‘Growing Together’: The ‘Asia Pacific century’

A document named ‘Growing Together’ prepared by UNESCAP for the sixty sixth session of ESCAP states that the realisation of what is termed as the ‘Asia Pacific century’ will depend on the region’s ability to harness the potential of regional economic integration.

A shared history and culture, complementarities arising from their very different levels of development, natural resources, capital and workforces and most importantly, the presence of large and growing markets have been given as plus factors for such a scenario.
The region has vast middle classes with growing incomes and purchasing power creating the world’s largest markets for products and services ranging from mobile phones to motorcars and jet only increasingly viable, but also highly desirable.
According to ESCAP, four key elements of a regional economic integration scheme are
n An integrated Asia-Pacific market – This would involve combining numerous bilateral and sub regional agreements into broader arrangements open to all Asia Pacific countries.
n Seamless physical connectivity – Through better transport, energy and information and communications technology (ICT) links and the adoption of best practices in trade.
n Financial cooperation – To ensure the optimal use of the region’s resources for mutual benefit,
n Addressing shared vulnerabilities and risks – Mutual cooperation will enable countries to respond more effectively to concerns about energy and food security, disasters, pressures on natural resources, social exclusion and rising inequality.
Being the world’s most dynamic region, if current trends continue, the report predicts that Asia and the Pacific will become the world’s largest market in 2012.
ESCAP, according to the report has developed an “export opportunities indicator” to identify the most promising export market in the world for each country. According to this indicator, China is among the top 10 export markets in the world for all the countries in the Asia and Pacific region.
Other top markets include India, Republic of Korea, Russia and Turkey. The indicator notes that excepting East and North –East Asia, Asia Pacific countries have greater export potential in other sub regions than in their own sub regions. This, the report notes is in contrast to the so far adopted method of regional integration which was sub regional.
The increasing importance of the export of commercial services is noted in the report. Between 2000 and 2010the region’s contribution to world service exports had increased from 22% to 29%. Present data also indicates the importance of the region as a major market itself partly due to the increasing purchasing power of the emerging middle class which can afford travel abroad for tourism and study and the data indicates that most of the tourism movements as well as international students in the region’s universities are within the region. This is an important point to note for Sri Lanka trying to attract tourists and foreign students. Countries in the region are reported to enter into bilateral and sub regional free trade agreements to overcome the various barriers to regional trade. According to the report, over 140 such agreements are now in existence creating a noodle bowl effect and have not provided a seamless or integrated market.
The study recommends to foster sub-regional trade links instead of deeper integration within the sub region and suggests three routes for achieving such a broader market.
1) An Asia Pacific Economic Area (APEA) which is a framework to join existing sub-regional groupings although it may be rather difficult, due to the levels of development within the region and because some major economies would not be included.
2) Building on the ASEAN+ approach – an Asia Pacific RTA with the two key proposals of ASEAN which include East Asia Free Trade Area (EAFTA) and the Comprehensive Economic Partnership for East Asia(E+CEPEA) to which other countries could accede to.
3) A new Asia Pacific trade Agreement (APTA II) with comprehensive scope based on negative lists, trade facilitation, investment, economic cooperation and most importantly special and differential treatment for poorer countries.
ESCAP’s view is that the approaches recommended in the report together with the creation of a regional development fund for promoting balanced regional development accompanying the programs for regional economic integration, regionalism in Asia and the Pacific could become a model of an inclusive, balanced, equitable and participatory development process for other regions to emulate because shared prosperity will foster peace and turn the 21st century into an inclusive and sustainable Asia Pacific century.
The ESCAP report although meant for the region to work together has many suggestions for countries to study and implement.

(Manel de Silva holds an Honours Degree in Political Science from the University of Ceylon, Peradeniya and has engaged in professional training in Commercial Diplomacy at ITC and GATT. She has served as a trade diplomat in several Sri Lankan Missions overseas and was the first female Head of the Department of Commerce as Director General of Commerce.)