APEC grapples for leadership role, but problems remain
APEC grapples for leadership role, but problems remain
Elisia Yeo, Agence France-Presse/Busan, South Korea
APEC has staked a claim for a global leadership role providing a counterweight to the European Union, but analysts warn its efforts are doomed to failure without radical reform.
Atop the list of problems facing the 21-member Asia-Pacific Economic Cooperation (APEC) forum after last week's summit in South Korea is the plethora of sometimes competing free trade agreements (FTAs) among members.
APEC has long insisted that FTAs boost the cause of global free trade, and the two-day meeting in the South Korean port of Busan saw a raft of new announcements.
China and Chile signed a free trade deal, while Canada and Japan, Chile and Japan and the United States and Southeast Asian nations all made preliminary moves which could result in agreements.
But analysts and business leaders say the "spaghetti bowl" of agreements with widely differing rules and standards are causing confusion.
"Politicians like to sign agreements, it makes them look good at home," said Richard Drobnick from the Marshall School of Business at the University of Southern California.
"They won't have a tremendous economic effect but they will have a confusing effect, because when you try to figure out what the rules are ... it's hard for the business people to think exactly 'what's my net advantage in going here or going there?'" he said.
Business leaders have blamed the abundance of FTAs on the virtual standstill in multilateral talks and say progress at next month's World Trade Organization (WTO) meeting in Hong Kong is vital.
While business executives recognize economies will not stop signing bilateral or regional trade accords, they say APEC must try to standardize agreements or risk irrelevance.
"If they don't get us all together, and we don't come up with a common take or template for FTAs, then it will always be like this. And that is distressing," said Roberto Romulo, a Philippine businessman who advises APEC.
Analysts also say APEC's goal of open trade and investment in the Asia-Pacific region for developed economies by 2010 and for developing economies by 2020 is behind schedule.
Privately, officials and business executives grumble at the organization's sleepy pace and express doubts about its ability to act effectively, given its consensus structure and non-binding agreements.
Romulo said APEC had been unable to adequately respond to problems such as the Asian economic crisis of the late 1990s.
"That's one issue that needs to be addressed. Are we really responsive? The fact that we're non-binding -- should we be binding? That's the other question. And security, is there a role for security in APEC?" said Romulo.
Despite the complaints, many agree APEC can wield useful political clout by bringing together such heavyweights as the United States, Japan, Russia and China under one roof.
The chief executive officer of steel and iron maker CAP SA in Chile, Jaime Charles, said APEC could still carve out a role as a counterweight to Europe and the tendency for regional trading blocs.
He pointed to the political pressure APEC put on Europe last week to make concessions on farm subsidies ahead of next month's WTO ministerial meeting.
"You need someone like APEC to work and to make these strong statements, to work towards multilateral trade for progress to be made," he said.
"The European Union doesn't move on its own. You need to move them, and to move them you need to have this big counterpart."
APEC also provides a forum for friendly member countries to politely nudge each other in ways they would not in the larger WTO arena.
"It all goes to peer pressure," said the chief economist with the General Motors Corporation, G Mustafa Mohatarem.
"The U.S. doesn't necessarily want to pressure Japan -- that's in the WTO context -- to change its agricultural policy," he said.
"But through the APEC process you indirectly do that."