At the APEC summit in November 2014, the participating countries discussed the possibility of creating an Asia-Pacific Free Trade Area (APFTA) by 2020 and approved the draft roadmap proposed by the Chinese side. The article uses hierarchical cluster analysis to assess the integration potential of the new association in four areas: liberalization of trade in goods and services, free movement of investment flows, financial integration and free movement of labor. The aim of the study is to determine the most likely scenario for the development of integration processes in the region, identify possible positions of the parties, as well as factors that contribute to and hinder the implementation of the concept of the Asia-Pacific Free Trade Zone.

Keywords: regional economic integration, trade liberalization, APEC, Asia-Pacific Free Trade Area (APFTA), hierarchical cluster analysis.

The article was received by the editorial office on 04.03.2015.

In November 2014, during the APEC summit, representatives of 21 participating countries1 once again expressed their intention to create a full-fledged integration association, and also approved the roadmap for the creation of the Asia-Pacific Free Trade Area (APFTA) proposed by the Chinese side.

PREREQUISITES FOR REGIONAL INTEGRATION

Since the signing of the Bogor Declaration in 1994, APEC members have made significant progress in implementing multilateral regional initiatives aimed at ensuring "the free movement of goods, services and capital between APEC countries by removing administrative and other obstacles to the movement of trade and investment flows" [1]. In 1995, the Osaka Action Plan was developed to achieve the goals of the Bogor Declaration [2], and in 1996-the Manila Plan [3], which defined the directions of interaction between the participating countries in 15 areas, including tariff and non-tariff regulation of trade, investment flows, customs procedures, and intellectual property rights competition policy , etc.

In 2002, the APEC countries adopted the first action plan to liberalize trade and reduce transaction costs [4], which allowed them to reduce the cost of doing business by 6% in four years. In 2007, the second action plan was adopted [5].

In 2010, APEC leaders signed the Yokohama Initiative [6], where they noted significant progress in implementing the Bogor Agreements and presented a new vision of integration in the Asia-Pacific region. Nevertheless, despite the progress achieved over 20 years, there are still factors that hinder the development of full-fledged integration across the region, including::

- significant differentiation in the level of economic development. In 2013, the gap in the level of GDP per capita between the countries of the region reached almost 29 times. If in Singapore, the United States and Canada, this figure was 55,182, 53,143 and 51,957 US dollars, respectively, then in Vietnam - only 1,911 [7];

- the monotony of the structure of production and exports in individual APEC countries, which exacerbates competition between them both in domestic and foreign markets [8];

Ekaterina Yakovlevna ARAPOVA, Candidate of Economic Sciences, Head of the Department of MGIMO (U) of the Ministry of Foreign Affairs of the Russian Federation, 76 Vernadsky Ave., 119454 Moscow, Russian Federation (arapova_katrin@mail.ru).

The article was financially supported by the Russian Foundation for Scientific Research, project N 15 - 07 - 00026 "East Asian regionalism in the context of a model of economic growth diversification".

1 Australia, Brunei, Canada, Chile, China, Hong Kong, Indonesia, Japan, Republic of Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, Philippines, Russia, Singapore, Taiwan, Thailand, United States and Vietnam.

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- conflicting interests of the region's dominant countries, primarily the United States, China, and Japan;

- differences in tariff and non-tariff regulation of trade (in particular, in determining the country of origin of goods) [9; 10].

The Chinese initiative to create an Asia-Pacific Free Trade Zone in the region has become one of three alternative scenarios for regional integration, along with the concept of Regional Comprehensive Economic Partnership proposed by Japan and the Trans-Pacific Partnership (TPP) promoted by the United States [11]. If successful, the Asia-Pacific Free Trade Area may become the first integration association that includes two poles of "global imbalances" - the United States and China, as well as Russia.

TRADE LINKS WITHIN APEC

A significant number of modern studies of the integration potential of still emerging associations are based on the assessment of the level of complementarity of trade flows. Over the ten-year period (from 2003 to 2012), the APEC complementarity index decreased from 0.9 to 0.86 (Table 1).

The higher the level of economic development of a country, the more they are focused on the partner countries in the region. The leading positions in the trade complementarity index are occupied by the United States, Japan, the Republic of Korea and Canada, while Brunei, Papua New Guinea, Peru and Chile remain outsiders. At the same time, the least developed countries are characterized by a positive trend in the trade complementarity index, while in the United States, Singapore or Japan, it has tended to decline over the past decade.

