Singapore ahead of the pack in APEC

Singapore ahead of the pack in APEC

By Siti Rahil

SINGAPORE (Kyodo): As one of the world's most open trading regimes, Singapore is a front-runner in pushing the Asia-Pacific Economic Cooperation (APEC) forum toward its goal of free trade, but this zeal has created slight friction with other Southeast Asian nations.

Singapore's support for APEC's efforts at trade and investment liberalization, facilitation and cooperation is not only aimed at boosting trade and investment in the Asia-Pacific area but also to engage major powers such as the United States and China in the post-Cold War world, Singapore officials say.

When APEC leaders declared their ambitious goal at their summit in Bogor, Indonesia, last year for APEC to achieve free and open trade and investment by 2010 for developed member economies and 2020 for developing economies, Singapore opted for the faster deadline even though it does not regard itself as a developed economy.

"We believe in free trade...we therefore want to set an example," Singaporean Prime Minister Goh Chok Tong said then.

This year, Singapore has urged APEC members to chart a credible "Action Agenda" for achieving that goal at next month's ministerial and summit meetings in Osaka and make substantive "down payments" at Osaka as a show of commitment.

With zero tariffs for almost all goods, Singapore has nothing to lose but everything to gain from trade liberalization in APEC, which accounts for 45 percent of world trade.

The government imposes high duties on only a few products such as motor vehicles -- to discourage car ownership and curb road congestion -- and cigarettes, in line with its no-smoking policy.

A more liberal trade and investment climate in the Asia- Pacific region is crucial for the small city state at a time when the government is urging local companies to venture overseas in search of business opportunities so as to overcome a chronic shortage of land and labor, as well as rising business costs at home.

At the same time, Singapore views APEC as an economic complement to the ASEAN Regional Forum (ARF) in engaging powers such as the United States and China in the region.

The Association of Southeast Asian Nations (ASEAN) launched the ARF last year as a consultative grouping on security in the Asia-Pacific area.

A credible Action Agenda at Osaka is "critical in shaping a constructive and predictable post-Cold War pattern of Asia- Pacific relationships to ensure optimal conditions for growth into the next century," Goh said last month.

"This is the fundamental strategic importance of APEC. Of course APEC is an economic and not a political organization. But after the Cold War, economics, trade, investments and finance now profoundly influence the international dynamics."

Singapore is concerned about the trade spats between the U.S., which is its top trade partner and one of its biggest investors, and Japan and other Asian economies, which have been reluctant to open their markets.

It believes that if Asian economies could be persuaded to liberalize trade and investment in the context of APEC, this will increase the West's stake in Asia and help assure Asian countries of ready reciprocal market access in the West.

The republic is also eying the potentially huge Chinese market. As such it is eager to have China firmly entrenched within the APEC framework through APEC's program of trade and investment liberalization, facilitation and cooperation, to make it easier for China to join the World Trade Organization (WTO).

Singapore's stance on the pace and depth of APEC trade liberalization is in most cases closer to that of the developed Western member economies such as the U.S., Australia, New Zealand and Canada than to its ASEAN peers.

"In ASEAN forums, Singapore says ASEAN should stick together and that it is committed to the ASEAN spirit. But in APEC, Singapore officials are ready to do anything fast, even without ASEAN," said an APEC official from one of the ASEAN countries.

"Singapore doesn't have any tariffs to reduce, so they just tell other people what to do. This creates a kind of distance between Singapore and other ASEAN countries."

Singapore's position on APEC is in marked contrast to that of Malaysia, which has long opposed the institutionalization of APEC and criticized its dominance by developed Western member economies such as the U.S. and Australia.

Other ASEAN members such as Thailand and the Philippines, and even Indonesia, which hosted last year's APEC summit, are also not really committed to trade and investment liberalization as they have their own fledgling industries to protect.

ASEAN, which normally strives to speak with one voice at international forums, has accepted the reality that its members do not share a common position as far as APEC is concerned.

Since the countdown to Osaka began, Singaporean leaders have publicly exhorted APEC to move on whenever preparations for Osaka appeared to be bogged down by the members' differences.

APEC officials from ASEAN said that Singapore has mostly sided with the views of the Western economies during the five special sessions of APEC senior officials, which were held this year to prepare the Action Agenda for Osaka.