APEC after 1989 in Seattle: New Challenges

November 11, 2009

Asia-Pacific Economic Cooperation: Old Promises, New Challenges

by Barry Desker

The ongoing Asia-Pacific Economic Cooperation (APEC) Leaders Week in Singapore marks the 20th anniversary of APEC.

Critics of the grouping have highlighted its failure to promote regional economic integration or voluntary sectoral liberalisation. They doubt its ambition to create a free trade area (FTA) across the region will be achieved by 2020. APEC summits, they charge, are better remembered for the attire of the leaders than for its substantive pronouncements. The grouping is seen as a talk shop with few concrete achievements to boast of, unlike the European Union.

This negative assessment ignores the dynamic growth that has occurred in East Asia over the past 20 years. The region’s rapid recovery from the current global economic crisis bears testimony to the emerging shift in global economic power from West to East. Trans-Pacific trade and investment is now far more significant than transatlantic trade and investment. The regular meetings of APEC leaders have facilitated this global adjustment as well as created an informal web of relationships across the Pacific. Even if APEC’s developed members do not meet the Bogor 2010 Goals next year, cooperation through APEC has enabled East Asia to emerge as the fastest growing region in the world.

A{EC’s role in promoting trade liberalisation tends to be forgotten. China’s participation in APEC since 1991 provided the impetus for its unilateral liberalisation. It was a valuable learning experience prior to China’s accession to the World Trade Organisation (WTO). APEC served as a template for China’s “early harvest” concessions to the Asean states during the China-Asean FTA negotiations.

APEC also provided the leadership for the 1996 WTO Information Technology Agreement (ITA), which facilitated the elimination of customs duties on computers, telecommunications products, semiconductors, semiconductor manufacturing equipment and scientific equipment. The central role of the electronics manufacturing sector in East Asia meant that the ITA had a greater trade liberalising impact than many of the bilateral free trade agreements that have been signed in recent years. APEC is now embarking on reducing non-tariff barriers to trade, which offers potentially the greatest gains to the trading community.

Though APEC  initiatives on multilateral trade liberalisation have stalled, recent summits have been marked by useful consultations on political issues. APEC discussed East Timor in 1999, terrorism since 2001 and is now involved in exchanges on “trade-related” security issues such as supply chain security, maritime security, energy and environmental well-being. Here APEC seems to be entering ground covered by the Asean Regional Forum (ARF). It is time to rationalise the areas covered by APEC and the ARF.

Indeed, it would be beneficial if back-to-back APEC and ARF summits could be held when an ARF member hosts Apec Leaders Week. Such a move is likely to win Chinese support. Back-to-back APEC/ARF summits would mean that APEC would focus on economic cooperation while ARF would become the apex regional security institution. Taiwan attends APEC meetings as “Chinese Taipei”, so it would be included in regional economic institution building. But it would be excluded from regional security dialogues.

The vision that should underpin our efforts to rethink the relationship between APEC and ARF is the critical need for institutions that will bind the United States, still the world’s sole superpower, and rising powers such as China within a framework that would allow also for the representation and participation of medium powers and smaller states. Such inclusive institutions can serve as the basis for the emergence of a regional identity.

An alternative view is that regional economic and security affairs should be shaped by the more powerful states in the Asia-Pacific region. A paper at a recent Pacific Economic Cooperation Council conference in Singapore called for a G-10, comprising the Asia-Pacific members of the G-20, at the apex of Asia- Pacific decision-making. Proponents of such a grouping argue that effectiveness matters more than broad representation.

But this turn to a structure based on a concert of powers reminds one more of a 19th-century rather than a 21st-century response to the challenge of creating stable regional orders.

One of APEC’s strengths is that its practices have been shaped by the norms and values of Asean, which played a critical role in establishing  APEC as well as the ARF. The Asean approach emphasises consultation, consensus decision-making and an inclusive approach to regional institution-building.

The opportunities for informal exchanges and consensual decision-making in APEC could help ensure that the concerns of both Western as well as Asian states are reflected in the evolving regional order. We need to recognise that there are divergent norms and values present in international society and that those differences could lead to possible conflict. Inclusive institutions such as APEC could serve as harbingers of cooperation on a larger scale. — The Straits Times, Singapore