From Santiago to Vientiane and the chances of economic integration

From Santiago to Vientiane and the chances of economic integration

Romeo A. Reyes, Jakarta

November is certainly a busy month for summitry. Last week 21
leaders of Pacific Rim "economies" met in Santiago, Chile for
the Asia Pacific Economic Cooperation (APEC) Summit. They include
leaders of 7 (out of 10) ASEAN member countries,China, Japan,
Republic of Korea, Australia and New Zealand, the U.S. Russia,
Mexico and Chile.

Hardly a week has gone by after returning to their respective
capitals and they will be off again for the ASEAN Summit on
Monday and Tuesday in Vientiane, Laos.

The countries hosting the two summits provide an interesting
contrast. Chile is one of the more advanced countries in Latin
America. In contrast, Laos is on the other side of the ocean, is
likely the least developed countries among ASEAN members, and
does not even have a coastline to speak of.

The contrast between the two host countries perhaps symbolizes
the differences between APEC and ASEAN in terms of membership,
how they do business, and their prospects of becoming an
economically integrated community in the future.

Even as membership has grown to 21, including the huge
economies of the U.S., China and Russia, APEC has remained as an
informal forum for dialogue. Accordingly, member economies take
action on a voluntary basis.

They do so perhaps with a sense of moral obligation as
commitments were made at the highest level through summitry. APEC
has a small secretariat based in Singapore with professional
staffs seconded from the rotating host and other member
economies.

ASEAN, on the other hand, has been around much longer, slowly
growing from the original 5 in 1967 to the present 10 members. It
has a Secretariat whose professional staffs are openly recruited
from member countries and service the series of ministerial and
senior official meetings that precede each annual summit.

Commitments to realize its goals, including formation of an
ASEAN Economic Community (AEC) by 2020 through removal of
barriers to the flow of goods, services, investment and skilled
labor are binding. Such commitments are translated concretely
into regional cooperation measures with implementation timeline
that are negotiated at the technical level prior to adoption.

The prospects for realizing an economically integrated
community are certainly better in Southeast Asia through ASEAN
than in Asia-Pacific through APEC. Apart from a more manageable
membership and geographic coverage, ASEAN leaders appear to have
a stronger political will not only in setting economic
integration goals but also in adopting and implementing regional
cooperation measures to realize them.

On the other hand, the political will of APEC leaders to
realize its economic cooperation goals appears to be waning.
Since 2001, their declarations have increasingly put more
emphasis on counter-terrorism and security issues, as well as on
the primacy of the WTO for removing trade and investment barriers
on a multilateral basis.

True to its name, APEC started off as a genuine forum for
economic cooperation whose fundamental goal as declared in Bogor
in 1994 was "a free and open trade and investment in the Asia-
Pacific". It is to be realized by 2010 for developed economies
and 2020 for developing economies by promoting the free flow of
goods, services and capital among member economies.

Following the Bogor Declaration, APEC adopted the Osaka Action
Agenda in 1995 providing a framework for realizing the Bogor
Goals, and the Manila Action Plan in 1996 containing the measures
and the collective and individual action plans to realize the
goals. In subsequent years, it agreed on Early Voluntary Sectoral
Liberalization in 9 sectors.

Progress was consistently, albeit slowly, made towards a free
trade and investment regime in APEC economies through economic
cooperation until the international community was stunned by the
catastrophe of the Sept. 11, 2001 terrorist attack.

When APEC leaders met in Shanghai in November 2001, the first
counter-terrorism statement was issued. While a trade
facilitation action plan to reduce transaction costs was adopted
in Los Cabos, Mexico in 2002, the Bogor Goals were already
beginning to be overshadowed by a more forceful second counter-
terrorism statement. The declaration also underscored the need
for APEC to support the Doha round of WTO negotiations.

At the 2003 Bangkok Summit, counter-terrorism and other
security issues began to dominate the agenda with explicit
acknowledgement that counter-terrorism is a complementary mission
to the Bogor Goals. The declaration also affirmed the primacy of
WTO multilateral trade negotiations.

Right before the beginning of the 2004 Summit in Santiago, the
Indonesian Coordinating Minister for Economic Affairs was quoted
as saying that "E" in APEC stands for "economic", rightly
implying that economic cooperation would be the main item in the
summit agenda.

However, a review of the declaration would reveal that
realization of the Bogor Goals was given only scant attention in
favor of anti-terrorism, proliferation of weapons of mass
destruction, and other security issues. The proposed study by the
private business sector on how progress towards realizing the
Bogor Goals might be accelerated was at best greeted with a
lukewarm welcome.

In addition, it would seem that APEC leaders are now looking
more at WTO negotiations as the primary instrument for removing
barriers to trade and investment flows.

Counter-terrorism, proliferation of weapons of mass
destruction, and other security issues are very important, urgent
and critical issues that need to be addressed by the
international community.

However, APEC does not seem to be the appropriate forum for
dealing with them. The statement that comes out at the end of its
annual summit is even called "Economic Leaders Declaration".
APEC might as well be renamed APSC - Asia Pacific Security
Cooperation.

The author is a senior advisor for ASEAN-UNDP Partnership
Facility based in Jakarta. The article is strictly personal.