The Asia-Pacific Security Lexicon (Upated 2nd Edition)

OPEN REGIONALISM

179 OPEN REGIONALISM One of the earliest principles agreed upon for the founding of an Asia-Pacific community. The term’s origins trace back to discussions about regional economic co-operation in the late 1970s. It became more prominent when it was cited as an ideal for the future economic development of the r egion by the first Pacific Economic Cooperation Council (PECC) in Canberra, in September 1980 and subsequently by the first Asia-Pacific Economic Cooperation (APEC) Meeting in Canberra in 1989. 1 Put simply, open r egionalism “involves r egional economic integration without discrimination against economies outside the region.”2 As defined by Ross Garnaut and Peter Drysdale, it includes the use of integrative pr ocesses and regional co-operation to mutually reduce trade barriers within the Asia-Pacific region without discriminating against outsiders. 3 Garnaut contrasts it with what he calls “discriminatory regionalism” which describes arrangements such as customs unions, fr ee trade ar eas, and preferential trade areas, where trade barriers at members’ borders are lower for trade with members than with non-members. He identifies the European Union and the NorthAmerican Free Trade Area (NAFTA) as examples of discriminatory r egionalism.4 According to Andrew Elek, under open r egionalism “regional trade liberalization is to be pr omoted, provided it is consistent 02 A_Pac Security Lexicon 9/28/07, 2:49 PM 179 180 with GATT [General Agreement on Trade and Tariffs] principles and not to the detriment of other economies.” W riting in 1992, Elek said that open regionalism was “unique” to the Asia-Pacific region and “radically different from the discriminatory nature of the EC [European Community]”.5 According to Garnaut, ther e are three analytic elements of open regionalism. First, it involves the adoption of open policies in relation to official barriers to trade. Second, open r egionalism requires that regional cooperation should be pursued with the goal of reducing non-official barriers to trade and incr easing the volume of regional trade without any element of discrimination against outsiders. Third, it requires regional market integration. This can take place “as a result of governments getting out of the way of pr ofit-maximizing patterns of trade; or thr ough the dynamics of private discovery of pr ofit maximizing patterns without any change in the policy stance of governments.” 6 The first formal discussion of open r egionalism in the AsiaPacific took place at the inaugural PECC meeting in 1980. The principles agreed upon by the meeting included “that EEC-type discriminatory trading arrangements ar e inappropriate in the Pacific”; that there was a need to “ensur e that existing bilateral, regional, and global mechanisms for cooperation ar e not undermined by any new r egional arrangements”; and the need “to ensure an outward-looking arrangement.”7 According to Hadi Soesastro, the background to the concept came fr om PECC’s socalled San Francisco Declaration on “Open Regionalism:A Pacific Model for Global Economic Cooperation.” This document was based on three premises. First, that openness was one of the main reasons for the economic dynamism of the Asia-Pacific. Second, that this openness was complementary with the global multilateral system; and third, that by making an explicit commitment to a model for open regionalism, the Asia-Pacific region could continue its own progress and make an important contribution to a str onger, more open global economic system. 8 APEC formally adopted the idea of open r egionalism in its Seoul Declaration in 1991 and it set out its specific interpr etation of the concept in the Osaka Action Agenda in November 1995. According to this document, open r egionalism goes beyond the traditional notion of fr ee trade ar eas which espouse nondiscrimination within a r egional grouping, stipulating that “the outcome of trade and investment liberalization in theAsia-Pacific region will be the actual r eduction of barriers not only among OPEN REGIONALISM 02 A_Pac Security Lexicon 9/28/07, 2:49 PM 180 181 APEC economies but also between APEC and non-APEC economies .”9 According to Yoichi Funabashi, “this commitment makes APEC more open than any other trade liberalization body thus far , including the GA TT, which r estricts its most-favour ed-nation (MFN) status only to member countries.” 10 In a detailed critique of the concept, Fr ed Bergsten has described open r egionalism as “an attempt to … achieve compatibility between the explosion of r...