CC BY
42УДК 339.542.22
Thipphaphone E.
Institute of Industrial Management, Economic and Trade Peter the Great St. Petersburg Polytechnic University (Saint-Petersburg, Russia)
Scientific supervisor Podoba Z.S.
PhD in Economics, Associate professor Peter the Great St. Petersburg Polytechnic University (Saint-Petersburg, Russia)
ASIA-PACIFIC ECONOMIC GROWTH & THE REGION'S MAJOR TRADE AGREEMENTS
Abstract: the recent focus on the Asia-Pacific region has increased recognition of the importance of intra-regional cooperation. Its trade is an impactful economic activity to generate a region's income and encourage economic growth. In the trade framework, the most significant component is the trade agreement that supports activities going smoothly. The main aim of the article is focused primarily on the Asia-Pacific's trade agreements and its economic dimensions. These analyses enable disclosure of trade agreements which APEC is applying to alliances whose factors reduce trade barriers and boost international trade values. In order to develop this research, systematic reviews and meta-analyses methods were conducted, which used information gathered from existing datasets like government agencies and research organizations. The main result is a role of the APAC economy in the global forum and the benefits of its trade agreements. The findings indicate that China and Japan's economies also contributed greatly to the APAC region. Additionally, the APAC economy was severely affected by the COVID-19 pandemic circumstance in the first wave; instead, it rapidly recovers and simply adapts to the crisis. Nevertheless, only a few sub-regions with high productivity potential can advocate for regional trade values. Furthermore, some trade agreements produce more positive results than others, but some of these agreements are still undergoing operational revision due to some complex elements for actual implementation.
Consequently, having effective trade agreements is critical to achieving the region's sustainable development agenda, and member harmony is essential.
Keywords: APEC, free trade agreements, Asia-Pacific Region, trade relations
At the present moment, the Asia-Pacific region (APAC) is becoming the larger player in the global economy. According to information from the International Civil Aviation Organization (ICAO), the APAC region is lightly described but generally considered to encompass the area in and around the western Pacific Ocean - and Oceania. APAC stands for Asia-Pacific (A-sia PAC-ific), and there is no official definition of the APAC and its borders; for example, some lists include Russia, while others do not. The APAC occupies a precious position in the global supply chains, being a significant supplier of intermediate goods, raw materials, and labor to the rest of the world. APAC's contribution to global exports rose from 28.7% in 2000 to 36.1% in 2018. APAC's intraregional merchandise exports accounted for 57.7% of total world exports in 2018, up from 50.8% in 2000 [0]. The APAC accounted for slightly more than a quarter of global GDP at the millennium's turn (GDP). The region's contribution to global output increased to 29% by 2010 as a result of increased consumption and integration into international trade, and this trend continued over the next decade.
Prior to the onset of the COVID-19 pandemic, the APAC contributed roughly 35% of global GDP. According to the report of International Monetary Fund (IMF) [0], the global and regional merchandise trade faced significant downward pressure throughout 2020 as a result of the COVID-19 pandemic, particularly in variable circumstances; prospects for emerging market and developing economies, particularly in Emerging Asia, have been lowered for 2021 [0]. All Asia-Pacific regions experienced a decline in GDP 1.9% in 2020, with the exception of East-Asia, where GDP increased by 0.2%. Nevertheless, the first half of 2021 has shown stronger GDP outturns than the expected global forecast in APAC, as Asian economies adapt to the pandemic circumstances. Furthermore, by 2040, the region could account for more than half of global GDP and approximately 40% of global consumption.
China is now the engine to the world economy and the largest economy in Asia and the Pacific, absorbing roughly one-fifth of the region's exports. As a result, even a moderate slowdown in China, combined with falling oil pricesand a concurrent trade slowdown in other Global Value Change (GVC) hubs, had a significant impact on other countries' export volumes. Besides China, there are other countries that dominated the regional trade performance, like Japan, Hong Kong (special administrative region of China), South Korea, India, and Singapore (by the share of total trade) - all East and North-Asian (ENEA) economies - contributed to more than 55% of it [0]. Sub-regional trading hubs such as India, the Russian Federation, and Australia are also significant trading nations.
Commercial exchanges between countries integrated in GVCs has become a key element for regional trade [0]. Currently, approximately 69% of APAC's exports are used as inputs in production processes elsewhere. The most important are machinery and equipment (i.e., capital goods), followed by intermediate goods and raw materials. In contrast, the majority of Asian and Pacific Rim exports to the EU and the US are consumer goods. These goods account for approximately 38% and 44% of all regional exports to these two markets, respectively. This pattern reflects the region's deep economic integration via regional value chains. It also emphasizes that, despite its rapid growth, final demand is primarily derived from the US and the EU, rather than from intraregional markets.
