APEC: development and prospects for economic ties

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.