November is certainly a busy month for summitry. On 20-21 November, 21 leaders of Pacific Rim “economies” travelled to and spent the weekend in Santiago, Chile for the Asia Pacific Economic Cooperation (APEC) Summit. They include leaders of 7 (out of 10) ASEAN Member Countries (AMCs) and 5 ASEAN Dialogue Partners (China, Japan, Republic of Korea, Australia and New Zealand). Hardly a week has gone by after returning to their respective capitals and they will be off again for the ASEAN Summit on 29-30 November in Vientiane, Lao PDR. This time, leaders of the 3 AMCs excluded from APEC – Cambodia, Lao PDR and Myanmar – will be in attendance.
The countries hosting the two summits provide an interesting contrast. Chile is one of the more advanced countries in Latin America and has in fact graduated to the high human development category based on UNDP’s Human Development Index (HDI). Geographically located on the western side of the Pacific, it probably has the longest coastline among APEC member economies. In contrast, Lao PDR is on the other side of the ocean, the least developed among AMCs in terms of HDI rank, and does not even have a coastline to speak of. But instead of calling their country land-locked, the Lao people proudly claim the distinction of being land-linked to 4 other AMCs. Viewed in those terms, the Lao PDR’s geographic location can indeed be an asset rather than a liability from the standpoint of cross-border trade.
The contrast between the two host countries perhaps symbolises 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.
APEC was formed fifteen years ago (1989) in Canberra, Australia as an informal Ministerial-level dialogue group originally with 12 members. When the People’s Republic of China, along with Hong Kong China and Chinese Taipei, were admitted two years later, APEC acquired the distinction of being the only multilateral forum in which China and the two territories it considers an integral part of itself are all represented. In accordance with this unique characteristic of APEC, members are referred to as “economies” rather than countries as they supposedly engage one another as economic entities.
Even as membership has grown to 21, including the huge economies of the US, China and Russia, APEC has remained as an informal forum for dialogue – declaring, affirming or reaffirming commitment to certain principles and goals at the end of its annual summit, but without legally binding obligations from its members. 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. Preparations before the annual summit are therefore limited and do not always benefit from prior deliberations at the technical level.
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 realise 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 labour 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 realising 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 realise them. In Vientiane, ASEAN leaders are expected to adopt long-term action plans and medium-term action programmes towards realisation of the ASEAN Community as well as a Framework Agreement for acceleration of economic integration in 11 priority sectors. Some AMCs are reportedly keen to even advance the deadline in forming the AEC. As articulated by the Secretary General of ASEAN in his opinion article in this newspaper last 22 November, a record total of 20 agreements and declarations are expected to be signed, including those with 7 Dialogue Partners to progress or initiate negotiations of free trade or closer economic partnerships with them.
On the other hand, the political will of APEC leaders to realise 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 realised 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 realising the Bogor Goals, and the Manila Action Plan in 1996 containing the measures and the collective and individual action plans to realise the goals. In subsequent years, it agreed on Early Voluntary Sectoral Liberalisation 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 September 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 realisation of the Bogor Goals was given only scant attention in favour 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 realising 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.