APEC in the 21st Century

1. APEC’s Achievements and Tasks

APEC’s Achievements and Tasks 1 1 APEC’s Achievements and Tasks Ippei Yamazawa APEC’S Achievements: An Overview China hosted the Ninth Leaders’ Meeting and the Thirteenth Ministerial Meeting of APEC in Shanghai in October 2001. China joined APEC together with Hong Kong and Chinese Taipei in 1992. Together with its accession to the World Trade Organization (WTO), this provided a superb opportunity for China to take the initiative in international cooperation. APEC is a unique organization for regional economic cooperation; twenty-one economies participate in it around the Pacific Ocean. It still remains an informal institution with annual meetings of leaders and ministers as its core and cannot be compared with a structured, formal and integrated body like the European Union. Nonetheless, with major economies such as the United States, Japan and China among its members, APEC plays, together with the EU, a major role in the world economy. APEC started as a ministerial meeting in Canberra in 1989 with twelve members. Each year, a different member-state has taken turns to host APEC meetings in its major city. The host member chairs 2 Ippei Yamazawa Leaders’ and Ministerial meetings and initiates preparations throughout the year. However, it is often said that APEC’s momentum has slowed recently. APEC has not made much progress in liberalizing trade and investment and the organization could not prevent the Asian crisis which hit East Asian developing economies in 1997 and 1998. APEC could not help WTO in launching its millennium round of negotiations in Seattle in 1999. All these disappointments have tended to discourage interest in APEC. Can APEC achieve anything? This chapter attempts to answer this important question. APEC has two tracks of actions: trade and investment liberalization and economic and technical cooperation (ECOTECH). ECOTECH was on the agenda from the outset but criticized for not having achieved much. Meanwhile, trade and investment liberalization began in 1993. This was stated explicitly in the Leaders’ declaration for the first time at the Seattle APEC meeting in 1993. Apparently this was due to the Eminent Persons Group (EPG) Report I submitted to APEC in August 1993, which elaborated the trade and investment liberalization agenda in its vision of APEC’s tasks (APEC/EPG 1993). Then in 1994 the Bogor Declaration stated a commitment to “achieving free and open trade in the region by 2010/2020”. Later, the Osaka Action Agenda (1995) provided the guideline for implementing the trade and investment liberalization programmes and all member economies submitted their Individual Action Plans (IAPs) for liberalization by November 1996 (Manila Action Plans for APEC, MAPA), which were implemented on 1 January 1997. Expectations for APEC heightened between 1993 to 1996 because of this prompt implementation of the trade and investment liberalization programme. When the EPG’s second report was presented to President Soeharto in 1994 with its explicit recommendation for implementing APEC’s programme of liberalization by 2000, some of its members wondered whether it would be too hasty to begin as the liberalization programme under the Uruguay Round agreement had not yet been completed (APEC/EPG 1994). Contrary to expectations, the Pacific Business Forum (PBF) — EPG’s counterpart for the business community) — recommended that APEC should start its programme immediately and a few members of the Leaders meeting endorsed this. Indonesia’s then President Soeharto accepted the latter’s recommendation and announced the ambitious Bogor Declaration. APEC’s Achievements and Tasks 3 However, Individual Action Plans (IAPs) have not gone far beyond the Uruguay Round commitments and another liberalization programme to supplement them, i.e. the Early Voluntary Sectoral Liberalization (EVSL), actually failed to take off because of conflict between the major participants in 1998. Together with the East Asian crisis which hit Southeast Asian economies (a leading group of economies with high growth potential in APEC), the liberalization momentum has since slowed down, and has certainly dampened expectations for APEC. However, pessimism about APEC is overly influenced by vacillating expectations about the organization, ignoring its actual capability. APEC’s recent experiences in liberalization have certainly revealed that APEC is not a negotiating body and cannot do much alone in the trade and investment liberalization area. However, APEC can still contribute to liberalization under WTO by acting as a catalyst. APEC could potentially assist its East Asian members in economic restructuring and return them to a high growth path, thus reviving the leading role of APEC in the 21st century. In...