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APEC: A fruitless exercise,
again
By Alan Boyd
SYDNEY -
In the end it was left to Philippine President Gloria
Macapagal-Arroyo to express Third World frustrations at
another fruitless exercise in trade diplomacy.
Taking aim at the annual gathering of Asia
Pacific Economic Cooperation (APEC) leaders in the
Mexican resort of Los Cabos, the Philippine leader
accused the United States and Japan of abdicating their
economic leadership. "They preach trade liberalization
but they practice protectionism," she said, after the
forum failed - for the 14th successive year - to match
its stirring rhetoric with achievable reforms.
Less publicly, other Asian leaders were furious
that the summit agenda had in effect been hijacked by US
President George W Bush to galvanize support for his
sagging military alliance against Iraq, while pressing
economic issues were sidelined - issues such as the
development of deprived regions that serve as breeding
grounds for the same extremists that Bush claims were
behind the September 2001 terrorism attacks.
While few doubted Bush's contention that
terrorism and economic development are interlinked, many
Asian delegations felt that the balance, with its
overriding focus on security, was all wrong. As Arroyo
noted, counter-terrorism measures such as border and
trade restrictions often have the undesirable effect of
weakening local economies and pushing more into
terrorist ranks. "My concern is how the terrorists have
shifted our attention away from how to work to make the
global economy thrive. And if we neglect the economic
imperatives at this time when we're so concerned with
terrorism, we would be feeding on terrorism by
promoting, hunger, disease and ignorance," she said.
APEC has always struggled to reconcile its
regional focus with the more global vision of the United
States, which wants to create an effective counterweight
to Western European influence in the World Trade
Organization. There has never been any dispute over the
importance of the WTO linkage; rather, the problem is
that this is being allowed to overshadow APEC's
fundamental purpose of encouraging economic
interdependency.
The forum's inability to
advance much beyond an annual burst of consultation and
dialogue reflects structural flaws that were imbedded in
its charter by the 12 original members in 1989. Anxious
to avoid the confrontational politics of the European
Union, the founders adopted three core principles that
have ultimately proved unworkable: consensus,
voluntarism and unilateralism.
Membership in
APEC requires a verbal commitment to reform and
cooperation that is not enforceable. There are no formal
agreements, and each state progresses at its own pace
within self-determined parameters. If it sounds like the
same state of inertia achieved by the Association of
Southeast Asian Nations, then it probably is: ASEAN also
comprises the biggest membership base for APEC.
Without a reporting mechanism for monitoring the
level of individual progress, APEC lacks the means to
formulate collective goals. A commendable reforms agenda
is on the table, but always just out of reach. A
particular source of discord is the forum's failure to
honor trade- liberalization commitments that were made
during the Uruguay Round of negotiations for the General
Agreement on Tariffs and Trade (GATT), predecessor to
the WTO. All of which undermines APEC's bargaining
position as it lobbies the EU to support development
goals that were adopted at the last WTO ministerial
meeting in Doha, Qatar, last November.
This is
not to suggest that APEC has been a failure. Dialogue
has resulted in greater cooperation in such fields as
education, health, telecommunications, small business,
labor standards and environmental protection. The forum
played the central part in the WTO's adoption of an
agreement on information-technology products in 1996
that now covers more than 90 percent of the global trade
in these goods. Technology transfers have been slower,
but some regions have benefited. Even the summits
themselves serve as a valuable conduit for building
confidence and defusing potential trade conflicts.
But APEC's success will be judged against the
lofty liberalization objectives that were set right at
the start, and it is here that the questions are being
asked.
"Even those sympathetic to APEC's vision,
goals and methods ... have become increasingly concerned
about the organization's lack of progress toward its
stated goals," the World Bank reported in a recent
study. "A greater prioritization of reform initiatives,
a willingness to codify commitments and to back them up
with strengthened evaluation and enforcement mechanisms,
and, perhaps most important of all, a move toward
collective rather than unilateral commitment to
implementation will be needed to turn APEC's long- term
goals into reality," the WB stated.
As it
stands, the voluntary reform strategy encourages the
more advanced countries to dismantle trade and
investment barriers and open their markets by 2010.
Developing states have until 2020 to meet these targets
- if they wish. Average tariffs have already fallen from
a high of 12 percent in 1995 to less than 8 percent,
with two-thirds of goods imported within the APEC
membership area goods now attracting duty of less than 5
percent.
However, these gains were partially
achieved through parallel negotiations in the ASEAN Free
Trade Area (AFTA) and the North American Free Trade Area
(NAFTA), as well as a host of bilateral pacts.
It is the drift toward bilateral free trade
zones (FTZs) that offers the clearest evidence of
declining confidence in APEC, and for that matter the
other regional trade groupings. Singapore, South Korea,
Japan, and Australia were all involved in FTZ meetings
on the sidelines of the Los Cabos summit, along with
their Pacific partners. China discussed the timetable
for a pending agreement with ASEAN. An "ASEAN Plus
Three" dialogue is under way between the Southeast Asian
states and China, South Korea and Japan that could
create one of the world's biggest FTZs totally outside
APEC.
Even Washington, which had remained aloof
from the initial rush of bilateral negotiations,
signaled that it was ready to establish a new market
linkage with ASEAN that will probably become an FTZ.
Collectively, these pacts have the potential to
undermine the workings of APEC. But equally, they could
create a more structured channel for unlocking reform
bottlenecks and imposing a deeper sense of commitment.
The US-ASEAN agreement is attracting particular
attention, as it seeks to revive the original spirit of
APEC within a more complicit framework. This time, US
officials have said they want a definite timetable for
compliance.
Yet it is the United States and
Japan, the two biggest economies in a bloc that controls
60 percent of global gross domestic product (GDP), that
will be expected to make the biggest compromises if APEC
is to recover its reformist zeal. While the summit was
calling on the EU to dismantle agricultural subsidies as
part of the Doha Round, Washington and Tokyo were
resisting pressure to open their own markets to more
farm goods from APEC states.
Doha, which ends in
2005, could be a litmus test on APEC's future direction.
If it fails to meet the latest targets, as many expect,
the forum may have to broaden its appeal by evolving
into an Asian equivalent of the Council of Europe.
"APEC must shed the perception that it is merely
an adjunct of the World Trade Organization.
Capacity-building needs to become a core APEC activity,"
former Thai trade diplomat Kobsak Chutikul said in a
recent address.
"While trade and investment
should remain the focus, APEC leaders in their annual
talks must take up more routinely other facets of
globalization, as well as any pressing political and
security concerns that affect economic well-being in the
region," Kobsak said.
(©2002 Asia Times Online
Co, Ltd. All rights reserved. Please contact content@atimes.com
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