The higher the trade complementarity index, the greater the country's interest in creating a regional integration association, since economic integration helps reduce trade costs. Thus, the most interested countries are the United States, the Republic of Korea, Thailand, Singapore, Malaysia, Japan, and China, while the least interested countries are Canada and Mexico, for which the trade policy is based.

Table 1. APEC Trade Complementarity Index

By export

By import

10-year trend

2003

2007

2012

2003

2007

2012

APEC

0.9

0.88

0.86

0.9

0.88

0.86

↓

Brunei

0.14

0.16

0.15

0.5

0.5

0.48

↔

Vietnam

0.35

0.41

0.45

0.52

0.55

0.6

↑

Malaysia

0.55

0.59

0.56

0.64

0.67

0.71

↔

Singapore

0.54

0.54

0.51

0.66

0.65

0.6

↓

Japan

0.61

0.58

0.54

0.68

0.66

0.63

↓

Australia

0.42

0.38

0.33

0.72

0.7

0.7

↓

New Zealand

0.33

0.34

0.3

0.66

0.66

0.64

↓

Canada

0.59

0.63

0.64

0.71

0.72

0.7

↔

Mexico

0.62

0.62

0.61

0.73

0.71

0.72

↔

Peru

0.21

0.21

0.27

0.57

0.59

0.62

↑

USA

0.73

0.69

0.69

0.75

0.75

0.74

↓

Chile

0.23

0.19

0.2

0.64

0.64

0.65

↔

Indonesia

0.51

0.48

0.43

0.63

0.62

0.64

↔

Philippines

0.41

0.4

0.44

0.53

0.51

0.59

↑

Thailand

0.65

0.62

0.57

0.68

0.66

0.66

↓

China

0.55

0.55

0.54

0.65

0.62

0.6

↓

Republic of Korea

-

-

-

0.64

0.65

0.64

↔

Taiwan

0.55

0.53

0.52

0.62

0.61

0.62

↔

Hong Kong

0.54

0.49

0.43

0.64

0.58

0.53

↓

Papua New Guinea

0.14

0.18

0.21

0.46

0.46

0.46

↑

Russia

0.32

0.35

0.35

0.63

0.61

0.62

↔

Source: [12].

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Complementarity is mainly provided by close trade ties within NAFTA. At the same time, for countries such as Vietnam and the Philippines, the gradual rapprochement with regional APEC partners and the growth of their share in total foreign trade increase the "integration motivation" to create an Asia-Pacific free Trade Zone.

DIFFERENCES IN THE CONTEXT OF ECONOMIC DEVELOPMENT

Homogeneity (proximity)in the classical theory of regional integrationUnderstanding the levels of economic development and the nature of foreign trade regulation of integrating countries is one of the main prerequisites for successful integration [13]. Experts of the European Commission today also believe that the maximum benefits from the implementation of the integration scenario can be achieved if two conditions are met::

First. The maximum proximity between integrating countries is not only territorial, but also in terms of the level of economic development and the degree of regulation of the national economy.

Second. The desire of countries to follow the path of reducing and eliminating restrictions on mutual trade (coordination of tariff and non-tariff regulation measures, establishment of common rules for determining the country of origin of goods, etc.)

Thus, in order to determine the integration potential of the newly created Asia-Pacific Free Trade Zone, it is necessary to assess the degree of homogeneity/heterogeneity of the economies of the integrating countries.

The purpose of this analysis is to identify the" integration potential " of APEC countries and determine the prospects for creating an Asia-Pacific Free Trade Zone in four areas:

1. Trade liberalization.

2. Free movement of investments.

3. Financial integration and integration in the banking sector.

4. Free movement of labor.

The study was conducted on the basis of calculations of coefficients of variation for a number of key indicators. The method of hierarchical cluster analysis based on the SPSS package was used to determine the degree of proximity/homogeneity of integrating countries, form their homogeneous groups, and identify parties to a possible clash of interests during negotiations on the creation of an APFTA [14; 15]. On this basis, the most favorable scenario for the formation of the zone can be developed, and the optimal sequence of concluding the necessary bilateral agreements, as well as multilateral agreements with a limited number of participants, can be built.

To assess the depth of differences in the levels of economic development of interning countries for a number of parameters, coefficients of variation were calculated (Table 2).

