Sat, Nov 11, 2000 page3

• Critics pan APEC as merely `A Perfect Excuse to Chat'

  Although it is the main forum for regional talks on trade and economic cooperaton, the Asia-Pacific Economic Cooperation is widely criticized for having produced few tangible results

  • By Monique Chu / STAFF REPORTER
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  Renowned American economist Paul Krugman has labeled the forum for Asia Pacific Economic Cooperation (APEC) "an empty shell." Some executives attending the APEC meeting in Malaysia in 1998 said the bloc had become "an embarrassing irrelevance." Some even ridiculed the top regional consulting body in the Pacific Rim as a mere talking shop -- "A Perfect Excuse to Chat" as some have mocked the acronym.

  And yet amid the disquieting doubts about what APEC is actually for, the show must go on and the eighth annual APEC summit will be held on Nov. 15 and Nov. 16 in Brunei.

  

  A worker prepares an Asia-Pacific Economic Conference (APEC) logo in Bandar Seri Begawan, Brunei yesterday. Asia-Pacific leaders will lay down plans in Brunei next week to bridge what they call the "digital divide," helping poor nations benefit from the information technology revolution.

  PHOTO: REUTERS

  "The game that is APEC will continue as it is `the' regional forum," said Wu Linjun (吳玲君), associate research fellow at the Institute of International Relations at National Chengchi University.

  

  Police check traffic in preparation for the APEC forum in Brunei yesterday.

  PHOTO: AFP

  Lai Shin-yuan (賴幸媛), former director of Taiwan's APEC Study Center, held a rather philosophical view on the only intergovernmental mechanism across the Pacific Rim. "If you put the development of APEC into historical perspective and see it as a process, you may develop a bit more patience with this regional grouping," Lai said.

  In his telling account of the APEC story entitled Asia Pacific Fusion: Japan's Role in APEC, noted Japanese journalist Yoichi Funabashi summed up APEC's evolution: "Since its inception, APEC has struggled constantly to find its identity. APEC's evolution has resembled Zen discourse: loose, flowing, and hard to define in a legalistic, dogmatic way."

  APEC was founded as a ministerial-level meeting of 12 economies in 1989 as part of the region's effort to raise its collective power vis-a-vis the European Community in the then thwarted Uruguay Round trade negotiations under the GATT (General Agreement on Tariffs and Trade, predecessor of the WTO).

  Since then, APEC has grown from a pure forum into a group with a permanent though tiny secretariat based in Singapore and a large number of committees and working groups. Ministerial working groups hold more than thirty meetings each year. And about 300 projects designed to promote economic and technical cooperation are currently operating under APEC's auspices.

  APEC watchers and veteran participants, however, agree on one thing: the 11-year-old grouping is at its crossroads as its lack of tangible results in economic terms has shattered its credibility.

  Politics steal the show

  Admittedly, in what is supposed to be an economic forum, politics has often stolen the show if one reflects on the focus of the media spotlight on the annual APEC informal leaders' meetings, which began in 1993 as the brainchild of US President Bill Clinton.

  In the 1999 summit in New Zealand, for instance, what took the limelight was the deteriorating situation in East Timor and efforts to put US-China relations back on track following NATO's bombing of China's embassy in Belgrade during the Kosovo crisis.

  In 1998, US Vice President Al Gore lobbed a hand grenade into the proceedings of the APEC meeting in Malaysia when he lauded the "brave people of Malaysia" in their struggle for reform. Gore's speech came perilously close to calling for the overthrow of the country's Prime Minister Mahathir Mohamad, who had earlier sacked his reform-minded deputy, Anwar Ibrahim.

  The summits between Clinton and Chinese President Jiang Zemin (江澤民) as part of the APEC sidelines in 1993, 1996 and 1999 also caught the spotlight when the two presidents were busy mending ties following previous standoffs between their two countries.

  A lack of consensus among members over its objectives and means and a failure to engage with civil society are APEC's principal weaknesses, critics said.

  Cooperation from diversity

  Initially a 12-member forum, APEC has developed into a 21-member bloc over the years, ranging from the tiny but oil-rich Brunei, to Papua New Guinea, to its neighbor Indonesia, to the world's most populous country, China, to two of the world's richest nations, the US and Japan.

  Although the three "pillars" of APEC -- trade liberalization, trade facilitation, and economic and technical cooperation -- were developed after the organization's inception, the diversity among its members has made cooperation an onerous task.

  While developed Western powers like the US favored using APEC to push for trade liberalization, Japan has never shown interest in using APEC for such a purpose, Funabashi noted in his book.

  Critics, especially from the West, have often cited the less-than-smooth trade liberalization process supposed to take place under APEC auspices as a major cause of their disappointment.

  Although APEC accounts for about 60 percent of world trade and has a bold free trade agenda, as stated in the 1994 Bogor Declaration, it has made little headway. After promising in 1994 to remove trade barriers by 2010 for advanced countries or by 2020 for poorer members, the group had completed, by the end of 1998, only a third of its tariff-cutting goals.

