HK has much to gain from TPP trade pact

Far removed from today's headlines for the most part, a small but highly influential group of major trading countries has been meeting over the past two years to map out the next generation of trade rules for the Asia-Pacific region.

This collective, unexcitingly called the Trans-Pacific Partnership, originated from a grouping formed in 2005, not by the United States or any of the region's economic heavyweights, but by Brunei, Chile, New Zealand and Singapore. Since then, five other economies - the US, Australia, Malaysia, Peru and Vietnam - have signed on and are now negotiating what is being billed as a "cutting edge, 21st-century trade agreement", with ambitions to push the envelop on trade liberalisation and venture where the World Trade Organisation and Apec have largely failed.

With most tariff barriers in the region removed by free trade agreements or previous trade rounds, what remains are the so-called "behind-the-border" impediments to trade and investment. This is where the Trans-Pacific Partnership is trying to be a pioneer, and its proponents are pinning hopes on it becoming the vehicle that takes us towards a future free trade agreement that would include all members of Asia-Pacific Economic Co-operation forum.

Negotiators for the partnership, who will meet again from today, have been down in the trenches fashioning new rules on such arcana as regulatory convergence, supply chain management and cross-border services trade. While hardly sexy, these issues are the indispensible facilitators of global trade. The grouping is also making a big fuss about its efforts to help out the region's small and medium-sized enterprises.

Most of these "emerging" trade areas are where Hong Kong already has unique advantages. For example, its firms are leading innovators of supply chain management and service know-how. Further liberalisation of services, now over 90 per cent of its gross domestic product, will undoubtedly play to Hong Kong's strengths and help stimulate growth and employment. Given that most members of the grouping are major service economies, the partnership offers Hong Kong a fast-track services liberalisation agenda consistent with its stated economic goals.

Yet Hong Kong is completely missing in action from the negotiations and has chosen not to even send observers, as Japan has done. When asked about regional trade arrangements, Hong Kong officials like to trot out the usual mantra citing their preference for multilateralism over regional trade deals.