The results of calculations indicate a high degree of heterogeneity of the APEC economies in all these indicators. Nevertheless, the coefficients of variation in the indicators of tariff regulation of foreign trade excluding agriculture are relatively lower than in the indicators that characterize the prerequisites for the development of financial integration. Agriculture remains one of the most protected sectors of the economy in a number of APEC countries, in particular in the Republic of Korea and Thailand, where the average level of MFN customs duties on agricultural products is 52.7% and 29.9%, respectively. They are followed by Japan and Mexico, where the figure is below 20%. The weighted average level of the customs tariff calculated based on the structure of imports was even higher. The Republic of Korea, Mexico and Thailand remain the leaders, which indicates that the share of the most state-protected, strategically important commodity items in the structure of their imports is relatively high. These states will strive to maximize the protection of national markets from the influx of cheaper and, consequently, more competitive products from partner countries in the event of the creation of an integration association.

At the same time, a number of Asia-Pacific countries actively use non-tariff instruments of foreign trade policy in order to protect national producers. First of all, this concerns the United States, which is extremely reluctant to reduce non-tariff restrictions in agricultural trade, trying to protect domestic producers as much as possible.

2 According to the concept of proximity, the higher the degree of economic development uniformity of the countries of the region, the higher their integration potential.

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Table 2. Coefficients of variation of key indicators of APEC countries ' macroeconomic development and foreign economic activity regulation

Indicator

Coefficient of variation

Trade Integration

Customs tariff

Average level of the MFN customs tariff, all categories of goods

0.62

Average level of the most-favored-nation (MFN) customs tariff, agricultural products

1

Average level of the most-favored-nation (MFN) customs tariff, non-agricultural products

0.59

Weighted average level of customs tariff by trade structure, all categories of goods

0.61

Weighted average level of customs tariff by trade structure, agricultural products

1.38

Weighted average level of customs tariff by trade structure, non-agricultural products

0.64

Export of goods and services, % of GDP Foreign trade turnover, % of GDP

1.05 0.98

Financial integration

Real interest rates, %

0.7

Interest rates on deposits, %

0.9

Interest rate spread, %

0.82

Central bank discount rates, %

0.61

Inflation rate, %

0.69

Total public debt, % of GDP

1.02

Corporate income tax, %

0.32

Free movement of labor

GDP per capita, USD

0.87

Unemployment rate, %

0.44

Author's calculations based on data: [7; 16; 17; 18; 19; 20; 21].

According to experts of the American Enterprise Institute, " leading US agricultural enterprises, especially in the most sensitive industries, such as sugar and dairy, are putting pressure on the Obama administration to maintain existing restrictions on access to the US market for goods from partners in free trade zones (under the Trans-Pacific Partnership). They do not see significant benefits from the reduction of customs duties and quotas by the CCI partner countries and insist on maintaining the priority of such instruments of foreign trade policy as sanitary and phytosanitary standards, technical barriers and non-tariff restrictions" [22, p.170].

The gap in the level of economic indicators in the financial sector is higher than in the field of foreign trade regulation. This is precisely what can prevent the opening of the financial systems of a number of Asia-Pacific countries to non-residents from partner countries, limit the ownership share of foreign counterparties, since increased competition in national markets can lead to the displacement of national producers.

At the same time, the coefficient of variation in the level of central bank interest rates is lower than the corresponding indicator for interest rate spreads. This means that, in theory, liberalizing the financial services sectors can increase the competitiveness of national financial institutions in a number of Asia-Pacific countries, reduce interest rate spreads, and ensure private sector access to credit resources.

The calculations performed indicate a relatively higher integration potential of free movement of investment flows. Coefficient of variation by tax

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Table 3. Clustering of APEC countries by the level of tariff regulation of foreign trade (agglomeration schedule)

Step

Clustering

Coefficients

Cluster 1

Cluster 2

1

Malaysia

Philippines

2.140

2

Australia

New Zealand

6.660

3

Peru

USA

8.690

4

Indonesia

Chile

9.820

5

Japan

Canada

15.240

6

Taiwan

Papua New Guinea

18.370

7

Australia

Peru

19.615

8

Japan

Taiwan

49.785

9

Australia

Hong Kong

51.038

10

Malaysia

Indonesia

51.610

11

China

Russia

73.690

12

Vietnam

Japan

91.123

13

Vietnam

Malaysia

113.947

14

Singapore

Australia

123.014

15

Thailand

Mexico

138.180

16

Vietnam

China

174.489

17

Vietnam

Singapore

282.987

18

Vietnam

Thailand

867.009

19

Vietnam

Republic of Korea

8627.277

The author's calculations are based on data from [18; 19; 20] based on the SPSS package.

The company's income tax, which reflects the conditions for creating and running a business, is much lower than the coefficients for other indicators. In other words, economic integration can contribute to the expansion of investment flows and stimulate both the inflow of investments to partner countries and the growth of investments abroad.

