Talking Trade blog
Missing in action: Trade secretariats
Published 01 November 2022
Secretariats, or a permanent management structure, play a critical role in the delivery and implementation of international agreements including trade deals. They provide the backbone to administer the day-to-day functions of keeping such pacts alive and ensuring that parties stick to their obligations. Secretariats come in all shapes, sizes and levels of formality.
Running an institution by informal committees alone can be a recipe for allowing members to shirk their implementation commitments. It is highly likely that many of the benefits of trade agreements will go unrealized.
Countries in the region are signing on to a host of often overlapping free trade agreements (FTAs), creating a so-called “noodle bowl” effect in trade parlance; but a number of them have no permanent structures in place to monitor the agreements.
Almost a year after entering into force, the Regional Comprehensive Economic Partnership (RCEP), despite having provisions requiring the creation of a Secretariat as the very first order of business, has yet to set up one. Cambodia, Singapore, and Indonesia are reportedly vying for the hosting role for different motivations: the Kingdom sees it as a low-hanging fruit to score a win under its current chairmanship of the Association of Southeast Asian Nations (ASEAN), the city-state claims it has a more relatively mature experience coordinating multilateral economic engagements, while the archipelago seems to want it a stone throw away from the Jakarta-based ASEAN Secretariat, which currently acts as caretaker for RCEP.
Some trade watchers have suggested that the ASEAN Secretariat is well-positioned to take this role given its influence in leading the bloc’s efforts throughout the negotiation rounds. But this approach could be problematic—ASEAN already has a complex organizational structure with an alphabet soup of committees and smaller groups handling different subsets of economic issue areas. Having them absorb RCEP-specific functions runs the risk of diluting the non-RCEP portions of ASEAN agendas. Instead, a separate Secretariat dedicated to RCEP would be more focused on its supervision and would even complement the efforts of its ASEAN counterpart, particularly in deepening regional economic integration.
Meanwhile, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) has also experienced similar challenges albeit in a different fashion. Instead of a Secretariat, the bloc opted for a Commission where the duties of managing the CPTPP rotates among the members based on the order they ratified the agreement. Singapore currently chairs the CPTPP Commission and will pass the baton to New Zealand come 2023, before Canada picks up the leadership mantle in 2024.
While many point out that this format allows members to share leadership responsibilities, it could also prove unsustainable in the long run, especially for an ambitious FTA of this scope. After all, they added the first two adjectives—Comprehensive and Progressive—into the FTA for a reason. Trade ministries, particularly from smaller members, face the enormous task of allocating already stretched resources to effectively handle both domestic trade issues and their yearlong duties as Commission chair. With more economies knocking on the accession door, the responsibilities also grow.
Another notable agreement is the Digital Economy Partnership Agreement (DEPA) which is not a typical FTA in the strictest sense. With Chile, New Zealand, and Singapore as current parties, and South Korea, Canada and China working on accession, trade officials and experts can make the case that it doesn’t merit yet the establishment of a standalone administrative structure. At the moment, those functions fall to a joint committee akin to the CPTPP Commission with the leadership role also rotated among the members.
But for a framework touted as “next-generation” and intended to shape the region’s digital environment, having a dedicated Secretariat in the near future could enhance DEPA’s credibility and influence in taking a first-mover advantage as it defines the playbook for digital trade. In a more practical example, it would also relieve members from running parallel talks with other countries bidding for membership. Chile chairs the accession working group for China, New Zealand for Canada, and Singapore for South Korea.
Critics often point out that Secretariats are nothing but an additional layer of bureaucracy and that governments have less appetite for such massive undertakings. But it is a necessary bureaucracy if countries want to ensure the long-term health and success of FTAs or any important economic arrangement. They provide an independent avenue to hold the parties accountable to their commitments, facilitate regular and high-level meetings including accession talks, act as an information hub and lend technical expertise to members, and serve as a link for other stakeholders such as businesses to engage in trade conversations.
The real challenge is to ensure these indispensable organs of the trading system have the mandate, leeway, and resources to remain independent and nimble. But that’s an entirely different story altogether. For now, governments in the region would be better off having robust institutions capable of delivering the substance of FTAs so they can invest more time into representing their respective interests with trading partners.
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