Asia Pacific Economic Cooperation [APEC]: Challenges and Tasks for the Twenty-First Century (review)

This collection edited by Ippei Yamazawa is drawn from papers presented to the twenty-fifth Pacific Trade and Development (PAFTAD) Conference, held in Osaka in June 1999. In the thirty years since its foundation, PAFTAD has been a significant driving force in support of closer intergovernmental collaboration in the Asia-Pacific region. It has provided the intellectual framework for such collaboration and played a prominent role in persuading academics from around the region of the virtues of trade liberalization. This collection includes contributions from many of the academics who have provided leadership to PAFTAD including Peter Drysdale, Ross Garnaut, Peter Petri, and Hadi Soesastro.

PAFTAD's decision to devote its twenty-fifth conference to a review of progress within the Asia-Pacific Economic Cooperation (APEC) grouping that it had played such a significant role in bringing into being seems particularly appropriate. APEC was just about to celebrate the tenth anniversary of its foundation at the time of the conference. As this book makes clear, however, not all was well with the grouping.

Ross Garnaut sets the tone for the book in the first chapter. He notes that the mood in mid-1999 was one of "disillusionment" and that APEC's problems urgently needed to be addressed if the process that had previously delivered positive results was not to "disintegrate." The response of the 1997 APEC Economic Leaders' Meeting to the financial crises that had afflicted East Asia in that year had been "banal." While APEC by itself could not have been expected to resolve these crises, its failure to put forward constructive solutions represented a "lost opportunity."

Other writers echo Garnaut's concern for APEC's future. Not only had the grouping failed to respond constructively to financial crisis but the effort to accelerate liberalization through sectoral trade negotiations had seriously eroded its fragile unity. Building on the grouping's support for the Information Technology Agreement, finalized at the WTO ministerial meeting in Singapore in 1996, APEC had embarked on negotiations aimed at producing a package of liberalization measures for individual economic sectors—the Early Voluntary Sectoral Liberalization program. Peter Petri describes the collapse of the negotiations, following the refusal of the Japanese government to agree to proposals for liberalization in the fisheries and forestry sectors, as an "embarrassing failure." It cast doubt not just on APEC's role as a venue for the negotiation of trade liberalization but on its very future.

What might be done to salvage APEC? The common theme running through the individual contributions is that the grouping has placed far too much emphasis on its trade liberalization agenda to the detriment of the other two "pillars" of its activities: trade facilitation and economic and technical cooperation. The case for APEC's giving greater priority to the latter is made cogently by Andrew Elek and Hadi Soesastro. They argue that economic and technical cooperation too often had been perceived as a rival to trade and investment liberalization and facilitation rather than as an essential complement to activities in these other spheres. The financial crises had demonstrated that capacity building is fundamental to sustaining economic growth in APEC's less-developed economies.

Aggarwal and Morrison, in a rare contribution by political scientists to a PAFTAD conference, provide the most comprehensive examination of APEC's recent woes. Using a sophisticated theoretical framework that identifies the factors influencing the demand and supply for international regimes, they conclude that many of APEC's problems stem from its weak decision-making structures. They find little evidence that APEC has had a constraining or shaping influence on national policies except insofar as it provided support for the global trend toward trade liberalization. APEC was weak by design. Modest initiatives such as strengthening the capacity of its small secretariat might enhance the grouping's analytical capacities and facilitate priority-setting but will not overcome its fundamental weaknesses. Nonetheless, they conclude that APEC...