Will APEC experiment work?<\/p>\n
The excitement of the Asia Pacific Economic Cooperation
\nmeeting has just ended and the leaders of 18 economies are back
\nhome. Noted economist Mari Pangestu, who attended the
\ntalks, look at the tasks lying ahead for each country.<\/p>\n
JAKARTA (JP): How should one view the results of the Osaka
\nAPEC meeting? The answers differ according to one's expectations
\nabout APEC, as well as the understanding of the relevance of the
\nAPEC process itself.<\/p>\n
If one expected big \"bang\" statements about liberalization in
\ntrade and investment to occur in Osaka then one was surely
\ndisappointed with the results. However, viewed in terms of the
\nAPEC process, the results achieved were very positive. Seattle
\ndelivered the vision, Bogor provided the goal and Osaka succeeded
\nin preparing the action agenda. For most of the next year the
\npolicy makers, will be busy cooking up a palatable action plan to
\nbe served up in Subic Bay by October.<\/p>\n
In other words, the results of Seattle and Bogor were on what
\ncan be termed the first track toward heading the process in the
\ndirection of an open and rules-based system of international
\ntransactions, which is crucial to the continued dynamic growth in
\nthis region and in the world.<\/p>\n
With Osaka and Subic Bay, we are back on the usual track of
\nensuring that everything necessary is done toward achieving a
\nmore open trading system.<\/p>\n
The work centers on agreement on the principles under which
\nliberalization and facilitation measures should be undertaken,
\nand then defining the actual schedules and commitments based on
\nthose principles. The fact that consensus was reached on the
\nprinciples and that there is a commitment to start the action
\nplan of liberalization by Jan. 1, 1997 is a remarkable
\nachievement.<\/p>\n
What are the principles that govern the process of
\nliberalization and facilitation? In the first instance they are
\nconsistent with multilateral principles: WTO-consistency, non-
\ndiscrimination and transparency. In line with the commitments
\nmade in Bogor, there is also the commitment to bring protection
\nto a standstill. APEC has also shown a forward looking approach
\nby agreeing on comprehensiveness which basically means that \"all\"
\nimpediments are to be reduced.<\/p>\n
In order to get the developing and Asian economies on board,
\nthe principles of flexibility and cooperation are important.
\nFlexibility refers to taking into account different levels of
\neconomic development, as well as in dealing with issues arising
\nfrom the liberalization and facilitation process, whereas
\ncooperation is often referred to as the third \"leg\" in APEC,
\nmeaning actions other than liberalization and facilitation. The
\nthird leg involves economic and technical cooperation to support
\nthe liberalization and facilitation processes of developing
\neconomies in particular.<\/p>\n
The main questions that are yet to be answered follow. Is it
\npossible for such a process of concerted unilateral
\nliberalization based on \"voluntary\" and non binding commitments,
\na flexible approach, and no sanctions to work? How do you define
\ncomparability, flexibility and substantial progress anyway -- and
\nthus prevent \"back loading\" or even exclusions (albeit temporary)
\nwhereby sensitive sectors such as Japan's agriculture sector;
\nU.S.'s textile sector, and the automotive sector for many
\neconomies, will not be liberalized until the very last? How do
\nyou measure the achievements of APEC if there are no binding
\ncommitments?<\/p>\n
Believers in the APEC process maintain that it will work
\nbecause of peer pressure and confidence building to undertake
\nunilateral liberalization between the APEC economies. In fact in
\nthe last year and even in Osaka we have seen some significant
\n\"down payments\" by the APEC economies, especially the developing
\neconomies. The May trade deregulation package announced by
\nIndonesia this year is seen as a down payment to the action plan.<\/p>\n
We do not know whether the APEC experiment will work. However,
\nsome factors should be considered to facilitate the experiment.
\nFirst is that there should be a continuation of APEC economies
\nwho will be willing to be the champions in undertaking unilateral
\nliberalization every year to push the process along.<\/p>\n
Second, one can predict that the issue of comparability and
\nsubstantial progress will not be an easy one to be solved by the
\nsenior officials. A continuous review and monitoring of progress
\nundertaken by APEC economies in liberalization and facilitation
\nwill be needed to assist in ensuring these principles are met and
\nto \"operationalize\" the peer pressure in more concrete terms.<\/p>\n
Finally the experiment will work if leaders, policy makers and
\nthe private sector believe that ultimately liberalization and
\nfacilitation can bring net positive gains to their economies, and
\nis the only way to strengthen their economies to become more
\ncompetitive and innovative in this ever changing and increasingly
\ncompetitive world. And at the same time be cognizant and prepare
\nto offset the possible negative effects of liberalization such as
\non the environment, and dislocation of workers and small and
\nmedium enterprises.<\/p>\n
The writer is head of the Economics Department at the Center
\nfor Strategic and International Studies.<\/p>",
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