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APEC Quo Vadis?
Published online by Cambridge University Press: 27 February 2017
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1 See, e.g., Bernard K. Gordon, Japan and the Pacific Basin Proposal, KOREA & WORLD AFF., Summer 1981, at 268, 270; Peter Drysdale, An Organization for Pacific Trade, Aid and Development: Regional Arrangements and the Resource Trade, in MINERAL RESOURCES IN THE PACIFIC AREA 611, 613–14 (Lawrence Krause & Hugh Patrick eds., 1978). Japanese academic economists promoting regional economic integration came together in the Japan Economic Research Center founded in the early 1960s. In 1965 Professor Kioushi Kojima presented a concrete proposal for a Pacific Free Trade Area to include the United States, Japan, Canada, Australia and New Zealand. This interest was then institutionalized in a series of regional international conferences, the Pacific Trade and Development Conferences (PAFTAD), which continue to this day.
2 The idea of an Organisation for Pacific Trade and Development (OPTAD) is usually credited to Sir John Crawford and Saburo Okita. See Saburo Okita, Pacific Regional Co-operation, in POLICY AND PRACTICE: ESSAYS IN HONOUR OF SIR JOHN CRAWFORD 122 (L. T. Evans & J. D. B. Miller eds., 1987). The OPTAD idea was pursued in PAFTAD during the late 1970s, see note 1 supra, and eventually spawned PECC, see note 8 infra, as its own seminar series.
3 See U.S. INT’L TRADE COMM’N, PUB. NO. 2166, THE PROS AND CONS OF ENTERING INTO NEGOTIATIONS ON FREE TRADE AREA AGREEMENTS WITH TAIWAN, THE REPUBLIC OF KOREA, AND ASEAN, OR THE PACIFIC RIM REGION IN GENERAL (1989); PETER DRVSDALE & ROSS GARNAUT, A PACIFIC FREE TRADE AREA? (Australia-Japan Research Centre Pacific Econ. Paper No. 171, 1989).
4 The exact meaning of “open regionalism” was an open question in the run-up to the Jakarta APEC meetings, although its leading academic statement may be found in Ippei Yamazawa, On Pacific Economic Integration, 102 ECON. J. 1519 (1992) (claiming that Pacific economic integration has resulted from market forces and investment, rather than any formal obligations or structures; thus, it is argued that APEC would best support the existing mechanisms of integration rather than rely on formal obligations like the Treaty of Rome or NAFTA). The current discussion of open regionalism is commonly conducted in terms of disputes concerning the 1994 EPG REPORT, infra note 12. See, e.g., AUSTRALIA-JAPAN RESEARCH CENTRE, AUSTRALIAN, INDONESIAN AND JAPANESE APPROACHES TOWARDS APEC 5–7 (1994); text at and notes 23–25 infra.
5 See, e.g., Hadi Soesastro, Pacific Economic Cooperation: A Historical Explanation, in INDONESIAN PERSPECTIVES ON APEC AND REGIONAL COOPERATION IN ASIA PACIFIC 3 (Hadi Soesastro ed., 1994); Hadi Soesastro, Prospects for Pacific-Asian Regional Trade Structures, in PACIFIC-ASIAN ECONOMIC POLICIES AND REGIONAL INTERDEPENDENCE 308 (Robert A. Scalapino et al. eds., 1988); MICHAEL W. OSBORNE & NICOLAS FOURT, PACIFIC BASIN ECONOMIC COOPERATION 7–14 (OECD, 1983).
6 See CONGRESSIONAL RESEARCH SERVICE, LIBRARY OF CONGRESS, AN ASIAN PACIFIC REGIONAL ECONOMIC ORGANIZATION: AN EXPLORATORY CONCEPT PAPER (1979) (prepared for the Senate Comm. on Foreign Relations), also available as PETER DRYSDALE & HUGH PATRICK, EVALUATION OF A PROPOSED ASIAN-PACIFIC REGIONAL ECONOMIC ORGANIZATION (Australia-Japan Econ. Relations Research Project Paper No. 61, 1979); and sources cited in note 3 supra. Of course, general U.S. interest reaches back to the beginning of the Cold War period, but it seems reasonable to draw the line for economic cooperation following the Vietnam War.
