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.