FORMATION OF FREE TRADE ZONE IN ASIA
The economy of Asia comprise of more than 4.2 billion people, accounting for 60% of the world population, who lives in 46 different states. Six further states lie partly in Asia, but are considered to belong to another region economically and politically. Asia is the world’s fastest growing economic region.
Economic conditions in Asia
As in all world regions, the wealth of Asia differs widely between, and within, states. This is due to its vast size, meaning a huge range of differing cultures, environments, historical ties and government systems. This vast diversity is creating barriers between states and comes to a point that it hinders the growth of the region.
Multiple attempts has been made to form a free trade zone within the region, the ‘Comprehensive Economic Partnership for East Asia’ (CEPEA), a Japanese led proposal for trade co-operation, free trade agreement, among the 16 present member countries of the East Asia Summit; the ‘East Asia Free Trade Agreement’ (EATA); and the ‘Regional Comprehensive Economic Partnership’ (RCEP),just to name a few.
It is an ASEAN-led trade agreement linking the economies of 16 Asia-Pacific countries. ‘The group includes more than 3 billion people, has a combined GDP of about $17 trillion, and accounts for about 40 percent of world trade.’ Negotiations are slated to begin in early 2013 and are expected to conclude by the end of 2015.
The idea of the RCEP was first introduced in November 2011 at the ASEAN Leaders Summit in Bali, as officials attempted to reconcile two existing regional trade architectures. China supported the East Asia Free Trade Agreement, which restricted the grouping to ASEAN, China, Japan, and South Korea. Japan, on the other hand, favored the Comprehensive Economic Partnership in East Asia, which added three countries: India, Australia, and New Zealand.
Opportunities and threats
ASEAN leaders struck a balance with the RCEP, adopting an open accession scheme that would allow other members to join as long as they agree to comply with the grouping’s rules and guidelines. As it currently stands, only ASEAN and its FTA partners will participate in the negotiations. However, contrary to reports that claim the United States is barred from joining, membership is open to other countries.