APEC smoothens process to become influential forum

By Vincent Lingga

JAKARTA (JP): None of the 27 ministers from 12 countries who gathered in Canberra on Nov.5-7, 1989 had expected the APEC forum they just inaugurated to be so quickly transformed into the substantial international institution it is today.

The three-page Joint Statement issued at the end of the inaugural ministerial meeting of the Asia-Pacific Economic Cooperation forum on Nov.7 did not even mention anything about the structure of the next meeting.

Instead, what was most clearly stipulated in the Summary Statement by the Chairman of the meeting, Australian Foreign Minister Gareth Evans, was that the APEC process would simply be a non-formal forum of exchanges of views among member economies.

But today, five years later, APEC has become an institutionalized forum of 17 members (Chile will join as the 18th member during the 6th six ministerial meeting in Jakarta) which accounts for more than 50 percent of the world's output and trade.

The APEC process not only has been increasingly well structured with a secretariat in Singapore but also has broadened with an annual forum, and has expanded to include several ministerial level meetings.

Evolution

The creation and evolution of APEC obviously should be attributed to the energetic diplomacy of the Australian government. In fact, it was the then Prime Minister Bob Hawke who, in a speech in Seoul in January, 1989, first explicitly raised the need for an Asia-Pacific forum of governments to define more coherently the region's shared common interests and to discuss barriers to trade within the region.

The right diplomacy and intense process of consultations conducted by Mr. Hawke and his Foreign Minister Gareth Evans for more than eight months finally succeeded in convincing the six ASEAN members -- Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand -- and South Korea, Canada, the United States, Japan and New Zealand of the merit of the concept.

Australia's early approach towards the ASEAN members was quite effective in easing their initial reservations that the proposed new forum might cut across ASEAN's structure and objectives and could dilute its cohesion.

But there were several factors that helped to make the situation in the late 1980s quite conducive to the concept of Asia-Pacific cooperation.

Interdependent

o The economies of the Asia-Pacific region have become increasingly interdependent, thereby creating a real need for constructive dialog on their economic prospects and opportunities and for closer cooperation to achieve shared objectives.

o Long before Prime Minister Hawke conceived the idea in January, 1989, there had been building blocks for such a regional forum informally developed by private forums. In the late 1960s, academics of the region began a series of Pacific Trade and Development (Paftad) conferences. Paftad was soon followed by the Pacific Basin Economic Council (PBEC) which was set up by businessmen.

But perhaps the most important private forum is the Pacific Economic Cooperation Conference (PECC), founded in 1980 (its name was changed to Pacific Economic Cooperation Council in 1992), as this forum includes academics, businessmen and policy makers, though in a private capacity.

PECC, which now has 20 national member committees, has established task force fora and working groups to concentrate on particular policy areas. They meet periodically, organize seminars and workshops, conduct studies and publish their conclusions and recommendations for the benefit of the Pacific Community.

The Indonesian national committee for PECC is coordinated by the Centre for Strategic and International Studies (CSIS) in Jakarta.

o The 1980s saw increasing trade tensions with mounting trade protectionism in various forms, while the Uruguay Round of multilateral trade negotiations remained protracted by sharp divisions of views and seemed to make little headway.

At the same time, there was an increasing tendency to drift away from a non-discriminatory multilateral approach to trade policies toward regional trading arrangements or blocs.

o There was fear that the European Community could lead to a protectionist fortified Europe. Further increasing the concern about the world being divided into regional trading blocs was the imminent establishment of the North American Free Trade Agreement.

o Another factor that supported the APEC concept was the increasing degree of outward-looking economic policies of the ASEAN countries. As these countries became increasingly dependent on exports to spur their economic growth, they also became greatly interested in striving for an open, free international trading system.

Pragmatic

But the high sense of pragmatism applied to the evolution of the APEC idea also made the cooperation concept much more palatable to all potential members.

Right from the beginning, APEC has been designed to be a non- formal forum of dialog, thereby opening its membership widely to all countries in the region with intensive economic links. The non-formality principle also avoided competition with the formal structure of ASEAN and its meeting with its dialog partners.

The adherence to the principle of a multilateral trading system further facilitated the APEC process because free trade is the common interest of all members.

APEC's sense of pragmatism also could be seen in its selection of areas of cooperation as the most appropriate focus of attention covering trade liberalization, data networking on economic data, investment, technology transfer and human resource development and sectoral cooperation in tourism, energy, trade promotion, environment and infrastructure.

The forum's recognition of the wide diversity of its members also has played a greater role in facilitating a smooth (though, to some analysts, a very slow) process of APEC.

Indeed, the APEC founding members represent almost all stages of development known to economics theorists. It includes well- developed countries such as the United States with a per capita income of US$23,000 and Japan with $30,000, newly industrializing ones such as Taiwan with $10,600 per capita and South Korea with $7,000, and such developing nations like Indonesia with a per capita income as low as $650.

Strengthened

The APEC process was further strengthened at its second ministerial meeting in Singapore on July 29-31, 1990. At that meeting, the ministers endorsed seven areas of cooperation which became APEC's first work projects covering: exchanges of trade and investment data, trade promotion, investment and technology transfer, human resources, energy, marine resources and telecommunications.

The Singapore meeting also further clarified principles for the future participation of Taiwan, China and Hong Kong and defined more clearly the meaning of regional trade liberalization.

But the most remarkable progress was made at the third APEC ministerial meeting in Seoul on Nov. 12-14, 1991 where for the first time representatives of ministerial titles from China, Taiwan and Hong Kong sat at the same table.

The Korean government, as the chair of the meeting, was highly praised for its active diplomacy and excellent conduct of the difficult negotiations that led to the admission of the three major economies as new members of APEC.

The ministers adopted the Seoul Declaration which set forth even clearer objectives, activities and broad organization of the group, mode of operation, future participation.

The Seoul meeting also increased APEC's work projects by three, covering transportation, tourism and fisheries. The ten projects are now being implemented by ten working groups.

As APEC became a much more active, though informal, organization with ten work projects, a need was increasingly felt for some form of administrative support.

Institution

The work on the formal organization of APEC accelerated under the chairmanship of Thailand as the hosts of the fourth ministerial meeting in Bangkok on Sept.10-11, 1992.

The meeting adopted the Bangkok Declaration on APEC Institutional Arrangements which formally established APEC as an international organization, provided for a permanent secretariat in Singapore and established budget and financial procedures.

APEC made a dramatic step in the process of its consultations last year under the chairmanship of the United States at the fifth ministerial meeting in Seattle on Nov. 17-19, which was followed by the first informal forum of APEC leaders.

The forum admitted two new members, Mexico and Papua New Guinea, and set up a a Committee on Trade and Investment, thereby further increasing the forum's institutionalization.

The Economic Vision Statement, issued at the end of the leaders meeting on Nov. 20 that sets in even more clear-cut terms the future path of the forum in the region into a community of shared interests, shared goals and shared commitments to a mutually beneficial cooperation.

The forum called for a meeting of APEC finance ministers which was held in Honolulu in the middle of March, 1994 and established Pacific Business Forum to facilitate a more active participation of the private sector in the development of business networks in the region.

Now that the APEC process has been well structured and institutionalized with at least two ministerial-level meetings and an annual meeting, the forum is set to embark on concrete programs of action to give more tangible economic benefits to the region.