A significant gap in the levels of GDP per capita and unemployment can exacerbate internal contradictions between national trade unions and the authorities in relatively more developed countries, forcing the latter to resort to limiting the influx of cheap labor from less developed countries and protecting their own citizens.

DIFFERENCES IN THE LEVELS OF TARIFF REGULATION OF FOREIGN TRADE

The assessment of the "integration potential" in trade was based on a database that includes six indicators of the average level of the customs tariff, which characterize the degree of regulation of foreign trade.

Hierarchical cluster analysis 3 showed that Malaysia and the Philippines are the closest in terms of tariff regulation of foreign trade among the ASEAN countries (Table 3). They are followed by the Australia-New Zealand pair, which is distinguished by close bilateral trade relations and similar approaches in trade policy towards third countries. The third pair may be the United States and Peru.

It is noteworthy that between all the countries that make up the closest ta levels-

3 The hierarchical cluster analysis method is based on the principle of calculating the distance between potential clusters in order to determine their level of homogeneity. The agglomeration schedule, calculated as part of a hierarchical cluster analysis, allows you to identify pairs of countries that are closest in terms of the indicators that underlie the calculations. In the first step, the closest observations (in this case, countries) are combined, and the level of proximity for this pair is characterized by a relatively lower coefficient value. The coefficients in the fourth column show the distance between two clusters (determined based on the square of the Euclidean distance determined using standardized values). The higher the observation step, the greater the value of the corresponding coefficient and, accordingly, the lower the level of uniformity of the corresponding pair.

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Table 4. Results of cluster analysis of APEC countries ' foreign trade regulation indicators (cluster membership)

Observation

7 Clusters

6 Clusters

5 Clusters

4 Clusters

Vietnam

1

1

1

1

Malaysia

1

1

1

1

Singapore

2

2

2

2

Indonesia

1

1

1

1

Philippines

1

1

1

1

Thailand

3

3

3

3

Japan

1

1

1

1

China

4

4

4

1

Republic of Korea

5

5

5

4

Australia

6

2

2

2

New Zealand

6

2

2

2

Canada

1

1

1

1

Mexico

7

6

3

3

Peru

6

2

2

2

USA

6

2

2

2

Chile

1

1

1

1

Taiwan

1

1

1

1

Hong Kong

6

2

2

2

Papua New Guinea

1

1

1

1

Russia

4

4

4

1

The author's calculations are based on data from [18; 19; 20] based on the SPSS package.

In addition, we have already signed bilateral free trade agreements to regulate the country's foreign trade in a timely manner. The agreement between Australia and New Zealand entered into force in the late 1980s, and between Peru and the United States in February 2009. Both agreements apply to both trade in goods and trade in services [23].

The creation of bilateral and multilateral free trade zones implies the liberalization of trade regimes within integration associations while maintaining the independence of member countries in implementing trade policies with respect to third countries, but the results of the study confirm the conclusion that long-term bilateral integration ties lead to a gradual convergence of approaches to regulating trade relations with third countries. Accordingly, the "hybrid approach" 4 adopted in 2009 in the framework of the Trans-Pacific Partnership concept and the concept of "open regionalism" may also be effective within APEC [24]. They will contribute to the creation of a full-fledged regional free trade zone in the future.

The scenario that identifies 7 clusters in cluster " 1 " includes Vietnam, Malaysia, Indonesia, and the Philippines, as well as Chile, Taiwan, Papua New Guinea, Canada, and Japan. Singapore and Thailand significantly differ in the nature of foreign trade regulation and form independent clusters "2" and" 3", respectively. Singapore pursues the most open, liberal policy towards its trading partners, seeking to expand trade by reducing barriers to the passage of goods and services. Thailand, on the other hand, is one of the most "regulated" economies in the region.

Cluster " 4 " unites China and Russia, but it is worth noting that in the scenario consisting of 4 clusters, these states are closer in their characteristics to the partner countries included in cluster "1". Cluster 6 mainly includes developed countries such as Australia, New Zealand, the United States and Hong Kong, as well as Peru, which has developed close trade relations with the United States,

4 The" hybrid approach " implies the possibility of simultaneous conclusion of free trade agreements by member countries at both the bilateral and multilateral levels.

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Table 5. Corporate income tax in APEC countries in 2013

A country

Income tax, %

Brunei

16.1

Vietnam

35.2

Malaysia

36.3

Singapore

27.1

Indonesia

32.2

Philippines

44.5

Thailand

29.8

Japan

49.7

China

63.7

Republic of Korea

27.9

Australia

47

New Zealand

34.6

Canada

24.3

Mexico

53.7

Peru

36.4

USA

46.3

Chile

27.7

Taiwan

35

Hong Kong

22.9

Papua New Guinea

42.1

Russia

50.7

Compiled on the basis of data from [21].

and a free trade agreement is in effect. A special cluster (cluster "7") is Mexico, although in the 4-cluster scenario it is adjacent to Thailand, pursuing a more active protectionist foreign trade policy.