In order to increase regional prosperity, the Asia-Pacific Economic Cooperation (APEC) has founded in 1989 to leverage the growing interdependence in Pacific Rim that promote free trade agreement throughout the APAC region. Also, APEC is an inter-governmental and regional economic forum. APEC currently has 21 countries as a member, the condition for membership is that the member is an independent economy rather than a state. As a result, APEC refers to its members using the phrase member economies rather than member countries. Because the APEC cooperative process is primarily concerned with trade and economic issues, and members interact with one another as economic entities, the term "economies" is used
to designate APEC members [0]. Furthermore, the members of APEC aim to increase regional advancement by fostering balanced, inclusive, sustainable, creative, and secure growth and by speeding regional economic integration.
In terms of intra-economy support, the Asia-Pacific Economic Cooperation (APEC) is primarily responsible for incubating trade policy approaches, its principal goal is to encourage long-term economic growth, trade, and investment, as well as prosperity in the Asia-Pacific area. With the emphasis of extending trade liberalization so that all goods, services, and people can move more quickly and smoothly across borders. APEC continues to work on regional free trade agreements and regional trade agreements (FTAs and RTAs) with the goal of promoting regional economic integration [0]. They have synchronized regulatory systems, which is a critical step in reducing governance procedures, time, regulatory barriers, and tariffs between countries. Members can facilitate faster customs clearance by allowing products to be easily exported and imported across the entire region using a common criterion.
The proliferating RTAs around the world, particularly in the Asia Pacific region, have had a significant impact on APEC's stance on multilateralism. Trade treaties, both intra- and inter-regional, are spreading in the Asia-Pacific region. Since around January 2013, 46 RTAs had been implemented [0], and more than a dozen RTAs were being negotiated or taken into account among APEC members countries. APEC has decided to investigate the feasibility of putting the best RTAs into effect. In accordance with preferential trade agreements in the APAC 2021-2022 report [0], in November 2021 there were 195 physical trade agreements in force, 19 signed and pending ratification, and 97 under negotiation, including at least one member of APAC. Hence, the goal of trade agreements is to produce higher aggregate gains in terms of increased GDP and trade flow [0]. Activation also differs by incorporating different sets of trade barriers (tariffs and non-tariffs).
APEC aims at establishing more than three extensive economic areas contributed by powerful countries. Thus, the TPP-12, the RCEP, and the FTAAP have been continually considered in relation to the encounter for regional hegemony
between the US and China. In more specific terms, it has been argued that the TPP-12 is being driven by the US as a tool for excluding China [0][0], which has been increasing its political and economic influence in the region, and for examining its power. In the next paragraph has focused on four significant and potential trade agreements which has the huge economic sizes and the most effective policy:
1. The Trans - Pacific Partnership (TPP): This is a massive trade agreement between Twelve countries: Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore, the US, and Vietnam. The TPP comprised areas for the environment, labor, telecommunications, e-commerce, and transparency. The agreement was important because of its position as the largest regional trade agreement ever negotiated in 2016, as well as its regulatory content, for instance, the conventional tariffs, customs, and investment provisions. Besides, the agreement is divided into two versions: TPP-12 and TPP-11 (CPTPP).
1.1 The original Trans - Pacific Partnership (TPP-12): As mentioned in the previous paragraph, this trade agreement was signed by 12 members of the Pacific Rim that included the United States (President Barack Obama period). They together comprised 38.4% of the global economy, 831 million people, and 26.5% of the world trade [00шибка! Источник ссылки не найден.][0]. The Obama Administration's "Pivot to Asia" made the US-led initiative into the TPP because his policy was designed to promote the US economy and statistical engagement in the Indo-Pacific region. The agreement comprises measures to reduce both tariff and non-tariff barriers to trade and to establish an investor-state dispute settlement (ISDS) mechanism. However, the initial agreement has collapsed because the US, in 2017, under the leadership of President Donald Trump, has formally withdrawn from this agreement, the agreement could not be ratified in time and thus did not come into force. The remaining nations negotiated a new trade agreement known as TPP-11 or CPTPP.
1.2 Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP, sometimes also called TPP-11): After the withdrawal of the US in 2017, it represented a significant loss in market size. Nevertheless, the agreement
has been continuously signed by the 11 countries (existing members without the US) : Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore, and Vietnam. The agreement come into force for those countries on 30 December 2018, excepted Vietnam (14 January 2019), the CPTPP covered 504 million people, 12.9% of global GDP, and 15.3% of global trade in 2018 [0]. Basically, because of overlapping memberships like spanning almost 30% of the world's GDP and population, China's accession will put the CPTPP's economic size close to that of RCEP [0].
The continual negotiation in the same year, the TPP-11, has been finalized as the reformed trade agreement with the official name "CPTPP." This trade agreement maintains the provisions and the degree of trade liberalization of the original TPP12. For instance, supporting exports and imports goods (qualifying goods for tariff cuts) and establishing export markets in the CPTPP region for SMEs is easier. Recently, due to the COVID-19 Pandemic, including a rise in protectionism, trade constraints, and the election of the Biden Administration in the US, we have seen a signal in some ways that the US is considering membership.
