What next after the Osaka summit?<\/p>\n
By Hadi Soesastro<\/p>\n
The following is the first of two articles on the progress of
\nthe Asia Pacific Economic Cooperation.<\/p>\n
JAKARTA (JP): APEC after Osaka is about implementing a set of
\naction plans as outlined in the Osaka Action Agenda. Japan's
\nprime minister, Murayama, proudly proclaimed that Osaka marked
\nthe transition from concept to action. This is a big challenge
\nfor APEC.<\/p>\n
Member governments must seek ways to ensure that collectively
\ntheir \"individual action plans\" produce significant results and
\nthat their \"collective action plans\" are both feasible and
\nacceptable. It is this combination of individual and collective
\naction plans that is unique to APEC and from now on will
\ncharacterize the APEC process.<\/p>\n
Skeptics question how a process that rests on the
\nimplementation of individual action plans could make progress in
\nestablishing free trade. Some have described the Osaka Action
\nAgenda as \"no action, no agenda.\"<\/p>\n
Osaka was a close call. There was concern that Japan could not
\nprovide the necessary leadership to create the road map for APEC
\nto implement the much heralded Bogor Declaration. Yet Japan was
\nsuccessful. The leadership may have come not so much from the top
\nbut largely through the careful planning and efforts of the
\nbureaucrats. Their success was in their ability to form a
\nconsensus, which definitely involved compromises by all members.<\/p>\n
Those that have been involved in APEC cannot deny that Osaka
\nwas a success. Leaders and ministers made an important agreement
\non the principles for trade and investment liberalization. The
\nmodality of APEC trade liberalization, which hitherto remained
\nvague -- perhaps unavoidable at the initial stage -- is now
\nclear.<\/p>\n
Osaka is regarded a success not only because it produced an
\nAction Agenda but because it has brought the APEC process back on
\ntrack. A number of APEC members, Malaysia in particular, were
\nconcerned that since the Seattle meeting APEC had embarked on the
\nwrong road: a road which may have ended with the creation of a
\nfree trade area.<\/p>\n
Nowhere in APEC documents is it stated that forming a free
\ntrade area is the objective of cooperation. In fact, the Bogor
\nDeclaration expressed the leaders opposition to the forming of an
\ninward-looking trading bloc. However, there was the worry that
\nAPEC trade liberalization would be pursued along the same process
\nthat would lead to the creation of a free trade area, namely
\nthrough negotiated schedules of tariff reductions and the
\napplication of discrimination against nonmembers. Some APEC
\nmembers thought that this was the way to go.<\/p>\n
Osaka put an end to the uncertainty by adopting a set of nine
\nprinciples: (1) comprehensiveness, (2) World Trade Organization-
\nconsistency, (3) comparability, (4) nondiscrimination, (5)
\ntransparency, (6) standstill, (7) simultaneous start, continued
\nprocess and differentiated timetables, (8) flexibility, and (9)
\ncooperation. To be sure, these principles are a result of
\ncompromises and some of the wordings allow for differing
\ninterpretations.<\/p>\n
Of importance is that the APEC process, which is acceptable to
\nall, is now clearly recognized as being based on open
\nregionalism, voluntary and nonbinding commitments, unilateral
\nactions, decision by consensus, and the role of peer pressure and
\nenlightened self-interest.<\/p>\n
The modality of APEC trade liberalization is now popularly
\nknown as \"concerted unilateralism\". This approach is grounded in
\nvoluntarism and collective initiative. In essence, under
\nconcerted unilateralism, APEC liberalization will be driven by
\nthe collective peer pressure of action plans implemented by each
\neconomy at its own pace. APEC post-Osaka will have to be able to
\ndemonstrate that this process works. However, APEC cannot fail
\nbecause there is no alternative approach.<\/p>\n
In addition to this issue of modality, there is also the
\nconcern that the APEC process has been too focused on trade
\nliberalization. It has been clear from the outset that America's
\nsupport of APEC is largely driven by its interest in opening up
\nmarkets in the region. The U.S. has effectively used bilateral
\nmeans to do and it is hoped that with the strengthening of the
\nWorld Trade Organization the U.S. will make greater use of this
\nmultilateral forum.<\/p>\n
Should the U.S. also use APEC? It is widely believed that U.S.
\nnegotiators would like to see APEC as a multilateral crowbar for
\nprying open East Asian markets. Such an attitude is likely to
\nbackfire because APEC would then be seen as the superpower's
\ntrade policy instrument, while many East Asians on their part
\nwould perceive the playing field as being essentially tilted
\nagainst them.<\/p>\n
Trade is a contentious issue. It is not that APEC should not
\ndeal with it, but it is a matter of how to approach it. It has
\nbeen argued that trade liberalization should not be the test of
\nAPEC's success or failure. By using trade as a measuring stick
\nAPEC would become hostage to economic interest groups, and APEC
\nis not so firmly established that governments would sacrifice
\nimportant issues for APEC's sake.<\/p>\n
On paper APEC believes in the importance of having a balanced
\nagenda and that APEC should rest on three legs, namely trade and
\ninvestment liberalization; trade and investment facilitation; and
\neconomic and technical (or development) cooperation. However,
\nthere is a strong tendency to view facilitation and development
\ncooperation as subordinate to trade and investment
\nliberalization. This should not be the case. APEC is not
\nfundamentally about liberalizing trade and investment. APEC is
\nmuch more; it is first and foremost about community building.<\/p>\n
There has always been this discrepancy between the broad view
\nand the narrow view of APEC. The broad view sees the importance
\nof APEC as a vehicle for community building in the Pacific,
\nincluding the structuring of a healthy and strong trans-Pacific
\nrelationship. The strategic value of APEC is that it could
\nintensify U.S. economic engagement in the Asia-Pacific region as
\na way to strengthen the basis for its presence in the region.<\/p>\n
However, APEC also serves as a forum for engaging China
\nconstructively in the regional and international arenas. This is
\nof strategic importance to the region in view of China's history
\nof isolation and revolutionary adventures. Both the U.S. and
\nChina are two big nations for whom multilateralism does not come
\nnaturally.<\/p>\n
The implementation of the Osaka Action Agenda should always be
\nviewed in the broadest context of APEC's development. The broad
\nview of APEC also suggest that besides emphasis of cooperation
\namong regional countries, emphasis should equally be given to
\nareas of population, food, resources, energy and the environment.
\nAPEC's task ahead is to translate these challenges into a
\nbalanced agenda. This is indeed a tall order. In due course
\nfurther development of APEC's institutional structure may be
\nnecessary. If the rationale is clear and derived from the broad
\nview, members should be less hesitant in supporting the
\ninstitutional development of APEC.<\/p>\n
Since Osaka, in line with the structure of the Osaka Action
\nAgenda, perhaps it is now more appropriate to talk about APEC's
\ntwo pillars rather than its three legs. The two pillars are: (1)
\ntrade and investment liberalization and facilitation; and (2)
\neconomic and technical cooperation, also described as development
\ncooperation.<\/p>\n
Window: Those that have been involved in APEC cannot deny that Osaka
\nwas a success. Leaders and ministers made an important agreement
\non the principles for trade and investment liberalization.<\/p>",
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