Author: Philippa Dee

The United States has agreed to join Singapore, New Zealand, Chile and Brunei in a free trade agreement which could set the pace for a broader Asia-Pacific free trade area, officials have said (The Straits Times, 22/09/2008). This is consistent with the US idea of ‘competitive liberalisation’ – the idea that if it signs up preferential trade agreements with some trading partners, others will want to join.

The trouble is, the partners that the US has snared have by and large been tiddlers – small countries with an inferiority complex who, in their perceived position of vulnerablility, are susceptible to this trade policy equivalent of emotional blackmail. And I am allowed to say this because I was born in New Zealand.

It is true that the existing P4 agreement between Singapore, New Zealand, Chile and Brunei is path-breaking in many respects. For example, it is the only agreement in the region to include a necessity test to discipline domestic regulation in each country (it must not be more burdensome etc etc).

But to suggest that this move is a precursor to a Free Trade Agreement of the Asia Pacific (FTAAP) is preposterous. If the US and other major trading partners cannot persuade each other to come to the party in Geneva, what hope do they have in a FTAAP?

Nor does this move do anything to address the ‘noodle bowl’ problem of overlapping, inconsistent rules of origin, reservations and exceptions in preferential agreements. Instead to trying to stitch together its existing agreements (including existing bilaterals with Chile and Singapore), the US is adding to the fragmentation.

US Trade Representative Susan Schwab should take a long hard look at the list of scalps on her belt (such as Oman, Jordan and Morocco) and declare competitive liberalisation to be intellectually bankrupt. Then, she should be trying seriously to stitch together the existing deals she has. We already have at least one nice triangle of bilaterals, namely, US-Singapore, US-Australia and Australia-Singapore. Why not start with that.