7 On a political level, the Japanese interest might date from 1960, when Diet member Morinosuke Kajima suggested the creation of a Marshall Plan-style Asia Development Fund (providing grants necessary for development). He seems to have been inspired by a combination of pan-Asian ideas and his conception of Japan’s role in the region. See MORINOSUKE KAJIMA, THE ROAD TO PAN-ASIA (1973); Tessa Morris-Suzuki, Japan and the Pacific Basin Community, 1981 WORLD TODAY 454. Early on, the pan-Pacific economic integrationist sentiment prevailed over the pan-Asian sentiment in Japan, but such basic issues are still recognizable today in ideas like the proposal for an East Asian Economic Group, initially advanced by Prime Minister Matahir of Malaysia as an APEC alternative. See note 23 infra.
8 Prior to APEC’s creation as an intergovernmental forum, PECC’s tripartite structure of government, business and academic participants was loose enough to permit the study and discussion of issues under the cover of nongovernmental status (government officials participated in their “private capacity”). For smaller countries such as members of the Association of Southeast Asian Nations (ASEAN), academic participants are frequently drawn from think tanks with close connections to, if not formal sponsorship of, their national governments. Given that small countries may not have a substantial separate foreign trade policy apparatus within government, the selfsame academic participants may be government policy advisers (which casts PECC in a special light when considering it as a source of private-sector input). See also text at and notes 25, 27 infra.
9 The mechanism to this end was the so-called 1990 Kuching Consensus under which, following APEC’s founding meeting in Canberra, the ASEAN countries set out their basis for participation in APEC: preserving the identity and cohesion of ASEAN without diluting its cooperative relations with its dialogue partners and third countries; basing APEC on principles of equality, equity and mutual benefit, taking into account differences in stages of economic development and sociopolitical systems; avoiding formation of an inward-looking economic or trading bloc, and seeking instead to strengthen the multilateral trading system; employing APEC as a consultative forum on economic issues, rather than adopting mandatory directives for any participant to undertake or implement; facilitating mutual cooperation to promote APEC members’ common interests in larger multilateral forums; and proceeding gradually and pragmatically with APEC rather than seeking rapid institutionalization.
10 The committees grew out of working groups, and their broad subject areas reflect the problem that APEC has grown like Topsy without setting priorities. The 10 current working groups consist of Trade Promotion, Trade and Investment Data Review, Investment and Industrial Science and Technology, Human Resources Development, Regional Energy Cooperation, Telecommunications, Fisheries, Marine Resource Conservation, Transportation and Tourism. Outside the functional groups, the Budget and Administrative Committee enjoys oversight over the APEC Secretariat’s budget and disbursements, which is important as the funding mechanism for working group projects. APEC SECRETARIAT, ASIA-PACIFIC ECONOMIC COOPERATION 3–7 (1994). In terms of organizing the work flow, individual countries typically work up a variety of reports for successive consideration by working groups and meetings of senior officials. Working group projects also include activity such as organizing seminars, for example on customs standardization. The meetings of senior officials are also the initial level of consideration for commissioned outside policy reports such as those of the Eminent Persons Group and the Pacific Business Forum, as well as the high-level guidance of political leaders’ “vision statements.”
11 The acknowledged problem with APEC’s organizational structure lies in choosing priorities under the open-ended rubric of Pacific economic cooperation. It has been addressed thus far largely by delegating control of meeting agendas to the host country for its year’s round of talks, as well as, more recently, drafting responsibility for the political leaders’ vision statement (to the United States in 1993, Indonesia in 1994 and Japan in 1995). However, this results in continuing ambiguity under differing economic perspectives and invites the injection of the host country’s views into the APEC process itself. This peculiar aspect represents a conscious choice and strength in many ways. Nonetheless, it complicates matters to the extent the organizational tiller swings around from year to year. More generally, proposals have been made to consolidate burgeoning working groups to impose order on the process, e.g., APEC: A New Vision, Korea-Canada Joint Paper on the Future Structure of APEC, Agenda Item 9, Fifth Ministerial Meeting (Nov. 1993), but no significant action has been taken.