The most closed country among APEC members is the Republic of Korea, which has the highest customs duties for all the items studied. This is the only country that forms an independent cluster in all 4 scenarios (Table 4).5 The gap between its indicators and those of other clusters is very large. Accordingly, Thailand and the Republic of Korea, while negotiating the creation of a region-wide free trade zone, may seek to maintain relatively higher rates of customs duties on a number of items of strategic interest to these countries.

FREE MOVEMENT OF INVESTMENTS

The integration potential of the movement of investment flows (foreign direct investment) can be estimated on the basis of the corporate income tax indicator. In the scenario with the formation of 7 clusters, Vietnam, Malaysia, Indonesia, New Zealand, Peru, and Taiwan are included in cluster "2". The tax rate in this group of countries ranges from 32.2% in Indonesia to 36.4% in Peru (Table 5).

Cluster 3 includes Singapore, Thailand, the Republic of Korea and Chile (from 27.1 to 29.8%). Cluster 4 is formed by the Philippines, Australia, the United States, and Papua New Guinea (Table 1). 6), where the tax ranges from 42.1% for Papua New Guinea to 47% for Australia. Cluster 5 unites Japan, Mexico, and Russia. In China, which forms an independent cluster "6", the conditions for doing business are the least favorable. Corporate income tax in this country in 2013 was 63.7%. The most favorable conditions for entrepreneurship were created in Brunei (cluster "1"), Hong Kong and Canada (cluster "7").

POTENTIAL FOR FINANCIAL INTEGRATION

To assess the potential of financial integration within the APEC countries, a database of 6 indicators was compiled that characterize the state of the financial sector of the participating countries: real interest rates, deposit interest rates, interest spread, inflation rate, state budget balance (% of GDP) and total public debt (% of GDP).

The financial systems of China and the Philippines are most similar in their characteristics, followed by the Republic of Korea-New Zealand pair, and the third place is occupied by the Thailand-Mexico pair (Table 7).

3 Cluster Membership, identified in the framework of hierarchical cluster analysis, allows us to determine not pairs of observations (countries), but relatively more homogeneous groups of countries based on calculations of the same distance between them. The SPSS system allows you to independently set the probable number of clusters and display the results of calculations in several scenarios / variants depending on the number of clusters: 4-x, 5-y, 6-cluster scenario, etc.The values in the columns of the table show the cluster number to which the country can be assigned within each of the calculated scenarios. Accordingly, countries that have the same cluster number opposite them can be grouped together according to the degree of uniformity based on the studied indicators. Comparing the cluster affiliation of countries in different scenarios allows us to assess the depth of heterogeneity between clusters. If several countries belong to different clusters in the 5-cluster scenario, then in the 4-cluster scenario, they are combined into one group, respectively, the level of heterogeneity between these clusters and countries is relatively lower.

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Table 6. Results of cluster analysis on corporate income tax in APEC countries (cluster membership)

Observation

7 Clusters

6 Clusters

5 Clusters

4 Clusters

Brunei

1

1

1

1

Vietnam

2

2

2

2

Malaysia

2

2

2

2

Singapore

3

3

3

2

Indonesia

2

2

2

2

Philippines

4

4

4

3

Thailand

3

3

3

2

Japan

5

5

4

3

China

6

6

5

4

Republic of Korea

3

3

3

2

Australia

4

4

4

3

New Zealand

2

2

2

2

Canada

7

3

3

2

Mexico

5

5

4

3

Peru

2

2

2

2

USA

4

4

4

3

Chile

3

3

3

2

Taiwan

2

2

2

2

Hong Kong

7

3

3

2

Papua New Guinea

4

4

4

3

Russia

5

5

4

3

Author's calculations based on data from [21] based on the SPSS package.

Table 7. Clustering of APEC countries by indicators of development of national financial systems (agglomeration schedule)

Step

Clustering

Coefficients

Cluster 1

Cluster 2

1

Philippines

China

0.817

2

Republic of Korea

New Zealand

15.004

3

Thailand

Mexico

26.899

4

Philippines

Republic of Korea

28.457

5

Indonesia

Australia

35.202

6

Chile

Russia

43.093

7

Chile

Hong Kong

91.936

8

Philippines

Thailand

106.187

9

Singapore

USA

134.706

10

Indonesia

Philippines

226.341

11

Singapore

Canada

270.052

12

Peru

Chile

395.456

13

Malaysia

Indonesia

527.228

14

Malaysia

Peru

890.513

15

Malaysia

Singapore

4903.799

16

Malaysia

Japan

40694.782

The author's calculations are based on data from [7; 16] based on the SPSS package.

