WTO. It is noted that agricultural trade issues need to be considered in conjunction with issues of rural development, food security and technology transfer. It was further noted that in the APEC Food System, APEC have leaders have already endorsed an initiative that links these concerns.

“Singapore Issues” sessions
Competition
On competition policy, there is agreement among Trade Forum members that the APEC and PECC principles provide the appropriate starting point for the development of positions to be taken in relation to other international fora. When the issues are analyzed from the perspective of the PECC and APEC competition principles, it is clear that the WTO principles of national treatment and MFN do not adequately address the core competition principles of non-discrimination and comprehensiveness.

The Trade Forum will continue to insist on competition as a dimension to be applied across all trade policy issues. Despite – or perhaps because of – the acknowledged difficulty of addressing some of the relevant issues in official fora, the PECC Trade Forum believes it can make a unique contribution by continuing to highlight the linkages that should be drawn between the competition principles and issues such as export and import cartels, parallel importing, anti-dumping, and subsidized trade. There are also clear links between competition and issues as diverse as poverty alleviation, education, intellectual property and agriculture.

The need for capacity building and building a public constituency for the competition dimension also received considerable attention. The need to build public support for competition-enhancing policy frameworks was also emphasized. It was noted that the “top-down” imposition of competition frameworks has not led to increased public support for the competitive process, even where the framework has been widely admired by competition experts.

Investment
The session highlighted the need for any WTO agreement to achieve greater consistency within WTO disciplines on investment. The relationship between any investment agreement and existing provisions of the GATS and TRIMs agreements needs to be carefully handled to ensure consistency.

It also highlights the need for the multilateral approach to investment to adjust to the fact that the foreign direct investment are increasingly taking the form of mergers and acquisition rather than greenfield investment.

The ability of national government to secure compliance at the sub-national level with the obligations imposed by international investment agreement and to regulate the increased investment flows are 2 issues that need greater attention if the potential benefits of increased international investment flows are to be realized.

The implications of the proliferation of bilateral and regional investment agreements were also explored. If lack of consensus in the WTO leads to a relatively weak multilateral investment agreement it is likely that economies will place greater emphasis on these bilateral and regional agreements rather than on the multilateral agreement.

Trade Facilitation
In line with APEC's greater emphasis on trade facilitation, PECC is also expanding its work in this area, both in a WTO context and as well as in relation to APEC. Special attention will be given to the APEC leaders’ call for a 5% reduction in business transactions costs to be achieved through trade facilitation measures by 2006. In this regard PECC stands ready to assist in the development of baseline measures and in monitoring progress toward the 5% target.

PECC advocates the development of business transaction cost measures based on specific industry sectors, and using these multiple measures as baselines against which the 5% target may be assessed.

It is important that baseline measures on selected industry sectors are made available by 2003 so that APEC member economies can begin to incorporate facilitation measures in their IAPs to address specific transactions costs identified in the baseline data.

Sessions on “Regional Trading Arrangements”
The PECC Trade Forum sees a role for itself in promoting increased transparency in relation to the regional trade integration of the continuing proliferation of RTA proposals in the region. This involves the obtaining and dissemination of as much information as possible on each individual proposal, to be accompanied by in-depth analysis of their implications.

It is important that analysis of RTA proposals should be undertaken not only from the perspective of the members of the proposed arrangement but also from the perspective of other APEC members and of the region as a whole.

It was also clear that while some trans-Pacific RTA proposals continue to be pursued, development of RTA initiatives is increasingly proceeding along separate tracks in East Asia and the Americas. The PECC sees a need to find ways of ensuring the ongoing engagement between the integration processes in East Asia and the Americas. As its own contribution to this engagement, the PECC Trade Forum will continue to promote collaboration and interaction between the research networks that have developed around both processes.

There is clearly more work to be done also in identifying the characteristics of RTAs that are most likely to be consistent with APEC’s objectives for region-wide trade and investment liberalization. The PECC will explore the possibility of developing a set of Principles for APEC-Consistent RTAs, for consideration by APEC member economies.

The Impact of RTAs on Asia-Pacific Trade Integration

RTAs in the Americas: Experiences and Lessons

The Developing Pattern of RTAs in East Asia

Issues in RTA design and Rules


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