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Australia keen on China-backed infrastructure bank
by Staff Writers
Sydney (AFP) Nov 06, 2014

Asia trade pact at 'top of the agenda': APEC official
Beijing (AFP) Nov 06, 2014 - Senior officials from the Asia-Pacific Economic Cooperation region have agreed to launch a "strategic study" on a trade pact backed by Beijing, the forum's top official said Thursday.

The study on the Free Trade Area of the Asia-Pacific (FTAAP) concept will last around two years, said Alan Bollard, APEC's executive director.

The deal remains at the "top of the agenda", he said, dismissing suggestions that slow progress on it was a blow to Beijing, but he added: "This is not an opening of negotiations."

The study will have to be approved by ministers and heads of government at the Leaders' Week meeting in Beijing, said Bollard, a former head of New Zealand's central bank.

The notion of a far-reaching trade pact such as FTAAP, first raised in 2006 by APEC leaders, has increasingly been pushed by China.

But it faces competition from a narrower Trans-Pacific Partnership (TPP) plan championed by Washington, which does not include China.

A separate Regional Comprehensive Economic Partnership (RCEP) plan has also been promoted by the 10-member Association of Southeast Asian Nations (ASEAN).

APEC had "no tradition of legal negotiations", Bollard said.

"The whole process through the year has been about understanding what FTAAP might mean, how it might get there, how long it might take, and how it might fit in with these other under-negotiation trade agreements," he said.

Some Chinese analysts have viewed Washington's TPP proposal with scepticism, arguing that the plan is intended as a way to thwart FTAAP and thus counter Beijing's growing influence in the region, concerns Washington has dismissed.

APEC wanted to see whether TPP and RCEP were "likely to converge towards something which would be in the direction of an FTAAP", Bollard said. "Or could they send economies off in different directions? APEC would like to see them converging. And this study will help give us directions about whether that's happening or not."

Ministerial meetings at the forum begin on Friday, and the full summit on Monday and Tuesday will see leaders of more than half the world's economy gather in Beijing.

Among the other initiatives to be discussed include a connectivity blueprint and a statement on anti-corruption.

Australia on Wednesday said it was keen to join an Asian infrastructure lender seen as a counterweight to Western-backed international development banks, but said changes to its set-up were needed.

China and 20 other countries last month put their names to a memorandum of understanding to establish the Chinese-driven Asian Infrastructure Investment Bank (AIIB) at a ceremony in Beijing.

The institution, reportedly to be based in Beijing, is expected to have initial capital of US$50 billion to address the region's burgeoning demand for transportation, dams, ports and other facilities, officials say.

But precise details about the bank, including governance and transparency issues, remain elusive and big economies such as the United States and Japan, as well as Australia, turned down an initial request to join.

Australian Prime Minister Tony Abbott told The Australian newspaper he would encourage other nations to back the bank once it was clear it was a "genuine bank" rather than an arm of just one country's foreign policy.

"We haven't decided not to join. We would like to join but we want to join a multilateral institution, but not one that is basically owned and operated by China," he said ahead of the APEC summit in Beijing.

"We've provided input into the governance. Because the MOU had already been the subject of intensive negotiation it wasn't possible for them to much revise the MOU prior to that initial date.

"But we're certainly hoping to have further discussions.

"If the MOU can be further adjusted... that makes it absolutely crystal clear that this will have the governance and transparency arrangements that other entities such as the World Bank have -- well, not only will we be happy to join but we'd expect that others like Japan and Korea and the United States would also join," he added.

"And we'd certainly be encouraging them to do so."

China's rise to become the world's second-largest economy has been accompanied by a desire to play a greater role in global organisations such as the International Monetary Fund, the World Bank and the Asian Development Bank, which have been dominated by Europe, the United States and Japan.

Beijing has maintained it is open to more countries joining new bank with the MOU signatories expected to negotiate its specifics in the coming months.

World Bank President Jim Yong Kim said in July that estimates for infrastructure needs in developing countries were at least US$1 trillion annually, far beyond the current capacity of his institution and private investment to handle.

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