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Table 8. Results of cluster analysis by APEC countries ' financial system development indicators (cluster membership)

Observation

7 Clusters

6 Clusters

5 Clusters

4 Clusters

Malaysia

1

1

1

1

Singapore

2

2

2

2

Indonesia

3

3

3

1

Philippines

3

3

3

1

Thailand

3

3

3

1

Japan

4

4

4

3

China

3

3

3

1

Republic of Korea

3

3

3

1

Australia

3

3

3

1

New Zealand

3

3

3

1

Canada

5

2

2

2

Mexico

3

3

3

1

Peru

6

5

5

4

USA

5

2

2

2

Chile

7

6

5

4

Hong Kong

7

6

5

4

Russia

7

6

5

4

The author's calculations are based on data from [7; 16] based on the SPSS package.

Nine countries have similar conditions for developing financial integration. These are the four ASEAN countries (Malaysia, the Philippines, Thailand, and Indonesia), as well as China, the Republic of Korea, Australia, New Zealand, and Mexico, which make up Cluster "1" in the 4-cluster scenario (Table 8).

When implementing the scenario with the allocation of 7 clusters, the "7" cluster includes Hong Kong, Russia, and Chile. At the same time, there are significant differences in indicators between the countries included in clusters "1" and "7" and the most developed countries in the region, such as Singapore, Canada, the United States and Japan. While Japan stands apart and forms an independent cluster in all these scenarios, the gap in the development of financial markets between this country and other countries in the region, especially developing countries, is very significant, which is one of the main obstacles to strengthening integration in the financial sector.

Liberalization of the banking services sector remains one of the most pressing issues for deepening integration. If we consider only the indicators of the APEC banking sector (the first three of the six indicators of financial system development), then it makes sense to increase the number of clusters to 9 due to the heterogeneity of its development levels in the participating countries.

The main cluster "3" (Table 10) is formed by 7 states: Malaysia, Philippines, Thailand, China, Republic of Korea, Australia and Russia. Singapore and Hong Kong form cluster "4", which is characterized by low deposit rates, but relatively high spreads - 5.2 and 5%, respectively (Table 9). Cluster " 6 " includes Japan, the United States, Canada and Mexico, which are characterized by low real interest rates and interest spreads, which makes these countries more competitive among partner countries. Chile and Indonesia form Cluster 5, while Brunei, Peru, Papua New Guinea and Vietnam form independent clusters.

PROSPECTS FOR THE FREE MOVEMENT OF LABOR

The extent of labor displacement is largely determined by two indicators: the level of GDP per capita and the level of unemployment.

In the 7-cluster integration scenario, cluster " 1 " consists of New Zealand, Hong Kong, Japan, and Brunei (Table 11). Cluster 2 includes the developing countries of the Asia-Pacific region: Vietnam, Indonesia, the Philippines, Thailand, China, Peru and Papua New Guinea. This group of countries is characterized by relatively lower GDP per capita and average unemployment rates.-

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Table 9. APEC Banking sector development indicators

Real interest rates in 2013, %

Interest rates on deposits in 2012, %

Interest rate spreads in 2012, %

Brunei

8.9

0.2

5.3

Vietnam

5.4

10.5

3

Malaysia

4.7

3

1.8

Singapore

5.2

0.1

5.2

Indonesia

7

5.9

5.8

Philippines

3.7

3.2

2.5

Thailand

4.1

2.8

4.3

Japan

1.9

0.5

0.9

China

4.2

3

3

Republic of Korea

3.9

3.7

1.7

Australia

6.5

3.9

3.1

New Zealand

1

4.1

1.7

Canada

1.7

0.5

2.5

Mexico

2.2

1.1

3.6

Peru

16.2

2.5

16.8

USA

1.7

Chile

7.4

5.8

4.3

Hong Kong

3.6

0

5

Papua New Guinea

10.3

0.5

10.3

Russia

3.4

5.5

3.6

Compiled on the basis of data from [16].

