Which direction will APEC take from Bogor?<\/p>\n
The Nov. 15 Bogor accord underlined the Asia Pacific Economic
\nCooperation forum leaders' commitment to achieving trade and
\ninvestment liberalization by 2020. Furthermore, there is
\nagreement on bringing new protection moves to a standstill. Noted
\neconomist Mari Pangestu argues that exposition of the various
\noptions toward achieving the goal is imperative for the next APEC
\nmeeting.<\/p>\n
JAKARTA (JP): The Bogor commitment cannot be considered a
\nbinding one since there is no legal document accompanying the
\ndeclaration. The statement is one of political intent and will,
\nand, since it comes from a group of economies which account for
\n40 percent of world trade, it sends a very important message
\nregarding this region's seriousness about liberalizing.<\/p>\n
What does all this mean? To the optimist, the fact that the
\nleaders met and talked about the issues and came up with such
\npolitical intent is already a remarkable achievement.<\/p>\n
At the other extreme, there are those who feel that the non-
\nbinding commitments made under APEC are ineffective and, at best,
\nthat the APEC meetings are a talk shop.<\/p>\n
The truth probably lies somewhere in between.<\/p>\n
Of course the basic difficulty of the trade and investment
\nliberalization process still lies in the divided opinions about
\nwhat liberalization means. At the heart of the debate, which
\nemerged due to the recommendations of the Eminent Persons Group,
\nis whether liberalization should be done on a basis which is
\nnon-discriminatory\/unconditional, or on a reciprocal\/conditional
\nbasis for non-APEC members. The East Asian economies have
\nundertaken unilateral liberalization in their own interest to
\nadjust and reform their economies so that they can become more
\ncompetitive. They would like to continue on that basis and are
\nagainst the conditional basis of liberalization, and especially
\nagainst the idea of creation of a free trade area.<\/p>\n
Whereas some of the developed countries are in favor of
\nconditional liberalization because they do not want Europeans to
\nhave \"free trade\". Reciprocity is a way to ensure that Europe
\nwill also liberalize. Japan is in a particularly difficult
\nsituation because it does not as yet support full liberalization
\ndomestically, yet it will be the chair of APEC next year. One can
\nonly hope that emphasis on regional economic cooperation, which
\nis not inward looking and is consistent with GATT\/WTO in a manner
\nthat will encourage and strengthen trade and investment
\nliberalization in the world as a whole, will be translated into
\nnon-discriminatory liberalization. Otherwise the wrong message
\nwill be sent to Europe and we could see the feared division of
\nthe world into regional blocs.<\/p>\n
President Clinton has called for a blueprint to realize trade
\nand investment liberalization by the next APEC meeting. This is
\nan ambitious goal given that the basic issue of how the
\nliberalization should occur vis-a-vis non APEC members is still a
\ncontentious issue. Other more difficult issues in coming up with
\na blueprint relate to resolving very difficult issues. What is
\nthe scope of trade and investment liberalization? Is the target
\nzero tariffs? Are non-tariff barriers included? What are the
\nexceptions if any to be made on the promise to undertake a
\nstandstill on new protection? Which sectors are to be included in
\nliberalization? Goods sectors alone? Are agriculture and services
\nincluded? Will liberalization take place sector by sector, or
\nsimultaneously? What are the acceptable exceptions to the
\nliberalization?<\/p>\n
It would be too much pressure on the APEC process to accept
\nfinal answers to these very difficult questions. At best, what we
\ncould hope for by the next APEC meeting would be a clear
\nexposition of the various options in undertaking liberalization,
\nso that the leaders are in a better position to decide.<\/p>\n
Here are two possible options:<\/p>\n
* First is the pragmatic suggestion that countries take their
\nexisting commitments in the Uruguay Round. In the first instance
\nAPEC countries should ratify GATT 1994\/WTO, implement the
\ncommitments and then undertake a unilateral or regional effort to
\naccelerate the existing commitments. For instance APEC economies
\ncan offer to add another additional percentage, say 10 percent,
\nto their offered tariff reductions under the Uruguay Round market
\naccess commitments. The advantage of this approach is that it
\nwill minimize the need to negotiate and can clearly be seen as
\nsupporting the multilateral track to liberalization.<\/p>\n
* Second is to clearly define the scope of the liberalization
\nin stages, either by instruments of protection (tariffs and then
\nnon-tariff barriers) or by sectors. After all, integration in
\nEurope started by sector. As an example, one area that developing
\ncountries in APEC will see great advantage in, will be if the
\nU.S. commits itself to an accelerated phasing out of textile
\nquotas under the Textile Agreement. At the bare minimum, if the
\nU.S. commits itself to implementing the textile agreement itself
\n-- that is not resorting to increased use of safeguard measures,
\nanti-dumping and unduly onerous circumvention rules, and also not
\nphasing out the important items in the last stage of the 10-year
\nphase out period -- this will be an important signal for all the
\ndeveloping Asian exporters of textiles and garments in APEC.<\/p>\n
In order to proceed from here in the APEC liberalization
\nprocess, much thought needs to be put into the various options
\nand modalities, weighing the different economic, political and
\nother conditions of the various countries -- as well as what has
\nbeen decided in GATT 1994.<\/p>\n
An important element to bear in mind, and in line with the
\nview that APEC is an evolutionary process, is the principle of
\npragmatism in which the primary focus is result rather than form.<\/p>\n
The writer is Head of the Economics Department of the Centre
\nFor Strategic and International Studies and a lecturer at the
\nUniversity of Indonesia.<\/p>",
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