Danang, Vietnam — In the world of trade diplomacy, the acronym is king.
As world leaders descend on the Vietnamese city of Danang for the APEC summit, the nomenclature of free trade — NAFTA, TPP, RCEP and OBOR to name but a few — will be in full flow.
But outside the corridors of economic power, the terms are little understood. Here is a guide to what they mean and why they are important.
APEC
First up is APEC, the regional economic bloc hosting this week’s global gathering in Vietnam.
The Asia Pacific Economic Cooperation — sometimes derided as “four adjectives in search of a noun” — represents 21 Pacific Rim economies, the equivalent of 60% of global GDP and some 2.9 billion people.
Headquartered in Singapore, the group is enormously varied — from economic giants China, Japan and the United States, to comparative minnows such as Vietnam, Indonesia, Chile and Peru.
Established in 1989, it is a child of the post Soviet-era, pushing for freer trade and lower tariffs across the Asia Pacific region.
It is not to be confused with ASEAN, a much smaller 10-member bloc of Southeast Asian countries.
TPP
Until the election of President Donald Trump last year, TPP was an attempt to create the world’s largest and most comprehensive free trade deal, embracing economies representing 40 percent of the global GDP.
But it was dealt a severe blow when Trump announced he was pulling US support earlier this year.
Ironically Washington spent years pushing the pact between 12 Pacific countries that very noticeably excluded its biggest regional rival China.
The remaining 11 countries — dubbed “TPP-11” — have since struggled to reboot the deal now that it doesn’t include access to the world’s largest economy.
In Danang on Friday ministers were working on salvaging the pact, with Japan and Mexico signalling a breakthrough but Canada saying no agreement had been struck.
The pact was previously described by the US as a “gold standard” for all free trade agreements because it went beyond just cutting tariffs.
It included removing a slew of non-tariff measures and required members to comply with a high level of regulatory standards in areas like labour law, environmental protection, intellectual property and government procurement.
RCEP
The Regional Economic Comprehensive Partnership (RCEP) is often described as China’s answer to TPP because it noticeably excludes the US.
It is a proposed trade deal between the 10 members of the Southeast Asian bloc (ASEAN) plus their regional trading partners China, Japan, South Korea, Australia, New Zealand and India.
It aims to cut tariffs but has far less regulatory standards attached than TPP.
It also exempts certain goods from the tariff cuts to protect local sectors and allows less developed members more time to comply.
It’s still in the negotiation stages but interest in it has renewed since the American withdrawal from TPP — a matter of concern for those who wish to see the US taking the lead on global trade.
OBOR
The One Belt One Road initiative is not a free trade deal, but a giant infrastructure plan to web Asia and beyond into China’s trading orbit.
A flagship policy of President Xi Jinping, it aims to revive the ancient Silk Road trade routes from Asia to Europe and Africa.
OBOR spans some 65 countries representing 60 percent of the global population and around a third of global GDP.
The China Development Bank alone has earmarked US$890 billion for some 900 projects.
The road and rail route will attempt to link the northern Chinese city of Xi’an with Dushanbe in Tajikistan, Moscow, Rotterdam and Venice.
The “21st-century Maritime Silk Road” is a maritime transport route that plans to connect China’s east coast with Europe via the South China Sea and the Indian Ocean.
That means billions of loans and infrastructure for China’s neighbours at a time when the United States is increasingly retreating from global leadership.
It also means new markets for China’s surplus of commodities like steel and concrete, and its army of engineers.
NAFTA
Signed in 1994 between the United States, Canada and Mexico, the North American Free Trade Agreement was the granddaddy of free trade deals.
Most economists say that overall it has brought significant financial benefits to all three countries over the years.
But Trump says it has sent American jobs overseas, especially in car manufacturing.
Since taking office he has vowed to renegotiate or scrap the deal, to the dismay of Canada and Mexico.
Officials have extended negotiations into 2018 but so far there is little common ground between the changes Washington wants and what its two neighbours are willing to concede, placing the whole deal in doubt. — AFP
