China mulls 'mega' FTA

China has proposed studying the feasibility of a mega free-trade agreement in the Asia-Pacific region as the many flourishing FTAs in the area could burden businesses with different standards, a senior official said on Wednesday.

"We made a proposal to establish a working group to study the feasibility of a Free Trade Area of the Asia Pacific, and we have received responses from many members of the Asia-Pacific Economic Cooperation forum," Wang Shouwen, assistant commerce minister, told reporters in Beijing.

Wang said that the working group will analyze the potential economic benefits of an Asia-Pacific FTA as well as how to use existing regional FTAs to build a broad pact.

"We are discussing how the working group will be composed, possibly comprising government officials, businesspeople and academics from different countries. It will be under the APEC framework with engagement of different members. ... But beginning a study does not mean the start of negotiations on an Asia-Pacific FTA. The working group will finalize a proposal for APEC to decide whether to launch the Asia-Pacific FTA talks," he said.

"We hold that an Asia-Pacific FTA will not conflict with other developing FTAs in the region as Asia Pacific leaders have decided that the Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership are both possible routes to it," Wang said.

FTAs have flourished in recent years, with more than 200 reported to the World Trade Organization. The Asia-Pacific region is building such trade agreements, such as the TPP, an ambitious 12-nation trade pact led by the United States, and the RCEP, a 16-nation trade bloc advanced by the ASEAN plus China, India, Japan, South Korea, Australia and New Zealand.

"Having too many FTAs in the region would set up different standards and create the 'Noodle Bowl Syndrome' — a disorganized tangle of bilateral trade deals — and thus hinder regional businesses. It's necessary to build up a mega FTA," Wang said.

The Asia-Pacific FTA was proposed in 2006. In 2010, APEC leaders announced the TPP and RCEP as parallel routes toward a regionwide FTA while promising to make the APEC an incubator for the regional trade agreement with guidance and talent support, Wang said.

"The Asia-Pacific region has seen vast FTAs, such as the TPP and the RCEP. But they compete with each other and have striking differences. While China is excluded from the TPP, it plans to bridge the gap with the proposal for an Asia-Pacific FTA. This will also mark a milestone in the history of the APEC," said Sheng Bin, director of China APEC Academy at Nankai University in Tianjin.

The APEC Ministers Responsible for Trade Meeting will be held in Qingdao, Shandong province, on May 17 and 18, part of this year's APEC meetings. China hosted the APEC 2001 in Shanghai.