Está en la página 1de 17

This article was downloaded by: [Academia Sinica - Taiwan] On: 18 March 2014, At: 18:28 Publisher: Routledge

Informa Ltd Registered in England and Wales Registered Number: 1072954 Registered office: Mortimer House, 37-41 Mortimer Street, London W1T 3JH, UK

The Pacific Review


Publication details, including instructions for authors and subscription information: http://www.tandfonline.com/loi/rpre20

APEC adrift: implications for economic regionalism in Asia and the Pacific
John Ravenhill Published online: 26 Nov 2010.

To cite this article: John Ravenhill (2000) APEC adrift: implications for economic regionalism in Asia and the Pacific, The Pacific Review, 13:2, 319-333, DOI: 10.1080/095127400363613 To link to this article: http://dx.doi.org/10.1080/095127400363613

PLEASE SCROLL DOWN FOR ARTICLE Taylor & Francis makes every effort to ensure the accuracy of all the information (the Content) contained in the publications on our platform. However, Taylor & Francis, our agents, and our licensors make no representations or warranties whatsoever as to the accuracy, completeness, or suitability for any purpose of the Content. Any opinions and views expressed in this publication are the opinions and views of the authors, and are not the views of or endorsed by Taylor & Francis. The accuracy of the Content should not be relied upon and should be independently verified with primary sources of information. Taylor and Francis shall not be liable for any losses, actions, claims, proceedings, demands, costs, expenses, damages, and other liabilities whatsoever or howsoever caused arising directly or indirectly in connection with, in relation to or arising out of the use of the Content.

This article may be used for research, teaching, and private study purposes. Any substantial or systematic reproduction, redistribution, reselling, loan, sub-licensing, systematic supply, or distribution in any form to anyone is expressly forbidden. Terms & Conditions of access and use can be found at http:// www.tandfonline.com/page/terms-and-conditions

Downloaded by [Academia Sinica - Taiwan] at 18:28 18 March 2014

T he Paci c R eview, Vol. 13 No. 2 2000: 319333

A PEC adrift: implications for economic regionalism in A sia and the Paci c
John R avenhill

Downloaded by [Academia Sinica - Taiwan] at 18:28 18 March 2014

A bstract A PECs lack of success in securing tangible bene ts in its rst decade has particularly disappointed its Western members. Its failures stem primarily from three weaknesses: a lack of consensus over its objectives and how these might best be realized; the absence of an institutionalized driving force for the grouping; and a failure to engage with civil society. A PE Cs shortcomings have put at risk what is arguably its most signi cant achievement: the annual meetings that bring together leaders from around the Paci c R im. Modest changes to organizational procedures might enhance A PE Cs prospects especially if its efforts are concentrated in trade facilitation and economic and technical cooperation rather than on trade liberalization. Such a change in direction would not only return A PE C to its roots but also be in accord with the priorities of E ast A sian governments. Keywords R egionalism; integration; cooperation; A siaPaci c; trade liberalization; A PEC; A SE A N.

Introduction
A PE C had its tenth birthday in Auckland in September 1999. Few participants were in a mood for celebrations, however. Not only did the violence in E ast Timor overshadow the meetings but the overall mood was one of disappointment with the lack of tangible results from the groupings rst decade.1 D iscussions centered on what had gone wrong in recent years, and on a search for new directions to make the grouping more relevant to the twenty- rst century.
John R avenhill will take up the Chair of Politics at the U niversity of E dinburgh in June 2000. He is currently Professor and Head of the Department of International R elations in the R esearch School of Paci c and Asian Studies, Australian National U niversity. A ddress: R esearch School of Paci c and Asian Studies, Australian National U niversity, Canberra ACT 0200, Australia. E -mail: raven@coombs.anu.edu.au T he Paci c R eview ISSN 09512748 print/ISSN 14701332 online 2000 Taylor & Francis Ltd http://www.tandf.co.uk /journals

