It has been theoretically proven and is widely known that free trade can contribute to overall human welfare by optimizing the surpluses of producers and consumers. The ultimate goal of free trade has been pursued by numerous international organizations, including the WTO, APEC and the business-government-academia tripartite forum known as the Pacific Economic Cooperation Council (PECC).
The recent collapse of talks at the WTO ministerial meeting in Geneva indicates that the gap between opinions in developing economies and developed economies is huge. It would take a tremendous effort to close the gap and reach an agreement that eliminates excess trade barriers. Both rich and poor countries would need to compromise on vested interests in order to settle their differences.
Can that be done through the WTO? If it could have been done through this multilateral platform, it should have been done a long time ago.
Why is it so difficult to come up with an agreement at the WTO? Why do WTO trade talks always progress at a limited pace? The answer is embedded in the nature of the WTO: It is rules and regulation-oriented. That means that anything undertaken cannot be undone to a certain extent.
As described in the preamble of the WTO document, the objectives of multilateral trade liberalization are mainly about enhancing quality of life, ensuring full employment, efficiently allocating world resources, and eliminating tariffs and other trade barriers so as to relieve discrimination and unfair treatment among trading partners in the global system.
It is obvious that the WTO serves as a catalyst for globalization; however, developing economies generally consider globalization to be a tactic used by developed economies to further exploit valuable resources in developing economies and to sustain their dominance. As an old saying goes, "what you see depends on where you stand." These different standpoints on globalization have also slowed down the WTO's progress.
APEC is somewhat more able to bridge the divide that the WTO has difficulty coping with, since its decisions are non-binding. In the APEC Economic Leaders' Declaration of 2000, the leaders stated that, "our vision is to prepare each of our economies and all of our people to use the technology revolution as a passport to the fruits of globalization."
In 2001, the APEC leaders stressed in their declaration that, "the goal is to build APEC toward a digital society, with higher growth, increased learning and employment opportunities, improved public services and better quality of life, by taking advantage of advanced, reliable and secure information and communications technology and networks and by promoting universal access."
With economic and technical cooperation as one of its organizational pillars, APEC stresses the anticipated benefits of globalization from bridging the gap between developed and developing economies, and by adopting appropriate policies -- particularly those associated with community building.
However, APEC's intergovernmental character involuntarily imposes certain constraints on the progress of free trade. Peer pressure disguised in the form of individual action plans is the main engine pushing APEC forward.
But the universal presence of government red tape has delayed progress in fulfilling the goal of trade liberalization. APEC has been accused of inefficiency, ineffectiveness and of having difficulties executing policies.
On the other hand, PECC is a tripartite forum capable of collecting valuable information and opinions from all angles.
What stimulates PECC to provide sound policy suggestions are economic incentives favored by business, political motivations supported by governments and arguments developed by academics.
PECC's agenda is aimed at improving cooperation and policy coordination in all economic areas, including trade and finance. Its goal is to promote economic development and cooperation among Asia-Pacific countries. With its tripartite nature, PECC can pursue the goal freely without facing the same constraints encountered by the WTO and APEC.
The main advantages that PECC has over the WTO and APEC are that PECC is not rules-based, not intergovernmental and conveys messages from business and academic sectors, not just government policies. Therefore, it is time for PECC to take a leadership role by designing a viable roadmap for the WTO and APEC.
Taiwan is a member of the WTO, APEC and PECC. Given the considerable probability of Taiwan being excluded from ongoing free-trade agreements, it ought to take full advantage of participating in these three organizations and play a decisive role in PECC, so as to move both the WTO and APEC toward their respective goals.
Darson Chiu is an associate research fellow at the Taiwan Institute of Economic Research.
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