12 The EPG has thus far produced two reports, A VISION FOR APEC: TOWARDS AN ASIA PACIFIC ECONOMIC COMMUNITY (1993) [hereinafter 1993 EPG REPORT], and ACHIEVING THE APEC VISION: FREE AND OPEN TRADE IN THE ASIA PACIFIC (1994) [hereinafter 1994 EPG REPORT]. The EPG’s membership overlaps somewhat with both the academic and the business elements of PECC, see note 8 supra, the difference from the U.S. standpoint being that PECC appears to be continuing in its traditional status as a more consensual group focused on economic integration, while EPG has taken higher-profile positions in the area of trade liberalization (especially through its 1994 EPG Report).
13 Thus far, the PBF has produced one report, A BUSINESS BLUEPRINT FOR APEC: STRATEGIES FOR GROWTH AND COMMON PROSPERITY (APEC 1994).
14 For the text, see APEC “Economic Leaders” Declaration of Common Resolve” Issued Bogor, Indonesia; November 15, 1994, available in BNA, Daily Rep. for Executives 219 (Nov. 16, 1994), 34 ILM 758 (1995).
15 APEC Ministerial Meeting, Joint Statement (Nov. 11–12, 1994).
16 APEC member economies represented in Jakarta included Australia, Brunei Darussalam, Canada, the People’s Republic of China, Hong Kong, Indonesia, Japan, the Republic of Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, the Philippines, Singapore, Taiwan (Chinese Taipei in APEC parlance), Thailand and the United States. Chile was also represented, as it formally joined APEC as part of the proceedings. Official observer institutions, including the ASEAN Secretariat, PECC and the South Pacific Forum or SPF (as well as the APEC Secretariat itself), were not formally represented at the political leaders’ meeting but had been present on November 11–12, 1994, at the Sixth APEC Ministerial Meeting, which segued into it.
17 4 U.S. DEPT ST. DISPATCH 828 (1993).
18 Id. at 833.
19 The suggestion in the 1993 EPG REPORT, supra note 12, to accelerate a new round of multilateral trade talks was acted upon only by the United States (outside the APEC framework, when President Clinton’s Group of Seven Open Trade 2000 proposal was quickly rejected by Europe).
20 Report of the Fifth Senior Officials Meeting for the Fifth APEC Ministerial Meeting, Seattle, Washington (1993). The formation of PBF in Seattle’s wake reflected a shadow debate on “private sector” APEC participation. PECC (an accredited Apec observer) was viewed as academically rather than business oriented, see note 8 supra, while the most logical candidate for private-sector input arguably should have been an existing business organization (the Pacific basin Economic Council, an applicant for APEC observer status, Tan Kim Song, Business grouping to seek Apec observer status, STRAITS TIMES, May 26,1994, at 38, whose membership largely consists of developed-country multinational enterprises doing business in Asia). Developing countries’ ambivalence is clearest in the parallelism between the small and medium-sized enterprise (SME) initiative and the idea that each nation would be represented in the new PBF by one “big” and one “small” businessman (despite admitting through the SME initiative that they were not deeply engaged in international trade).
21 The initial Honolulu APEC Finance Ministers’ meeting of March 1994 was recently succeeded by a meeting on April 16, 1995, in Bali; alongside investment flows, the topic of currency exchange rates in the form of questions about recent yen appreciation predominated. See, e.g., K.T. Arasu, APEC Ministers Begin Talks Shadowed by Yen Turmoil, Reuters, Apr. 16, 1995, available in LEXIS, News Library, Curnws File.