320

T he Paci c R eview

A t one level, A PE C appeared to have made substantial progress in its rst ten years. From its foundation as a ministerial-level meeting of twelve economies in 1989, it developed into a grouping of twenty-one countries. Its membership expanded more rapidly than that of any other regional economic organization. Membership now includes the worlds three largest economies the U S, China, and Japan and, with R ussia joining in 1998, three of the ve permanent members of the U N Security Council. A PE C members collectively account for close to half of all world trade. The grouping adopted an imaginative target: free trade in the region by the year 2010 for developed and 2020 for less developed economies. The annual leaders meetings provide the only institutionalized forum that brings together heads of government from all Paci c R im countries, in itself an innovation that has proved especially valuable in periods of tension between Washington and Beijing. In 1993, the grouping established a secretariat in Singapore. Ministerial working groups hold more than thirty meetings each year. A nd close to 300 projects designed to promote economic and technical cooperation are currently operating under A PE Cs auspices. Why, then, the current self-doubt? To a considerable extent, this lies in A PECs achievements being con ned primarily to matters of process. Substantive outcomes from its activities have been far less obvious. The grouping accordingly has been vu lnerable to accusations that it is little more than a talking shop A Perfect E xcuse to Chat as some have interpreted its acronym. Chatting may be highly desirable in a region where legacies of the Second World War and the Cold War continue to cloud relations between states. The very existence of A PE C, linking countries of enormous diversity, a grouping that spans Southeast and Northeast A sia and the Paci c O cean, is itself an achievement. It has helped cement the idea that the A sia-Paci c might constitute a natural economic region. Process in itself may be a positive contribution and, for some A sian members, community-building arguably has been the primary raison dtre for the grouping (Soesastro 1998: 95). A PE C, however, was sold to an often-skeptical audience, at least in its Western members, with promises that it would deliver far more than the minimal form of con dence-building that a new discussion forum might generate. H ere its credibility has not been helped by the hyperbole that accompanied its development; for instance, Fred Bergstens claim that the Bogor D eclaration, through which members committed themselves to free trade, was potentially the most far-reaching trade agreement in history (Bergsten 1994: 20). A nd just as enthusiasm for A PE C was in ated by A sias rapid economic growth so the regions economic crises of 199798 generated new questions about the groups role and relevance. For A PE C to maintain credibility, it was time to move beyond the plethora of declarations, plans and action agendas to generate substantive outcomes. So far, it has failed to deliver.

Downloaded by [Academia Sinica - Taiwan] at 18:28 18 March 2014

John R avenhill: E conom ic regionalism in the A sia-Paci c

321

A PE Cs problems stem from three principal weaknesses: a lack of consensus among members over its objectives and how these might best be realized; the absence of a body that has the capacity to be a dynamo for the grouping; and a failure to engage with civil society.

Lack of consensus over objectives and means


When Australian Prime Minister Bob H awke rst proposed the establishment of A PE C in early 1989, he took as his model the O E CD, the O rganization for E conomic Cooperation and D evelopment, the Parisbased grouping that promotes coordination of domestic and international economic policies among its member states. A principal role of the O E CD is to increase transparency by collecting and disseminating information about its members policies. The O E CD is not a forum for trade negotiations and A PE C initially was not intended to be one either. In 1993, however, following the rst report of an expert advisory committee, the E minent Persons G roup (E PG ), and the staging of the rst leaders meeting in Seattle, trade liberalization became the centrepiece of A PE Cs agenda. The push came primarily from A PECs Western governments the U S, Canada, Australia, and New Z ealand. It also received strong support from the professional economists who had long promoted economic cooperation across the Paci c, and who constituted the core of the E PG. Most A sian governments were much less committed to the trade liberalization agenda. Instead, they wanted the emphasis in A PE Cs activities to be placed on trade facilitation and on economic and technical cooperation (the other two pillars of A PE C, as they came to be known). R econciling an agenda of trade liberalization with the objectives of A sian governments required a number of compromises. A sian members wished to avoid A PE Cs evolution into another forum in which Western governments could attack their trading policies. Moreover, given their trade dependence on Western E urope as well as North A merica and other parts of A sia, they strongly opposed any move for A PE C to become a preferential trading area (indeed, one of their interests in the establishment of the grouping, at a time when the G ATTs U ruguay R ound talks were stalemated, was to diminish the possibilities of the global economys fragmentation into rival trading blocs). A PE Cs two core principles for liberalization re ected these A sian concerns. Liberalization was to occur through Concerted U nilateralism: A PE C members would determine (through Individual A ction Plans) their own timetable and priorities for trade liberalization to meet the goal of free trade by 2010/20. A nd liberalization in A PE C would be non-discriminatory: A PE C would embrace O pen R egionalism through which concessions to member economies would be extended on a non-reciprocal basis to all WTO members. A PE Cs approach to trade liberalization differs markedly from that of the G ATT/WTO, whose methods have succeeded in lowering most tariffs

