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.