22 The 1994 EPG REPORT, supra note 12, proposed that APEC adopt a comprehensive program at Jakarta in the form of a long-term goal of free and open trade and investment in the region, with implementation of trade liberalization to begin by 2000 and be completed by 2020. Vigorous pursuit of trade facilitation and technical cooperation programs was advised. However, the report appeared to move backwards in certain areas, such as by (1) proposing a focus on antidumping and restrictive practices, while delaying examination of broader competition policy questions to an indefinite future; and (2) specifying that a gradual convergence of environmental standards as part of broader product harmonization was desirable, while suggesting that APEC press for broad international acceptance of the “polluter pays principle” (though counseling against its adoption within APEC as potentially disadvantageous in international trade on cost grounds, absent general agreement by other countries).
23 The East Asian Economic Group (EAEG) proposal, later repackaged as the East Asian Economic Caucus (EAEC) within APEC, stemmed from a Malaysian proposal of the early 1990s for a group consisting of Asian countries (notably excluding APEC members such as Australia, New Zealand and the United States). The original Malaysian “non-paper” for the proposal included as its rationales cooperation in advancing the Uruguay Round negotiations, the need for a cohesive voice in trade matters, the usefulness of a counterweight to growing trade groupings outside Asia, the need to meet political-economic challenges in Europe and the Americas threatening to divert investment from tile ASEAN region, and the desire to ease “pressures by OECD countries on ASEAN to move towards premature membership in that organisation, … affinity with Japan within an economic group could help in easing off that pressure.” HADI SOESASTRO, THE EAST ASIAN ECONOMIC GROUP (EAEG) PROPOSAL AND EAST ASIAN CONCEPTS OF THE PACIFIC BASIN 8 (Indonesia Centre for Strategic & Int’l Studies No. M51/91, 1991). The subsequent development of the EAEG/EAEC proposal is a running history of resistance to formation of the group by Japan, which saw it as conflicting with Japanese national interests in maintaining close relations with the United States (which strenuously opposed EAEG). Taking the stated initial rationales at face value, EAEG/EAEC aims at limiting liberalization in connection with the Japanese model of development. See also note 31 infra.
24 See ASEAN Ministers Fail to Resolve Rift on APEC, 11 Int’l Trade Rep. (BNA) 1494 (Sept. 28, 1994).
25 Initially, a general debate emerged at the meeting (more generally cast in terms of disagreement with U.S. positions linking trade with political objectives or advocating a formal regional trade area). The specific debate on the structure of APEC trade liberalization involved U.S. economist and EPG Chair, C. Fred Bergsten, and Australian economist Ross Garnaut, who disagreed on the concept of “open regionalism.” See Barry Wain, Clinton’s Policies on Trade in Asia are Criticized, ASIAN WALL ST. J., May 9, 1994, at 2 (Ross Garnaut interview). The debate continued in Jakarta parallel to the APEC meetings themselves. See C. Fred Bergsten, Towards Free Trade in the Pacific, delivered at a conference sponsored by Indonesia Nat’l Comm. for Pacific Econ. Cooperation & Centre for Strategic & Int’l Studies (Nov. 14) (defending 1994 EPG Report approach); Ross Garnaut, The Bogor Declaration on Asian Pacific Trade Liberalisation, id. (asserting “open regionalism” in PECC sense inconsistent with suggested selective discrimination against non-APEC members).
26 Recommendations in the report, supra note 13, called for specific undertakings to heighten transparency in regulatory and administrative regimes, liberalization of customs and business visas, protection of intellectual property, and attention to business ethics in opposition to problems of corruption in government; these were linked with a variety of human resources and business development policies. Almost simultaneously, Indonesia sponsored the World Infrastructure Forum, which focused on financing infrastructure through nongovernmental sources to assist development. It appeared to verge on a public SOM, given the prominence of the subject matter on the 1994 APEC agenda and heavy government participation in a nominally private conference.