  The main reasons behind this setback, APEC watchers say, are the non-binding nature of these declarations, as well as APEC's core principle of "open regionalism."

  Chiang Pin-kung (江丙坤), former chairman of the Council of Economic Planning and Development (CEPD), who represented former president Lee Teng-hui (李登輝) at APEC summits in 1998 and 1999, summed up what he termed "APEC's flaws by birth."

  "APEC follows the ideal of `open regionalism.' That is, if APEC members want to slash barriers to each other's trade, they must do so for other countries as well, including countries that are not part of the group and that offer nothing in return. But when it comes down to implementation, everybody becomes selfish," said Chiang, currently president of the KMT's think tank, the National Policy Foundation.

  Indeed, from its inception, APEC was not to be an economic bloc or legally bound free trade area like the North American Free Trade Agreement (NAFTA) or the European community. Instead, APEC has sought to realize a vision of global free trade, driven by the liberalization of the region's dynamic economic forces.

  But the rules under APEC's auspices are non-binding, thus undermining its goal of free trade, Chiang said.

  "Consequently, it's indeed not easy to reach the objective of trade liberalization [under the umbrella of APEC]," the veteran APEC participant admitted.

  Opposition from Japan over opening up its forestry and fishing industries was the reason for scuttling the proposal for a wide-reaching trade pact that would have liberalized tariffs in nine sectors.

  "It's a tough job. The conclusions reached by APEC leaders are yardsticks for APEC members to follow.

  But nobody follows up the extent of implementation by each member, so it's difficult to see any substantive outcomes," Chiang said.

  Without any legally binding requirement, APEC has to rely on peer pressure to persuade governments to live up to their free trade agreements. Trade officials like James Chu (朱曦) from the Board of Foreign Trade of the Ministry of Economic Affairs said the annual peer review of each member's trade liberalization progress helps to push for advances in overall liberalization.

  But not everyone is as optimistic as Chu. "The effects of peer pressure on governments' decision-making are difficult to document. APEC can be credited with all the liberalizing actions that member economies have undertaken since its formation -- or none at all," Australian economist John Ravenhill wrote in an article in the journal Pacific Review in June.

  A mouth without teeth

  But APEC's failure to offer effective measures to cope with the Asian financial crisis also soured the organization in the eyes of critics although the its defenders say APEC was never designed to cope with any immediate international financial fiasco.

  "APEC's credibility has been cast in serious doubt especially during the Asian financial crisis when some accused APEC of being incapable of offering effective measures to deal with the economic earthquake," said Andrew Hsia (夏立言), director of the foreign ministry's department of international organizations.

  Veteran APEC analyst Lai sprang to APEC's defense. "Unlike the International Monetary Fund (IMF), APEC is not designed as a real mechanism to handle immediate financial crises. It doesn't have the teeth," Lai said.

  Another noted trend within APEC, the expansion of its brief to include even social issues, has also worried some participants.

  "A senior Chinese participant once teased APEC by saying that `the street vendor's stand has expanded bigger and bigger (攤子越擺越大)' and in a way such an expansion of issues is indeed a problem," said Chu.

  Despite its original nature as an economic forum, the APEC has expanded to include discussions on social issues, including the notion of "social safety net", gender issues and even marine resources.

  Arguably these discussions can be linked to "economic security," as Lai suggested. Veteran APEC participants have already begun soul searching about this.

  "Some suggested that maybe we should go back to the fundamentals [meaning discussions on the original three pillars of the forum]," said Hsia, while recalling several rounds of APEC senior officials' meetings he had attended in recent years.

  Who cares anyway?

  Another principal weakness of APEC is its failure to lure keen participation from the private sector and consequently the public's perception of the regional grouping as an "irrelevance."

  "That APEC is not an acronym that is widely recognized in its member countries is scarcely surprising," noted Ravenhill in his Pacific Review article.

  So far the private sector's participation in APEC activities has been limited as representatives from the business sector have only been engaged systemically in the forum's activities by taking part in the APEC Business Advisory Council (ABAC) meetings.

  In the case of Taiwan, only three business tycoons have attended ABAC meetings regularly, and a majority of Taiwan's small and medium-sized enterprise operators simply don't have a clue what APEC is, not to mention the general public, said Hsia.

  Perhaps that's why APEC host countries in 1999 and 2000 have chosen to put on the agenda the issue of the way the forum is perceived by the public on the agenda.

  But whether APEC can indeed "reach out to" the general public, as one of this year's proposed topics suggests, remains to be seen.

  The show must go on

  But one thing is for sure: the show will go on. And in the end, most APEC watchers believe that the dignitaries assembled in Brunei will come up with enough declarations on trade, strengthening of the market, or perhaps the hot issue of globalization, to be able to proclaim a victory before heading home.

  And by the time China hosts the APEC summit next year, the declarations to be made in Brunei this year may simply have faded into to the background, just like the Auckland declarations of last year.
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