Downloaded by [Academia Sinica - Taiwan] at 18:28 18 March 2014

322

T he Paci c R eview

on trade in manufactured goods to inconsequential levels (for comparisons of the two approaches see A ggarwal (1993) and R avenhill (1999) ). R eciprocity has been at the heart of the WTO s approach to trade liberalization for three principal reasons. Politically, it has been essential in enabling governments to reassure domestic constituencies that they will receive something in return for the concessions they have made. Moreover, reciprocity facilitates the construction of domestic pro-liberalization coalitions by assuring exporters that they will gain access to foreign markets. Finally, by compelling other go vernments to engage in trade negotiations, the requirement for reciprocity multiplies the potential gains from trade liberalization beyond those achievable through unilateral actions. In contrast, liberalization based on unilateralism has a number of disadvantages. It provides no certainty for foreign partners because individual governments can re-interpret their obligations as they see t. A PE C members have maintained that they individually have the right to determine what free trade actually means and this will not necessarily be the complete removal of tariff and non-tariff barriers. Moreover, a unilateral approach makes assessment of comparability across countries extremely complicated. A nd absent legally-binding requirements, A PEC has to rely on peer pressure to persuade governments to live up to their free trade commitments. The long lead-time before free trade is to be realized within A PE C another twenty years for the less developed economies has, however, minimized the pressure on governments to act. A nd the likely effectiveness of moral suasion among governments as diverse as those of Peru and R ussia is questionable. Taken together, these factors induce considerable uncertainty for domestic exporters on the issue of whether A PE C will give them improved access to foreign markets. Consequently, they are less likely to mobilize in support of domestic trade liberalization. For A PE Cs supporters, a voluntary, unilateral approach poses another problem. It is dif cult for them to isolate A PE Cs contribution to trade liberalization and demonstrate how A PE C itself has added value to the process. The Individual A ction Plans published by member economies lack transparency and speci city, making comparison across countries almost impossible (Petri 1997). The effects of peer pressure on governments decision-making are dif cult to document. A PE C can be credited with all the liberalizing actions that member economies have undertaken since its formation or none at all. D etailed studies of the Individual A ction Plans adopted by A PE C economies suggest in fact that few economies have liberalized beyond the commitments that they had already made in the U ruguay R ound of G ATT negotiations (Yamazawa and U rata 1999). Some economies have done so for reasons that have little to do with A PEC: China, because of its desire to enter the WTO ; Chile because of its wish to join NA FTA . Besides these two, only a couple of A PE Cs

