Revisiting Sectoral Liberalization: an Alternative to the FTAAP? Implications on the Philippines

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This paper develops a modality of liberalization for APEC, based on a sectoral level, as an alternative to the politically sensitive Free Trade Area of the Asia-Pacific (FTAAP). This model, originally developed by Wonnacott (1994), argues for the liberalization of sectors on an MFN basis, where APEC members are principal suppliers. The main advantage of this option is that it skirts the free rider problem that usually afflicts MFN liberalization. While this approach would benefit APEC as a group, it impacts different members differently. The paper examines the implications of such liberalization modality on the offensive and defensive interests of the Philippines in APEC.