The United States and China both have initiatives to expand their economic reach in Asia – the US-backed Trans-Pacific Partnership (TPP) trade agreement, and China’s One Belt, One Road and AIIB. Dr. Denis Hew, Director of the APEC Policy Support Unit tells us that Asia stands to gain from the TPP and other regional developments. We spoke to Dr. Hew as part of our 3-on-3 series – three questions in three minutes.
Q. How will the TPP impact business and investment opportunities in Southeast Asia?
A. Well, I think TPP will have tremendous impact in terms of business opportunities in the region. It’s potentially the largest FTA in the world, potential market of 800 million, in terms of total market – 40% of (world) GDP, a third of trade, it’s also considered a 21st century, next generation, free trade agreement, so it covers not just the traditional types of reduction in tariffs and also non-tariff barriers, it’s also into new generation issues such as digital trade, e-commerce, and also covers things like looking at investment protection, helping small and medium enterprises, so I think there will be a lot of opportunities.
Q. What implications will the TPP have on ASEAN’s long-term economic integration efforts?
A. As we know, ASEAN has this long-term integration, trying to create an ASEAN Economic Community, we know that the deadline is past, it’s 2015 – but it’s a long term journey, trying to create a single market. And I think TPP will play a very important role. Not just TPP, of course, we also have RCEP, which is ASEAN+6 FTA, and these two, I would call mega free trade agreements, will mutually reinforce each other to promote greater regional integration and support the ASEAN Economic Community.
Q. With American and Chinese driven projects gaining more momentum in Asia Pacific, how will such initiatives alter trade relations in the region?
A. Well, we know that global trade slowed down. There’s been a very fragile economic recovery, we know that the global trading system has been pretty slow at the WTO, so we think TPP, RCEP are very important types of free trade areas that will hopefully sort of resuscitate lots of trade and investment in the region. And of course in APEC we’ve got the Free Trade Area of the Asia Pacific, FTAAP, which of course TPP and RCEP are very important building blocks towards achieving that one day.
