APEC institutionalization moving rapidly

By Faisal Harahap

JAKARTA (JP): APEC will not be formally structured in the near future, but the process of institutionalization within the grouping is moving relatively fast.

The head of the Eminent Persons Group (EPG) Fred Bergsten did not touch on the nature of APEC's organizational structure after he submitted a report to President Soeharto last month.

He would only say that APEC should be an open, outward-looking forum and not a closed, inward-looking one.

The report was prepared during the group's meeting last July in Tokyo, in anticipation of the second APEC summit in Bogor in November.

It was not clear whether the pace of APEC's institutionalization was in the agenda of the group's meeting but the group could not come out with a recommendation on that issue. Either that was the case or the group perceived that, being a forum, it would be irrelevant to look into the issue unless a different sort of grouping for APEC had been decided upon.

To be sure, the organizational structure of APEC had been of great concern to quite a number of countries and gained vast coverage by the press in these countries.

When it was set up in 1989 in Canberra, it was agreed that APEC should be a loose consultation forum. However, it became more and more institutionalized as meeting at various levels became regular and working groups, committees, as well as the Singapore-based secretariat were established.

Furthermore, the EPG recommended the formation of a dispute settlement mechanism, to be named Dispute Mediation Service, similar to what is being established by the would-be World Trade Organization.

The recent Senior Officials Meeting in Yogyakarta agreed to enhance the ad-hoc status of the Group on Economic Trends and Issues to a permanent committee.

A third APEC summit has been planned for Tokyo next year, and should be preceded by several EPG meetings, a number of Senior Official Meetings and at least one Ministerial Meeting. A Ministerial Meeting will be held in Jakarta on Nov.11-12 to wrap up issues and recommendations for the Bogor summit, which might be succeeded by a Finance Ministers Meeting sometime next year.

Aside from the EPG, there already exists the Working Group on Trade Promotion and the Working Group on Small Scale Enterprises. A Special Committee on Trade and Investment as well as a Budget and Administrative Committee had been formed.

Business groups and organizations of the region set up the Asia Pacific Business Network, called the APB-Net.

Heads of governments agreed in their first summit in Seattle last November that the trade and investment potential in the region could best be exploited through harmonizing customs practices, investment procedures as well as product tests and standards among APEC members.

While the developed member nations of APEC seemed impatient in turning the Asia Pacific rim into their export and investment outlet, the less developed countries wanted assurances that the various propositions put forward by the other side would not adversely affect the growth of their economies.

A hasty inception of a trade and investment liberalizing ghost, and one applying to promotions as well, would necessarily include a predetermined organizational structure separate from the pace of the development of activities in the field. This lead to reservations on the part of the less developed countries in accepting anything related to the organizational structure of APEC.

Australian Foreign Minister Garth Evans expressed his country's wish when he was in Bangkok last July to upgrade APEC from its current loose economic grouping to a regional vehicle to free trade. No mention, however, was made as to how it should or could be done and as to what sort of organizational structure of APEC would be most conducive in achieving such a goal. Nor was it mentioned whether APEC should be pre or post-Uruguay.

Australian newspapers were somewhat critical when they found out last August that the EPG was not without proponents of a trade bloc similar to the North America Free Trade Agreement and the European Community. One important thing contained in the group's report, which Bergsten might have forgotten to reveal in his meeting with the press here, was a recommendation to allow member countries to individually decide offering free trade concessions to a non-participant country on a reciprocal basis.

Malaysia was worried on APEC becoming a ploy by the larger western countries to control the economies of the smaller Asian countries. Malaysian ministers voiced opposition to APEC because no one could guarantee that APEC would not be structured in a formal way. This, they said, could lead to a formally structured APEC issuing guidelines and procedures which would dilute, or at least weaken, ASEAN and its closely related AFTA, to the detriment of ASEAN economies.

While continuing to voice critical words about APEC, they seized every opportunity available to promote East Asia Economic Caucus.

Philippines seemed to be the most aggressive and took a bold thrust by proposing to establish an Asia-Pacific grouping called the Community of Asia-Pacific Nations. Formation of the community was put forward to President Soeharto by President Fidel Ramos when the latter visited Jakarta in September last year. No political ingredients of the idea were mentioned but the community, as the proposal stood, would be set up in a so-called New Bandung Conference sometime next year.

President Ramos had also raised this issue on the occasion of the Pacific Basin Economic Council Meeting in Seoul last May. Indonesia showed no interest in the creation of the political monster, and no follow-up gathering to discuss the proposal had been organized so far.

Thailand and Indonesia decided to ride the waves with extreme caution, believing that member countries could still benefit from APEC if the forum was not to be exploited beyond the necessary needs and not structured beyond the necessary format.

Nothing very special had been heard from Thailand yet, but President Soeharto seized the opportunity when he opened the so- called Indonesia, Asia Pacific and the New World Order Meeting in August last year in Bali. This meeting was to stress that APEC should in no way become a trade bloc because the agreed principles for developing cooperation among members were based on the mutual benefit of each individual country.

At the time when his colleague, Finance Minister Mar'ie Muhammad, was attending the first APEC Finance Ministers Meeting in Honolulu, Foreign Minister Ali Alatas made it clear in Jakarta last March that ASEAN was not opposed to formalizing APEC. However, he added that institutionalizing the forum should not be done hastily. APEC, Alatas contended, should become an organization equipped with a secretariat and a codified set of rules and procedures in a gradual way like ASEAN. He was careful to add that it should only be a forum for consultations for the time being.

The United States government seemed to have fully understood the aspirations of some of the ASEAN countries and could accept their positions. The U.S. Ambassador Robert Barry revealed his government's stance on the issue late last month in Jakarta, saying his country preferred maintaining APEC as a loose non- formal organization in view of the diverse economies and cultures of its member countries.

In a nutshell, one should not expect the upcoming Bogor summit to endorse initiatives for the establishment up of a formal organizational structure of APEC. On the other hand, no one could stop the ongoing institutionalization process within APEC through the scheduling of more regular meetings, formation of additional working groups and committees, as well as setting up of principles, guidelines, rules, and procedures, etc.

By the way, APEC already has its executive director and secretariat.

The writer is a civil servant.

Window: One should not expect the upcoming Bogor summit to endorse initiatives for the establishment up of a formal organizational structure of APEC.