Resource security: a new motivation for free trade agreements in the Asia-Pacific region

Abstract

ABSTRACT:Following a historical commitment to multilateralism, in the last decade the trade policy initiatives of many states in the Asia-Pacific have turned to bilateralism through the negotiation of free trade agreements (FTAs). The corresponding proliferation of regional FTAs has thus far been understood to result from three broad motivations: a desire to advance trade liberalisation beyond WTO disciplines; mercantilistic efforts to secure preferential access to key export markets; and/or attempts to use FTAs to secure non-economic political gains. This paper argues that since the middle of the decade a new motive has emerged -the use of FTAs to improve resource securityparticularly by import dependent resource consumers in Northeast Asia. As yet unexamined in the literature, this paper seeks to document and explain this trend. It analyses the recent emergence of resource security concerns as a new FTA motive; the corresponding shifts in the FTA strategies and initiatives of Japan, Korea and China; and the dynamics of an emerging race for resource-related FTAs between the three governments. Based on this analysis, it demonstrates that resource-related FTAs could potentially improve consumers' resource security through either the liberalisation of trade, the extension of investment protections, or broader diplomatic gains with the targeted supplier. However, owing to supplier reluctance to enter into binding policy commitments for resource industries, their track record shows success in only the diplomatic dimension, and the prospects for a strengthening of their effects are poor. As a result, it is argued that while resource concerns have become a key motive for FTA initiatives in the Asia-Pacific region, they have not substantively improved resource security for its import-dependent states and are unlikely to do so in the future.2

Mega-Regional Trade Deals in the Asia-Pacific: Choosing Between the TPP and RCEP?

“…Agreements involving China and ASEAN members also rarely address any of the WTO Plus issues -such as investment, intellectual property and technical barriers to trade -in a substantive way that improves upon or extends existing WTO rules (Capling and Ravenhill 2011). As a result, many analysts have argued that FTAs in the Asia-Pacific have failed to live up to their promise of advancing either trade liberalisation, or broader forms of regional economic cooperation, in a meaningful way (Capling 2008a;Dent 2010;Ravenhill 2008;Wilson 2012).…”

“…Third, others have been forced to defensively begin signing FTAs in order to neutralise disadvantages associated with being "outsiders" to the web of agreements gradually spreading across the region (Dent 2010). Finally, some regional governments have used FTAs for geopolitical rather than purely economic purposes: to "reward" security partners (Higgott 2004), to signal diplomatic intentions (Capling 2008b), and to pursue non-trade forms of economic cooperation (such as resource security agreements) (Wilson 2012). The consequence of FTA proliferation is that the trade system in the AsiaPacific is no longer flat and multilateral, but dominated by a complex web of overlapping bilateral agreements with markedly different designs and purposes.…”

Diplomatic Objectives in Trade Politics: The Development of the China-Japan-Korea FTA

“…FTAs are sometimes concluded to enhance the state's security position in evolving global and regional politics (Aggarwal and Govella 2013;Pempel 2013). The resource-importing countries take advantage of FTAs to improve "resource security" in which they can enjoy the continuous availability of necessary natural resources at reasonable prices (Wilson 2012). Second, political conditions have crucial influences on the selection of FTA partners.…”

Resource insecurity and international institutions in the Asia-Pacific region

“…In contrast to the marked changes in interstate relations brought about by BITs, government attempts to increase resource security through investment-related provisions in PTAs have enjoyed minimal success. A survey of minerals chapters in PTAs involving East Asian countries (Wilson 2012) found that all of the ten agreements with resource suppliers that included investment protection provisions had significant exemptions for resource sectors. Moreover, none of the resource chapters included a commitment on the part of exporting states to refrain from imposing export controls (the only agreements that mentioned export controls, those between Japan and Indonesia and Japan and Brunei, merely require consultation on quantitative restrictions and, in both instances, the suppliers reserve the right to impose such restrictions if they see fit -a much weaker discipline than found, for instance, in the EU's trade agreements with Algeria and South Africa (WTO 2010: 180)).…”