APEC may be losing ground, faces calls for revamp

APEC may be losing ground, faces calls for revamp

P. Parameswaran , Agence France-Presse, Manila

Fourteen years after its establishment as the premier economic and trade forum in the Asia-Pacific region, the APEC grouping needs a major shake-up after losing ground due to a weak operational structure, analysts say.

A key problem facing the Asia-Pacific Economic Cooperation (APEC) forum, whose leaders including U.S. President George W. Bush meet in Bangkok next week, is its consensus-driven decision- making process, which hinders agreements crucial to free up trade and investment among its diverse 21 member economies.

The APEC process is further complicated by a one-year rotating leadership that analysts say is too short to implement ambitious initiatives and keep track of the wide-ranging activities of the group.

The Singapore-based APEC secretariat is by design small and weak since it is not given any significant mandate.

It has little institutional memory as the top two leaders at the secretariat are in place for a maximum of two years and the professional staff members are seconded for two- or three-year postings, according to an independent assessment report.

Coordination is also ineffective because APEC officials in member countries are mostly not working full time for the group.

"APEC has been and still is in a crisis although it is slowly trying to consolidate its position," Hadi Soesastro, the executive director of the Centre for Strategic and International Studies in Indonesia, told AFP.

Soesastro is a member of the APEC International Assessment Network (APIAN).

The independent group is assessing APEC's initiatives and has called for a "thorough review" of the group's management structures, which it says have grown both too complex and weak to meet the demands of a growing organization.

Soesastro suggested an OECD-type but much less elaborate APEC secretariat "that forces the organization to think strategically."

But as APEC is a "voluntary and loose" process, member economies are extremely cautious in developing institutions that could transfer decision-making from individual governments to a regional institution.

APEC started discussing ways to reform the APEC process at its last summit meeting in Mexico although no agreements have been reached, Soesastro said.

"Just like any business organization, APEC needs to re-examine its operational model after 14 years of existence," said David Parsons, the director-general of the Pacific Economic Cooperation Council (PECC), the only non-governmental body that sits as observer in the APEC grouping.

"If there is a crisis in APEC, then it is a crisis of relevance to the tasks ahead," Parsons said, citing, among other APEC's weaknesses, the implementing mechanisms being used to achieve its free trade and investment targets by 2010 for developed economies and 10 years later for developing economies.

Among the much criticized internal structures and rules of APEC is its individual action plans -- the key mechanism in which member economies make pledges to liberalize trade and investment.

Many of the pledges do not appear to be credible, business groups complain.

"Some governments are cautious in putting in black and white their commitments as this may jeopardize their negotiating positions in the WTO (World Trade Organization)," Parsons said. "There is a perceived lack of credibility."

Unlike in the WTO, where liberalization is reciprocal, member economies in APEC remove trade and investment barriers on a voluntary basis although their tariff-busting plans, for example, are subject to peer review and pressure.

If this APEC modality for liberalization cannot be made to work, "it is hard to see how the APEC process can be sustained," Soesastro said. "The biggest task is for APEC to make this modality work."

He also called for a review in the APEC leadership process, in which a member economy assumes the task of chairman for one year.

While this rotation system has a built-in assurance that the APEC agenda will reflect a balance of interest of the group's diverse members, it has its weakness as well, he said.

"In view of its rather nomadic pattern of operation within a one-year cycle, it is not easy to establish sufficient institutional memory," he said. "Some good initiatives get lost and some others are repeatedly being reinvented."

APEC comprises Australia, Brunei, Chile, China, Canada, Hong Kong, Indonesia, Japan, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, the Philippines, Russia, Singapore, South Korea, Taiwan, Thailand, United States and Vietnam.