APEC can turn into a trade bloc: Analyst
APEC can turn into a trade bloc: Analyst
JAKARTA (JP): The Asia Pacific Economic Cooperation (APEC) forum may turn into a trade bloc if its member economies cannot adopt the principles of the most favored nations (MFN) in its trade liberalization program, an expert warned yesterday.
Suhadi Mangkusuwondo, a member of the APEC Eminent Persons Group, said at a seminar here yesterday that some of the developed member economies, particularly the United States, prefer a preferential trade liberalization scheme to the MFN provision.
When other economies follow the principle of the preferential tariff reductions to the MFN, Suhadi said, they automatically make the APEC forum a free trade area, which under article 24 of the World Trade Organization, needs a special free trade agreement.
"However, it will be difficult to make the APEC forum a free trade area because it involves 18 economies with very different levels of development," Suhadi said at the seminar, hosted by the Center for Strategic and International Studies.
Indonesia, however, has repeatedly stressed that APEC should remain an open regional forum. It should not lead to the creation of a new trade bloc.
Suhadi noted that if APEC economies cannot settle the issue of either the MFN or the preferential treatment, it will be difficult for each member to come up with their own action plans at the next APEC ministerial meeting in the Philippines later this year.
Under the Osaka Action agenda, agreed at the APEC leaders' last meeting in Osaka in November, each member is asked to submit its action plan at the next APEC meeting in the Philippines, with a view for implementation to begin in January 1997.
"We have a lot of homework for the Manila meeting... And it seems to me that the Indonesian government is still cool and calm when the Manila meeting is almost upon us," Suhadi said.
Unilateral action
Meanwhile, Soemadi D.M. Brotodiningrat, chairman of the Indonesian delegation to the APEC Senior Officials Meetings, noted that Indonesia is currently preparing its unilateral action agenda. However, he declined to mention if Indonesia will submit the agenda at the Manila meeting.
Suhadi said that if most APEC economies cannot submit their action plans this year, it means that the APEC forum will be unable to accelerate trade liberalization. Consequently, it will adopt the time frame of the World Trade Organization, which is MFN in nature.
"If this is the case, then there will be no trade liberalization under the APEC forum. There will be only trade and investment facilitations, along with development and technical cooperation among member economies," Suhadi said.
Economist Mari E. Pangestu disagreed with Suhadi, saying that although not all the members can come up with their action plans, the next APEC meeting can still help accelerate trade and investment liberalization in the region.
She noted that three or four members coming up with their action plans by the next APEC meeting will be enough as they will give ample "contagious" promptings to other members.
When explaining the "contagious" promptings, Marie said that if four economies come up with their liberalization programs, other economies will be likely to follow suit as they will also try to secure their market shares and competitive advantage in the international market by liberalizing their economies. (rid)