Downloaded by [Academia Sinica - Taiwan] at 18:28 18 March 2014

John R avenhill: E conom ic regionalism in the A sia-Paci c

323

smaller economies New Z ealand and the Philippines have lowered tariffs substantially beyond their U ruguay R ound commitments. Members pledged that they would improve their offers each year but governments have made few enhancements since they lodged their rst plans in 1996. With the onset of the nancial crisis, some A sian economies, notably Malaysia and Thailand, moved in the other direction by increasing their tariff levels. The former Chair of the E PG, Fred Bergsten (1997a: 10) conceded that there was no hard evidence to date that any A PE C country has taken additional liberalization steps solely due to A PE C. Neither of the two major players in A PE C the U S and Japan has a strong commitment both to the groupings goal and to its method of trade liberalization. A lthough Washington has pushed forcefully for trade liberalization within the grouping, it has indicated repeatedly that it will not undertake unilateral liberalization under A PE Cs auspices unless nonmembers, most notably the E uropean U nion, simultaneously implement equivalent measures. In other words, a requirement for reciprocity remains central to the U S approach. The Japanese government, on the other hand, has never shown interest in using A PE C as a forum for trade liberalization (Funabashi 1995; Yamamoto and Kikuchi 1998). O f cial barriers have not proved a major obstacle to the operations of Japanese corporations in the rest of A sia. The value of incremental gains from trade liberalization in A PE C have consistently been outweighed from Tokyos perspective by fears of a political backlash from sensitive sectors should the government adopt measures that go beyond its U ruguay R ound commitments. R ather than trade liberalization, the Japanese government has emphasized A PE Cs potential to play a role in trade facilitation, and the importance of economic and technical cooperation in encouraging commerce in the region. The governments IA P re ected these interests rather than trade liberalization. Singapore has been consistent in its support for A PE Cs trade liberalization efforts. O ther A sian economies, such as Indonesia, the Philippines, and Thailand, at times have voiced their enthusiasm. But many have shared Japans view that A PE C should place more emphasis on economic and technical cooperation than on trade liberalization. The government of the Peoples R epublic of China has consistently expressed this view (Yunling 1998). This lack of enthusiasm for trade liberalization stemmed primarily from the fear that A PE C would become yet another instrument that the U S could use to exert pressure to open A sian markets. O ther factors may have added to this reticence. For instance, because other A sian economies enjoy duty-free access to the Japanese market under that countrys scheme of tariff preferences for less developed economies, a non-discriminatory reduction in Japans tariffs might adversely affect their competitiveness in the Japanese market (Panagariya 1994). Nowhere was the gap between the positions of the U nited States and Japanese governments more obvious than in A PE Cs efforts to promote

Downloaded by [Academia Sinica - Taiwan] at 18:28 18 March 2014

324

T he Paci c R eview

trade liberalization on a sectoral basis (an approach labelled E VSL E arly Voluntary Sectoral Liberalization). Impatience with the slow pace of trade liberalization under A PE Cs voluntary unilateralism process drove the U S to advocate a sectoral approach. The U S had supported sectoral approaches to trade liberalization in the latter stages of the U ruguay R ound negotiations and continued to promote them in regional and multilateral negotiations after the conclusion of the WTO talks in 1993. The initial results within A PE C appeared positive. A t its meeting in Manila in November 1996, A PE C supported the removal of tariffs on information technology products, an agreement that followed one reached by the Q uad group (the U S, Canada, Japan, and the E U ) earlier in the year. This initiative helped to pave the way for the Information Technology A greement signed at the Singapore ministerial meeting of the WTO in the following month. Information technology products, however, were unusual in that most A PE C economies were both signi cant importers and exporters, the extension of production networks in the electronics industry througho ut the region having generated substantial two-way trade (Bernard and R avenhill 1995, E rnst 1994; E rnst and R avenhill 1999) . Moreover, tariffs in this sector generally were already low. A nd prior agreement within the Q uad group ensured that reciprocity on the part of the E uropeans would be forthcoming. A PE Cs subsequent attempt to extend the scope of sectoral liberalization, however, served primarily to expose the divisions within the grouping. A PE C leaders instructed trade ministers at the Manila meeting to identify possible candidates for further sectoral liberalization. Member economies subsequently proposed forty-one sectors. A PE C leaders then selected fteen of these for early liberalization, of which nine sectors were scheduled for fast-track treatment. Mexico and Chile refused to participate in the negotiations, stating their preference for across-the-board liberalization. But it was Japans opposition to liberalization of sheries and forestry products trade that effectively extinguished the EVSL process at the 1998 Kuala Lumpur leaders meeting. These sectors were politically sensitive for the Japanese government: unlike information technology they were characterized by substantial trade imbalances and by small, heavily protected domestic industries. In an effort to save face, A PE C eventually referred the E VSL program to the WTO. The E VSL experiment marked an approach to trade liberalization completely at odds with that previously adopted by A PE C. R ather than relying on voluntarism and unilateralism, it rested rst on negotiation of a package deal of sectors to be targeted, and then on concerted action within a short time-frame to implement the negotiated targets. Furthermore, E VSL put reciprocity rmly back on the negotiating table: U S Trade R epresentative Charlene Barshefsky indicated at the Kuala Lumpur meeting that the U S would not proceed with E VSL unless the E uropean U nion made commensurate moves.

