It’s the Summit season and Prime Minister is only just back from a meeting of pan-Asian leaders in Hanoi and is packing his bags for the annual meeting of APEC Economic Leaders in Yokohama 12-13 November.  One Summit he will not get to is the earlier meeting of G20 Leaders in Seoul.  New Zealand cannot claim a place at that table and this makes all the more important our participation in the other leadership fora in the region.

In the last year growth has returned to the APEC region but the recovery remains fragile. New Zealand’s Australian and Asian markets saved our bacon during the financial and economic crisis. New Zealand has important interests to protect and advance in the region which takes over 70 percent of exports.  These revolve mostly around the forward agenda for trade and investment and the extent to which new generation trade agreements can keep pace with the way business is now being done particularly through increasingly complex regional value and supply chains.

Two poles for regional economic integration are emerging ? one based on a pan-Asian vision formulated in the proposal for a Comprehensive Economic Partnership in East Asia (CEPEA) and discussed actively if inconclusively in Hanoi; the other the proposed Free Trade Area of the Asia Pacific (FTAAP), a vision whose time has surely come especially since it was first advocated in 2004.  FTAAP is an Asia Pacific vision which sits uneasily within the APEC grouping as a forum largely for voluntary and non-binding actions.

Free trade “areas” and free trade “agreements” are not quite the same thing. The language is important.  Neither CEPEA nor FTAAP are conventional FTA negotiations and neither at this point have either form or (much) substance.  The only FTA negotiation to have legs in the region is the Trans Pacific Partnership (TPP) between nine APEC member economies (now including Malaysia as well as New Zealand and the United States).  TPP must have something going for it as even Japan is showing interest.  TPP is a conventional negotiation in the sense that it has a structure, timetable and agenda.  TPP is also ambitious ? a new generation agreement, an agreement for the 21st century, maybe even an agreement we can believe in if you follow the American rhetoric.

After a year of negotiations TPP is still only at the beginning.  Negotiators have a lot of work to do to bring greater shape to the negotiation and to fulfill its potential as a pathway to region-wide liberalization.  In Yokohama on 11 November a seminar organisedjointly by the NZ US Council, the Singaopore Business Federation and the US APEC Business Coalition will attempt to help governments “walk the talk” in developing the TPP agenda. Even so these negotiations will not be concluded until the end of 2011 at the very earliest.

All these balls cannot be kept up in the air forever.  Protectionist threats and currency wars risk setting back progress. The time has surely come for APEC, in the year it marks the first deadline of the Bogor vision for free and open trade in the region among APEC’s industrialized economies, to overcome its cautious approach to decision-making.  APEC Economic Leaders would take a giant leap forward if they were to decide decide once and for all in Yokohama to embrace FTAAP and put in place concrete steps to achieve it.

APEC’s business arm, the APEC Business Advisory Council, which also meets in Yokohama this week has been unequivocal in its view that more needs to be done to realize the Bogor vision. In its annual report to Leaders ABAC sees several possible pathways towards FTAAP including TPP, CEPEA and other bilateral agreements. This strategy of “let all flowers bloom” neatly avoids the idea that there is some rivalry between the different visions for regional economic integration.

New Zealand plays a strong hand in all these initiatives.  As a founding member we are enthusiastic supporters of TPP as well as FTAAP but realistic enough to know that CEPEA might provide a decent alternative if the US political system cannot match its lofty rhetoric and deliver an ambitious outcome.

That’s why John Key is packing his bags again and why he will be accompanied in Yokohama by ten business leaders out to demonstrate New Zealand business interest in these critical developments.  While the G20 deliberates the future of the global economy without smaller economies like New Zealand it is in our fundamental interest to participate actively in both APEC as well as the East Asia Summit and use whatever influence we have to encourage a regional trading system that is more open and more secure.