Wed, 09 Nov 1994

APEC: development and prospects for economic ties

By Wisber Loeis

JAKARTA (JP): The Asia Pacific Economic Cooperation (APEC) forum was formed in 1989 as a very loose and informal dialog group. It has since become the primary regional vehicle for promoting trade and practical economic cooperation.

The Asia-Pacific region has a huge potential and is one of the most dynamic regions in the world today. The population of the APEC members is more than two billion or approximately 38.5 percent of the world population. APEC's 17 members had a combined GNP (Gross National Product) of US$13 trillion in 1993 which is about half of the world's total annual output. Their per capita income in 1992 was more than one and half times that of the world average per capita income.

APEC also plays an important role in global trade. In 1992, the collective foreign trade volume of APEC economies reached more than US$3 trillion or percentage of world trade. The APEC member countries also trade a lot with each other, with the trade volume amongst APEC members totaling US$2.17 trillion or approximately 69 percent of their trade volume with the world in the same year.

Given the importance of trade to the growth of the region, APEC supports liberalization under the multilateral framework. APEC has been a strong supporter of the successful conclusion of the Uruguay Round of GATT negotiations. At the fifth APEC Ministerial Meeting in Seattle in November last year, APEC members strongly urged that the impasse in the Uruguay Round negotiations be overcome. The pressure from APEC undoubtedly became one of the most significant driving factors that made possible the early conclusion of the Round.

Furthermore, at the Meeting of APEC Ministers In Charge of Trade on Oct. 6 this year, the meeting agreed that APEC will emphasize the importance of having the agreement on World Trade Organization (WTO) ratified as soon as possible, so that it can become operative by Jan. 1, 1995.

At the same time APEC also aims to supplement the multilateral trade system, by working towards a more liberal regional trade regime and enhanced investment flows. This process is expected to benefit not just the APEC members, but the entire global economy because APEC members are committed to applying "open regionalism". This concept is designed to encourage greater openness throughout the global economy as well as in the region.

Another unique feature of APEC is its heterogeneity. There are considerable differences among members in terms of population, the values of Gross National Product (GNP), per capita incomes, as well as the level of their development and socio-political systems. Given its heterogeneity, in fact it is hoped that APEC will also address the disparities and imbalances between the developed and developing countries.

The Association of Southeast Asian Nations (ASEAN) countries are concerned with this aspect of APEC and feel that it is important that APEC should not dilute existing regional cooperation. It is further emphasized that APEC should be based on principles of equality, equity and mutual benefit, taking into account the differences among members. APEC cooperation should not develop into an economic bloc and should not adopt a "closed regionalism" approach and should remain a consultative forum. Most importantly, is the position of the ASEAN countries that APEC institutions and structure should be developed in stages and in a pragmatic manner.

What has been the development in APEC during Indonesia's membership in 1992? Indonesia is a founding member of APEC and from the very beginning has played an active and constructive role in it.

The overall program of APEC could be divided into three parts, namely: trade liberalization; trade and investment facilitation; and development cooperation. Two fora, the Eminent Persons Group and the Pacific Business Forum network have recommended how APEC should launch the process of trade liberalization, including its time frame. People are keenly waiting to see how APEC will respond to these recommendations.

The annual Ministerial Meeting will be convened as usual to discuss the crucial issues APEC should address. Other than trade liberalization there are 10 concrete work programs aimed at trade facilitation such as standards and conformance, trade policy dialogue, tariff databases and manual. In the area of investment the establishment of a non-binding investment principles is now under serious considerations.

While APEC's central theme remains trade and investment flows that will in turn ensure regional growth, it has also stressed critical needs in the areas of human resource development, cooperation in improving public and commercial infrastructure, the development of small and medium enterprises and the enhancement of business/private sector participation in APEC activities. Other areas of cooperation that are being stressed have strong linkage with the developing members, including transfer of technology, education programs and business volunteers program. In 1994, there has been a lot of progress with regard to APEC cooperation in these particular areas.

Indonesia hopes that APEC will serve as the vanguard of true North-South cooperation and partnership. With such a North-South partnership in place in Asia Pacific, there is every reason to expect that it can be made the model in the global context.

The spate of APEC meetings and activities in Indonesia this year shows how serious Indonesia and President Soeharto himself have taken their responsibilities during Indonesia's chairmanship of APEC. President Soeharto has indeed given his personal attention to all these activities. Economic cooperation in the Asia Pacific region is important to Indonesia as 70 percent of its exports are directed to this region and 52 percent of foreign investments are from member countries in the region, and finally that around 35 percent of total foreign aid to Indonesia come from the other APEC members.

My personal view is that the prospects for economic cooperation within the APEC framework are very bright. This will endow to the benefit of the region as well as to Indonesia's national interests.