Macroscope | Beijing must take a different route with the US to realise FTAAP goals
China and the United States can look at forging a deal that would not interfere with existing agreements but would lead back to the WTO
Last week's joint ministerial statement emerging from the Beijing Apec meetings finessed but did not resolve big-power trade tensions. Festering disagreement has characterised Asia-Pacific Economic Cooperation-based trade discussions between the United States and China all year over the architecture for trade co-operation.
At the root of the problem is the configuration of country groupings coalescing around a number of prospective "mega" trade deals. These budding agreements are even more central to trade while the WTO Doha Round negotiations remain beached by seemingly irreconcilable differences.
On one side, the US is invested in the 12-nation Trans-Pacific Partnership (TPP) and the EU-US Transatlantic Trade and Investment Partnership. On the other, China is one of 16 (Asean plus 6) Asia-region countries negotiating the Regional Comprehensive Economic Partnership.
Against this background of overlapping but potentially competing groupings - none of which encompass both China and the US - China has used its role as Apec chair this year to breathe life into the 2006 agreement to explore the Free Trade Area of the Asia-Pacific (FTAAP) for the entire 21-country Apec membership.
This initiative has met opposition from the US, which sees it as a competing distraction from the TPP. The TPP faces closure difficulties resulting in repeated timetable adjustments. China's push for the FTAAP was treated as a geopolitically motivated countermeasure, which it may well have been.
The joint ministerial statement enjoins Apec members to "kick off and advance … the eventual realisation of the FTAAP". The goal of establishing the FTAAP is to be realised "as early as possible by building on ongoing regional undertakings". A key ingredient in the process is a "collective strategic" two-year study on relevant issues.
Therein sits the compromise. China gets its study and an undertaking that the FTAAP project will go forward. The US keeps TPP front and centre for as long as it takes to complete, and as part of the structure of international commitments that will fertilise the FTAAP.