Regional Economic Integration and Multilateralism: The Case of the ASEAN-Australia-New Zealand FTA and the Malaysia-New Zealand FTA

Abstract

Regional economic integration is back in vogue following the “stumble” in the Doha Round in July 2008. Preferential trade agreements (PTAs) are driving this trend in Asia and the Pacific as well as in Central and South America, and the sheer volume of PTAs is striking. In the 1990s there were barely five PTAs in force, but now there are more than 200 either under negotiation or in force. In this regard, Asia and the Pacific has developed a rapidly evolving regional economic architecture that spans two major plurilateral agreements, the Trans-Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (or ASEAN+6 RCEP), as well as the putative Free Trade Agreement of the Asia-Pacific (FTAAP), which received a new lease on life through the Asia-Pacific Economic Cooperation (APEC) leaders’ meeting in Beijing late last year. ASEAN, as a group or individually, has been particularly busy in this sphere, deliberately using PTAs as a supplement to its own regional integration process. In Central and Latin America, economic integration has been similarly pursued at variable speeds and in variable geometries. In the meantime, there have been some concerns about the proliferation of PTAs for all the usual reasons. Trade diversion is a reality and with their less-than-comprehensive approach to sensitive issues like agriculture and burdensome rules of origin (ROO), many PTAs are perceived as being at best of marginal business interest and at worst a “stumbling block” to conclusion of the Doha Development Round. This paper argues, however, that more recent PTA outcomes, like the ASEAN-Australia-New Zealand FTA (AANZFTA) and the Malaysia-New Zealand FTA (MNZFTA) present a rather more nuanced picture. There may even be some grounds for modest optimism about how PTAs can be building—not stumbling—blocks for multilateralism. Four distinct criteria are used to assess the AANZFTA and the MNZFTA. These include: 1) the breadth and depth of agricultural market access liberalization; 2) the existence (or non-existence) of WTO-plus commitments; 3) how the risks of complex ROO, etc., are mitigated; and 4) the introduction of bespoke solutions of direct commercial value to business (e.g., facilitated business visitor access). The paper suggests that both the AANZFTA and the MNZFTA provide the basis for engagement at the WTO on how to multilateralize the outcomes secured through the AANZFTA and the MNZFTA. The role and experience of New Zealand in both of these high quality and comprehensive PTAs is something that may be of enduring interest.