Table 10. Results of cluster analysis on APEC banking sector development indicators (cluster membership)

Observation

9 Clusters

8 Clusters

7 Clusters

6 Clusters

5 Clusters

4 Clusters

Brunei

1

1

1

1

1

1

Vietnam

2

2

2

2

2

2

Malaysia

3

3

3

3

3

Singapore

4

4

4

1

1

Indonesia

5

5

5

4

2

2

Philippines

3

3

3

3

3

Thailand

3

3

3

3

3

Japan

6

6

3

3

3

China

3

3

3

3

3

Republic of Korea

3

3

3

3

3

Australia

3

3

3

3

3

New Zealand

7

6

3

3

3

Canada

6

6

3

3

3

Mexico

6

6

3

3

3

Peru

8

7

6

5

4

3

USA

6

6

3

3

3

Chile

5

5

5

4

2

2

Hong Kong

4

4

4

1

1

Papua New Guinea

9

8

7

6

5

4

Russia

3

3

3

3

3

Author's calculations based on data from [16] based on the SPSS package.

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This makes them potential suppliers of low-skilled labor to relatively higher-income countries. Malaysia and Mexico form cluster " 3 "and are close in terms of their indicators to cluster" 7", which includes Russia and Chile, since in the 6-cluster scenario, all the listed four states are included in one group. Cluster 4 is formed by Singapore, Canada,and the United States, which are the most developed APEC countries with the highest GDP per capita. Australia and the Republic of Korea form independent clusters ("6" and "5", respectively).

Countries in clusters " 4 " and " 6 " can become the main host countries for cheap labor from the least developed countries of the region. For Singapore, the creation of an Asia-Pacific Free Trade Zone in the future is unlikely to lead to a sharp increase in the influx of low-skilled labor. It is already taking place as a result of integration processes within ASEAN. However, for other developed countries (especially Canada and the United States), the free movement of labor can create serious problems and exacerbate tensions with national trade unions. One cannot help but see that these countries have relatively high unemployment rates, which means that they are more interested in providing jobs for their own citizens than in reducing the costs of companies by using cheaper labor from developing countries in the region.

the prospects

Assessment of the integration potential of the Asia-Pacific Free Trade Zone showed that there are significant differences in the level of economic development and the nature of state regulation of the economic systems of the countries of the region. This is typical both for the sphere of trade regulation and for the regulation of financial flows, which significantly reduces the likelihood of forming a full - fledged free trade zone in the region in the short and medium term (within 5 years, as it was announced at the AEEC summit). The probability of rapid development of financial integration in the region is even lower.

Integration processes within APEC will be developed in accordance with the concept of "open regionalism" or within the framework of the "hybrid approach" adopted for the Trans-Pacific Partnership, when participating countries will be able to sign free trade agreements on a bilateral basis (or a multilateral basis with a limited number of participants), while simultaneously negotiating integration cooperation throughout APEC.. An increase in the number of bilateral free trade agreements will contribute to the formation of the Asia-Pacific Free Trade Zone, as bilateral agreements concluded in recent years in the region are becoming more "clean" (clean regionalism)6 [25, p. 205]. The higher the quality of bilateral and multilateral agreements concluded, the less contradictions can arise when negotiating the creation of a regional free trade zone.

The application of the hierarchical cluster analysis method, which is the basis of this study, made it possible to determine the most favorable scenario for regional integration in the Asia-Pacific region, and to identify the optimal sequence for concluding bilateral free trade agreements within APEC. The Asia-Pacific Free Trade Area can be created only after signing an agreement within the framework of the Trans-Pacific Partnership. The effectiveness of integration processes will significantly increase if the Republic of Korea joins the TPP. The bilateral free trade agreement with the United States, which is the main driving force behind the 12-state integration process, can help accelerate negotiations between this country and the TPP states. However, representatives of the ruling circles of Korea have repeatedly expressed concerns that liberalization may negatively affect the development of national industries [26].

The implementation of the Trans-Pacific Partnership concept can speed up the negotiation process for the creation of an Asia-Pacific Free Trade Zone, but it can also become an obstacle that reduces the motivation of a number of countries to further expand integration processes. First of all, we are talking about the United States. Con-

6 The term "clean regionalism" refers to the gradual improvement of the quality of bilateral free trade agreements. Liberal regimes apply to an increasing number of commodity items, covering not only the reduction and elimination of tariff restrictions, but also non-tariff regulation, the development of general rules for determining the country of origin of goods, etc.

page 78
The TPP concept will help strengthen both the economic and political positions of the United States in the region, and it is interested in developing integration without the participation of its main competitor for economic and political influence in the Asia - Pacific region-China. In addition, in the current political conditions, it is quite difficult to imagine the creation of a new integration association with the simultaneous participation of the United States and Russia. However, if we consider only economic conditions, then the CCI can be considered as a necessary stage preceding the formation of an APFTA.