2. The Regional Comprehensive Economic Partnership (RCEP): It is the world largest trade agreement. Also, it represents the considerable efforts that have been made to strengthen the bonds of economic growth through trade within the region [0]. It was first perceived at the 2011 ASEAN summit, while the negotiation was formally launched during that time between members of the APAC in 2020. It is expected to revise regional and global trade patterns, and the trade agreement was adjusted to reflect that. For instance, tariff on nearly 90% of traded commodities are removed, and several customs, investment, intellectual property, and e-commerce rules are standardized. The RCEP will facilitate the development of regional value chains by establishing a uniform set of trade regulations and simplifying complex concerns such as rules-of-origin (CoO).
Thus, the treaty was formally signed in November 2020 and consists of the ten ASEAN and all six non-ASEAN signatories that combination of high, middle, and low-
income countries, together with 2,290 million populations, 29.1% of the world GDP, and 28.7% of the world trade. The trade pact took effect on January 1, 2022. Further, this trade agreement is considered a mega trade agreement in APAC as well as it will become the world's largest free trade agreement [0]. The trade agreement aims to eliminate 90% of the tariff on imports between regions (signatories) within 20 years of coming into force and will create common regulations for e-commerce, trade in goods and services, investment, intellectual property, SME, and economic corporations.
3. The Free Trade Area of the Asia-Pacific (FTAAP): In 1994, the regional consensus on achieving 'Bogor Goals" [0], and the FTAAP, is also a pathway to achieve the objective. The agreement is an aspiration between 21 nations that are a part of APEC that aims to promote mutually beneficial regional cooperation (free trade throughout the region), and it includes 40% of the world's populations, 55% of the world GDP, and 44% of the world trade. The concept was first formally discussed in 2006 at the Hanoi summit. In the same year, APEC declared that it would be a long-term prospect of the FTAAP [0]. Thus, APEC members have concentratedly studied various factors in the FTAAP in terms of establishing an effective trade pact - for instance, the study of pros and cons that relate to the FTAAP on APAC's economy and the world, and analyzing the mechanism of FTAAP preparation of APEC members such as market access, rules of origin, customs procedures, and technical barriers to trade. The FTAAP has huge potential for improving the welfare of participating APEC's economies and will encourage economic growth in the region [0]. They anticipate that the FTAAP will be even better if it is linked to trade openness (lower taxes or avoidance of double taxation) in services and increased trade facilitation.Therefore, the FTAAP has been seen as a key instrument in achieving APEC's aim of restructuring cross-border procedures for people, goods, and services. In 2010, the APEC leaders agreed to continue to pursue FTAAP by further supporting areas like e-commerce, investment, environmental goods and services, standards, and conformance.
To summarize an overview of trade agreements, the TPP/CPTPP is the "next-generation" trade agreement [0]. It reformed customs duties on electronic transmission, international labor laws, and environmental commitment. In the trade liberalization under CPTPP and TPP12, tariffs have decreased to the minimum level. After its full implementation, more than 90% of tariff lines among members will become duty-free. Meanwhile, the RCEP provisions on intellectual property are a great achievement. When comparing the RCEP to the CPTPP, the scope of the depth is smaller, which implies the tariff reduction is supposed to occur at around 80%.
Nonetheless, the RCEP is the most ambitious agreement because it aims to provide significant opportunities for the strengthening of trade and economic corporations among its members. According to an APEC official, the FTAAP is proposed to be a broad, high-quality trade agreement with board scope, accounting for half of global trade and GDP once completed. The FTAAP benefits the wider economy in a variety of ways, including increased productivity and welfare, as well as more consistent trade regulations to facilitate international business implementation in the region. Furthermore, fig. 6 depicts a schematic drawing of the member countries in each of the agreements, as well as the overlap between them.
Figure 1. Membership of the CPTPP, TPP-12, RCEP, and FTAAP in overview [0]
As a conclusion, the APAC region plays a main role not only in the international trade field but also in the politics of international affairs because this region is home to almost half of the world's population. Thus, Asia-Pacific has a huge
Russia
percentage in the global economy and contributes approximately 39% to the world economy [0]. By 2040, Asia-Pacific GDP is expected to account for 40% of global GDP consumption. As its economies integrate further, it has the potential to fuel and shape the next phase of globalization. Therefore, having effective trade policies would achieve its goal and also promote its bilateral trade values to increase constantly. Even though policies may not cover all sectors of economic activity, the outcomes of the existing policies and trade agreements will be an advantage to developing and implementing new policies in the future. Nonetheless, the international dimension and the domestic situation of each participating member country affect the process of negotiations and the achievement of the agreement [0].
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