Bridging the Pacific: Toward Free Trade and Investment Between China and the United States
The terrain of the world trading system is shifting as countries in Asia, Europe, and North America negotiate new trade agreements. However, none of these talks include both China and the United States, the two biggest economies in the world. In this pathbreaking study, C. Fred Bergsten, Gary Clyde Hufbauer, and Sean Miner argue that China and the United States would benefit substantially from a bilateral free trade and investment accord. In the process, they contend, each country would also achieve progress in addressing its internal economic challenges, such as the low saving rate in the United States. Achieving greater trade and investment integration could be accomplished with one comprehensive effort or through step-by-step negotiations over key issues. The authors call on the United States to seek liberalization of China's services sector as vital to securing an agreement, and they explain that such contentious matters as cyberespionage and currency manipulation be handled through parallel negotiations rather than in the agreement itself. This is an important study of the benefits and difficulties of a complex matter that could yield dividends to the two economies and help stabilize the security and well-being of the rest of the world.
Should Korea Join the Trans-Pacific Partnership?
Despite a lack of consensus among Koreans, Korean officials recognize that—sooner or later—Korea will need to be part of the Trans-Pacific Partnership (TPP). Jeffrey J. Schott and Cathleen Cimino conclude that Korea should seek to join the TPP as soon as possible if it can manage its bilateral trade issues with Japan in a pragmatic way. If politics and economic sensitivities prevent such a step, Korea should encourage TPP participants to institute an “open enrollment” period soon after the TPP deal is signed and immediately take advantage of it. Korea should also try to conclude an ambitious trade deal with China, paving the way for China to join TPP as well.
Taking ASEAN+1 FTAs towards the RCEP: A Mapping Study
In November 2012, the leaders of the ASEAN+6 countries agreed to launch a new FTA negotiation called the "Regional Comprehensive Economic Partnership" (RCEP). In this paper, we conduct stocktaking studies of ASEAN's own FTA and five existing FTAs with 6 dialogue partner countries, to identify the possible benefits and challenges of RCEP. We find that the five "ASEAN+1 FTAs" provide an insufficient level of liberalization, both in tariffs and services trade. The coexistence of five FTAs with different rules of origin (ROOs) creates a potential "noodle-bowl" situation which impedes the effective use of the FTAs. Also, the China-Japan-Korea FTA and the Trans-Pacific Partnership (TPP) pose challenges to the "ASEAN Centrality". We recommend that RCEP negotiation should address those challenges by (a) concluding a comprehensive and high-level RCEP by 2015; (b) setting the target of 95% percent tariff elimination with a "common concession" approach; (c) introducing the "core non-tariff measures (NTMs)" concept and removing them; (d) allowing co-equal rules in the ROOs, setting a general rule of "RVC(40) or CTH" and developing consolidated operational certification procedures; (e) introducing concrete and tangible trade facilitation programs and addressing FTA utilization issues; and (f) liberalizing trade in services at a high level.