Trade facilitation in APEC<\/p>\n
By Mari Pangestu<\/p>\n
JAKARTA (JP): The recent reports and emphasis of late on the
\nprogress of APEC have focused on the more \"meaty\" subject of
\ntrade liberalization. Since the Eminent Persons Group (EPG)
\nannounced their recommendations for achieving trade
\nliberalization in the area, much of the debate has been on what
\nis meant by trade liberalization? What are the modalities? Should
\nliberalization be on an unconditional Most Favored Nation (MFN)
\nbasis or a reciprocal Free Trade Area basis? Should there be a
\ntime frame and should it be flexible according to the level of
\ndevelopment of the member country? These are complex questions
\nwith much at stake in making commitments. Decisions about trade
\nliberalization involve sensitive sectors and political
\nimplications.<\/p>\n
Let us not get the Asia Pacific Economic Cooperation (APEC)
\nprocess bogged down by expecting that these difficult issues and
\ndifferences in position by members can be resolved by the coming
\nBogor meetings. It will require many more meetings to clarify and
\nagree on the various issues since APEC decision making works on a
\nconsensus basis.<\/p>\n
Let us also recognize that this does not mean that APEC is
\nnot making any progress. A lot of progress towards the goal of
\nenhancing trade and investment flows in the region can be
\nachieved through trade and investment facilitation programs.<\/p>\n
These are agreements to cooperate on technical issues and
\npolicies to \"facilitate\" trade and investment flows by reducing
\ntransaction costs and technical obstacles. On the surface such
\ncooperation is less contentious as it involves agreeing on
\nstandardizing or harmonizing technical standards, definitions and
\nprocedures, as well as minimum acceptance of some universal
\nprinciples. The acceptability of such programs lies in voluntary
\nparticipation by countries.<\/p>\n
Such cooperation as harmonization of technical standards may
\nsound trivial, but in reality these nuts and bolts issues are
\nwhat lead to a more predictable and open trading system. Most of
\nthe trade facilitation issues are covered in various Uruguay
\nRound agreements and will be an important feature of the World
\nTrade Organization (WTO) work agenda. However, implementation of
\nthese agreements is of course another issue and many gray areas
\nremain which could hinder the smooth flow of trade by being
\nmisused as protectionist measures.<\/p>\n
Therefore APEC could play a key role in ensuring
\nimplementation and in certain areas APEC might even agree to go
\nbeyond the Uruguay Round commitments.<\/p>\n
Under the official APEC program, there are at present three
\nfacilitation programs that have been under serious discussion.
\nOne is the non-binding investment principles (discussed in Bora's
\npiece on page 12). The other two in the trade facilitation area
\nare the customs and customs procedures harmonization and
\nharmonization of standards. While the outcome and progress are
\nnot known yet, the essence of the trade facilitation programs can
\nbe described as follows.<\/p>\n
Customs harmonization in the first instance requires
\nagreeing on the same customs classification to reduce search
\ntime. Other issues relate to harmonizing inspection and reporting
\nprocedures, pre-inspection and valuation of imports and
\ncorresponding duties, agreeing on classification of new products
\nand so on.<\/p>\n
The Pacific Business Forum (PBF), the group of eminent
\nbusiness people asked to provide input to APEC, has also
\nrecommended specific programs such as electronic documentation
\nand processing of entry documents, training and education of
\ncustoms officers, and development of an APEC electronic database.<\/p>\n
Settling these issues in a substantive way could lead to the
\ndevelopment of an APEC customs code as recommended by PBF.
\nWhereas harmonization of standards and conformance testing has
\nharmonization of product safety, health and systems standards as
\na long term objective. In the short run, some limited agreement
\non harmonization can be achieved, but it is likely to take a long
\ntime to achieve the long run objective. Under the new Uruguay
\nRound commitments transparency of use of standards and technical
\nregulations and APEC can certainly contribute to the
\nimplementation of this agreement and not use standards and
\ntechnical barriers for protection purposes. Mutual recognition of
\ntesting facilities and conformity assessment procedures would
\nalso facilitate trade and reduce the cost of product testing for
\nsmall and medium-scale enterprises.<\/p>\n
Other than these two areas which are already under
\ndiscussion in APEC, several other trade facilitation measures
\nhave been recommended by the EPG, PBF and researchers. There
\nmeasures could be in the future APEC program.<\/p>\n
In brief they are, first ensuring transparency and
\ndiscipline in use of anti dumping measures. Improper application
\nof the new anti dumping rules and procedures under the new WTO
\ncan still lead to trade diversion. Furthermore this
\nrecommendation is important given the increase in anti dumping
\ninvestigations and actions by some developed country members of
\nAPEC, namely the United States, Canada and Australia.<\/p>\n
Second is the recommendation to create an APEC Dispute
\nSettlement Mechanism to resolve trade disputes arising in the
\nAPEC region. The idea being that member countries in a dispute
\ncan try to mediate in the APEC forum before bringing it up to the
\nWTO. This recommendation can be useful for trade disputes that
\nlie outside the scope of the new WTO or reflect the wish of APEC
\nmembers to settle the specific disputes within the region rather
\nthan at the GATT level. However, there is the danger of rendering
\nthe GATT dispute settlement mechanism useless and also put
\nsmaller countries in APEC at the mercy of larger countries; the
\nvery reason that the arbitration through WTO was created.<\/p>\n
Therefore, one must design the mechanism very carefully to
\navoid all these pitfalls.<\/p>\n
Third is to relax visa requirements to facilitate the flow
\nof people between the countries in the region. This is not simply
\nbecause of the rise in tourism, but also due to business needs,
\nsuch as in the services sector. While control of entry for
\nsafety, security and other reasons are still needed, much can
\nstill be done to simplify and relax visa requirements, granting
\nof multiple entry visas or a smart card systems for frequent
\ntravelers, and to make it easier to obtain temporary work permits
\nand visas for business and training needs.<\/p>\n
Fourth is harmonization and simplification of rules of
\norigin. Rules of origin are used to identify the origin of goods
\nfrom a customs territory or country. There has been a
\nproliferation of rules of origin due to the creation of free
\ntrade areas, preferential schemes and efforts to prevent
\ncircumvention and anti-dumping penalties. Misuse of rules of
\norigin stands out as a possible source of technical barriers to
\ntrade. The long term objective of any work on rules of origin
\nwould be to ensure the adoption of as minimal and transparent as
\npossible rules of origin. APEC can contribute to ensuring
\ndiscipline in this area should participate actively in the GATT
\nthree year work program to harmonize rules of origin. However
\nGATT harmonization only covers trade on an MFN basis and not
\ntrade under regional or preferential agreements, so that APEC can
\nalso complement efforts by the WTO by looking at rules of origin
\nin the latter context.<\/p>\n
Admittedly much more work and thought still needs to go into
\ndeveloping these various trade facilitation programs. Its
\nvoluntary, and often non-binding nature has also been criticized
\nas reducing the effectiveness of such agreements. The optimistic
\nresponse is that the fact that APEC countries are attempting such
\nan exercise in itself is already a sign of progress. APEC is a
\nprocess; who knows how and what will be the process of evolution,
\nbut in the final analysis it is hoped that there is a realization
\nthat progress achieved in the area of trade and investment
\nfacilitation could lead to substantial tangible benefits and will
\nenhance the credibility of APEC.<\/p>",
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