Bush pushes on APEC free trade agreement

The United States may push for a free trade zone between the 21 countries of APEC this week, a move that would bring together three of the world's biggest economies in an effort to improve the world free trade.

US President George Bush is expected to call for a feasibility study on creating an Asia-Pacific-wide free trade agreement, a senior US trade official said in Washington.

The official said the study would consider setting up working groups to look into the benefits of the free trade area among APEC's 21 economies, which include the United States, Japan, Russia, China, Australia and South-East Asia's strongest economies.

"The idea is to really evaluate whether an APEC-wide free trade agreement would be a benefit to the members of APEC," the official said.

It would "lay out the game plan for determining how one might come together".

A spokeswoman for Australian Trade Minister Warren Truss said yesterday that while the idea was valid, the Government wanted to focus on the Doha trade talks.

She said the Australian Government would look at an Asia-Pacific-wide free trade agreement "down the track".

The spokeswoman said the APEC Business Advisory Council and Pacific Economic Co-operation Council had conducted a study into the proposal that found practical difficulties.

Mr Bush will have the opportunity to test his thesis in free trade-friendly Singapore tomorrow and Friday before his visit to Vietnam.

However, Mr Bush's ability to drive the international debate may be undermined by domestic objections to his free trade agenda.

On Monday, just a week after his Republican Party lost control of the House of Representatives and Senate, he suffered a new defeat when a bill to make permanently normalise trading relations with Vietnam was rejected.

The US chief trade negotiator, Susan Schwab, reportedly flew to Vietnam on Monday ahead of the vote for what were supposed to be celebratory meetings with her Vietnamese counterparts. It will be an embarrassing reverse for both Mr Bush and the Vietnamese Government.

"There may be some damage," said a Vietnamese economic analyst yesterday, "but we already have a bilateral trade agreement so it will only affect some parts (of the economy). It's more about image than trade."

The United States normalised trade relations with Vietnam in 1995 under president Bill Clinton and signed the bilateral deal in 2001.

However, this week's bill is necessary because of a hangover from the Cold War called the Jackson-Vanik law, which requires a yearly review of Vietnam's political and economic practices and an annual granting of trade preferences. When Vietnam joins the World Trade Organisation, that law must be rescinded under WTO rules.

Ms Schwab said the US saw the Asia-Pacific free trade plan as something that would eventually become a reality.

"We aren't talking about suddenly launching a negotiation for a free trade area of the Asia-Pacific region. I think over time we would hope to see that evolve and it's a good topic" for discussions within APEC, she said.

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