Another prerequisite for region-wide integration is the creation of a North-Eastern free trade Zone that unites China, Japan, and the Republic of Korea [27; 28]. In addition, it is necessary to strengthen Russia's integration into the Asia-Pacific region. So far, our country has not signed a single bilateral free trade agreement with its APEC partners. Russia is in talks with New Zealand and Vietnam, but bilateral free trade agreements have not yet been signed.

* * *

The Asia-Pacific Free Trade Area is likely to cover only trade in goods. At the same time, the agricultural sector will obviously be excluded from the agreement's provisions, since many member countries will continue to strive to maintain protectionist policies in this area, maintain the competitiveness of national industries and protect national agricultural producers. In addition, significant contradictions may persist in the development of general rules for determining the country of origin of goods. In trade in services, APEC countries are likely to work in the "APFTA minus X" format, similar to the "ASEAN minus X"flexible participation format.

It would make sense to make the process of foreign trade liberalization in the APFTA step-by-step, similar to the development of integration processes within ASEAN, when the six most developed and four relatively less developed countries had different schedules for reducing customs duty rates and established transition periods that differed in duration. In this case, Thailand, Indonesia, Vietnam, Russia, Mexico, and Papua New Guinea could be assigned to the second, relatively less developed group of countries, both in terms of their degree of integration into the regional economic system and in terms of the nature of foreign economic regulation.

Free movement of investment can be exactly the direction where APEC countries can achieve maximum results. This is due both to relatively smaller differences in indicators that characterize the ease of doing business, and the availability of significant financial resources in a number of Asia-Pacific countries, in particular in Japan, which determines the focus of these countries on pursuing an "aggressive" policy of expanding investment abroad (which is typical for China). Accordingly, Singapore, Thailand, the Republic of Korea, Chile, Russia and Hong Kong will be the main host countries for investment flows from partner countries, while the United States, Japan and China will be the key suppliers of capital.

The issues of free movement of labor may be most acute when creating an Asia-Pacific free Trade Zone. Developing countries such as Brunei, Chile, China, Indonesia, Thailand, the Philippines, Peru, Papua New Guinea and Vietnam can become major suppliers of relatively cheap labor to the United States, Canada and Australia, which in turn will try to impose restrictions to protect national workers and solve unemployment problems.

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INTEGRATION POTENTIAL OF FREE TRADE AREA OF THE ASIA-PACIFIC

(World Economy and International Relations, 2016, vol. 60, no. 1, pp. 68 - 81)

Received 04.03.2015.

ARAPOVA Ekaterina Yakovlevna (arapova_katrin@mail.ru),

State Institute of International Relations (University) of the Ministry of Foreign Affairs of the Russian Federation, 76, Vernadskogo Prosp., Moscow, 119454, Russian Federation.

Acknowledgements. The research was supported by the Russian Fund for Humanities, project no. 15 - 07 - 00026 "East Asian regionalism in the context of diversification of economic growth model".

During the 2014 APEC summit the participating countries agreed to move towards a region-wide economic integration and approved China-backed roadmap to promote the Free Trade Area of the Asia-Pacific (FTAAP). The paper examines prospects for economic integration in the Asia-Pacific in the framework of 21 APEC participating members. It aims to measure the "integration potential" of the FTAAP on the basis of quantitative and qualitative analysis of the actual statistic data, to explore key obstacles hampering economic integration in the region. The research comes from the theory of convergence and concept of proximity. They suppose that the higher is the degree of homogeneity in economic development and regulatory regimes of the integrating countries the higher is their "integration potential". The objective of the author's analysis is to measure the "integration potential" of APEC countries in four directions: trade liberalization, free movement of investments, monetary and banking integration, free division of labor. Initial estimates of the FTAAP prospects base on the merchandize trade complementarity indices and coefficients of variation analysis. Besides, the research uses hierarchical cluster analysis that helps to classify countries in different groups according to similarity of their economic typologies. This methodology allows to reveal the favorable algorithm of regional economic integration in the framework of the "hybrid approach " (or "open regionalism " adopted for APEC countries in 1989) which encourages the countries to enter into free trade agreements on a bilateral basis or to make offers to the APEC membership as a whole. Final conclusions are based on the results of authors' calculations with consideration for contemporary trends of the member countries' economic development and long-term strategies of economic growth.

Keywords: regional economic integration, trade liberalization, APEC, Free Trade Area of the Asia-Pacific, hierarchical cluster analysis.

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