27 For the APIC, see APEC, Report of the Fourth Senior Officials Meeting for the Sixth APEC Ministerial Meeting, Ann. 4 (Nov. 8–10, 1994), as affirmed, id., para. 13, and Jakarta Ministers’ Statement, supra note 15, para. 14. While different in some details, the APIC seemingly was based upon a PECC draft code. See PECC TRADE POLICY FORUM, ENCOURAGING INTERNATIONAL INVESTMENT IN THE ASIA PACIFIC REGION: A DRAFT ASIA PACIFIC INVESTMENT CODE (n.d.). See also NEW DIRECTIONS IN REGIONAL TRADE LIBERALIZATION AND INVESTMENT COOPERATION: A TRIPARTITE APPROACH, SELECTED PAPERS FOR SEVENTH PECC TRADE POLICY FORUM (Gili Yen ed., 1993).
28 See Official Says U.S. Backed Dmim in APEC Investment Code Dispute, 11 Int’l Trade Rep. (BNA) 1803 (Nov. 23, 1994).
29 Jakarta Ministers’ Statement, supra note 15, para. 18.
30 SEE Press Conference of the President, Jakarta Hilton (Nov. 15, 1994). As regards reports that China and South Korea were not obliged to meet free trade objectives until 2020, President Clinton stated:
First of all, whether China and South Korea have to meet this objective by 2020 or 2010 depends upon their own rate of growth. That is, there was no definition today of industrialized countries that excluded them in 2010. Indeed, I think most of the people who were in that room today thought that, given South Korea’s growth, they might well meet that and, in fact, might be expected to meet it before 2010, and that the Chinese could meet it, depending on whether they’re able to sustain a certain level of growth.
South Korea’s decision to pursue OECD membership, see, e.g., Alastair Macdonald, South Korea Applies to Rich Nations Club OECD, Reuter Eur. Bus. Rep., Mar. 29, 1995, available in LEXIS, News Library, Curnws File, raises the issue even more pointedly. See also Results of the APEC Meeting in Indonesia, Fed. News Serv., Nov. 22, 1994, available in LEXIS, News Library, Curnws File (discussing China’s accession to GATT).
31 From the ASEAN perspective within APEC, this determination linked to liberalization requirements arguably appears to be a driving force in terms of the EAEG/EAEC. See note 23 supra.
32 The GATT Article XXIV standard is rather that members in a preferential trade arrangement are required only to maintain an average level of goods tariffs vis-à-vis nonmembers that is no higher than it was before the arrangement. GATS Article V’s analogous, but arguably more generous, economic integration provisions for services have not attracted attention in APEC-related debates, see, e.g., text at and note 25 supra, despite the fact that for some APEC members liberalization of services may be as significant as, or more so than, goods. The issue in practice is the extent to which trade diversion is emerging as an effect of regionalism. See JEFFREY A. FRANKEL, SHANG-JIN WEI & ERNESTO STEIN, APEC AND OTHER REGIONAL ECONOMIC ARRANGEMENTS IN THE PACIFIC (Center for Pacific Basin Monetary & Econ. Studies, Fed. Reserve Bank of San Francisco, Working Paper No. 94–04, 1994).
33 See, e.g., apec trade benefits to all not practical: maclaren, Xinhua News Agency Item 0314200, Mar. 14, 1995, available in LEXIS, News Library, Curnws File (Canada and Australia).
34 Bogor Declaration, supra note 14, para. 9.
35 On how such matters represent new kinds of trade policy issues of the 1990s, see, e.g., PETER WINGLEE ET AL., ISSUES AND DEVELOPMENTS IN INTERNATIONAL TRADE POLICY 64–86 (IMF World Econ. & Financial Surveys, 1992); GEZA FEKETEKUTY, THE NEW TRADE AGENDA (Group of Thirty Occasional Papers No. 40, 1992) (approaching issues under the rubric of globalization). See also OECD, TRADE AND COMPETITION POLICIES: COMPARING OBJECTIVES AND METHODS (Trade Policy Issues No. 4, 1994).
36 See, e.g., Satoshi Isaka, Seeking Free Trade APEC Must Now Get Down to Details, NIKKEI WKLY., June 26, 1995, at 1, available in LEXIS, News Library, Curnws File.
37 See, e.g., INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT, EAST ASIA’S TRADE AND INVEST MENT: REGIONAL AND GLOBAL GAINS FROM LIBERALIZATION (1994).