Downloaded by [Academia Sinica - Taiwan] at 18:28 18 March 2014

John R avenhill: E conom ic regionalism in the A sia-Paci c

325

The decision to refer the E VSL program to the WTO severely damaged A PE Cs credibility. It was not just the E VSL program itself that lost credibility. The failure of the program highlighted the lack of any mechanism in A PEC for dealing with trade liberalization in sensitive sectors. A s A PE C moves towards its deadlines for complete freeing of trade, political sensitivities will be heightened. G overnments inevitably will leave liberalization in the most dif cult sectors until last agriculture in E ast A sia; textiles in most Western countries. A voluntary, unilateral approach to trade liberalization will not produce the desired outcomes. But the A PE C framework lacks an incentive structure conducive to negotiated liberalization. The E VSL dbcle thus cast doubt on A PECs overall capacity to deliver on its free trade agenda unless this is negotiated in a broader framework under the WTO s auspices. What of the other pillars of A PE Cs activities on which Japan and most other A sian members have placed greater emphasis? A gain, progress to date has been disappointing. E conomic and technical cooperation (E cotech) receded into the background when A PE C gave pride of place to trade liberalization. A PE Cs Western members initially were anxious to avoid the perception that E cotech activities were a form of compensation to the less developed economies for their moves to liberalize trade. R ather, they emphasized the economic logic that those economies undertaking trade liberalization would be the principal bene ciaries of their own policy reforms. A n unfortunate consequence is that some of the industrialized country governments in A PE C tended to view economic and technical cooperation as a competitor rather than a complement to the trade liberalization agenda. A lack of enthusiasm for E cotech undoubtedly also sprang from the unwillingness of Western member governments to provide any substantial sums for new foreign aid activities. D espite this reticence, A PE C currently has close to 300 E cotech projects running under its auspices. A triumph of process over substance again characterizes cooperation in this eld, as does a general lack of coordination and setting of priorities. Projects range from promoting the understanding of culture in schools to an improved seafood inspection regime, from research on best gender practices in the workplace to risk assessment in customs procedures. The proliferation of projects has resulted from a largely incoherent process in which senior of cials approved proposals if a member state expressed an interest and a willingness to provide some resources. O f cials have given little consideration to whether member states pet projects are directly linked to A PE Cs core activities, or to avo iding overlap among the proposals. O f greatest concern, however, has been the failure of most projects to generate substantive outcomes. Seminars, the construction of databases, and research projects have been the most popular activities. Financial cooperation is another area where A PECs activities have been disappointing. Trade and foreign affairs ministries have dominated A PE C

Downloaded by [Academia Sinica - Taiwan] at 18:28 18 March 2014

326

T he Paci c R eview

Downloaded by [Academia Sinica - Taiwan] at 18:28 18 March 2014

from its foundation. Financial cooperation is not well integrated into the A PE C framework. Finance ministers did not meet until 1994; subsequent meetings have not been coordinated with the annual leaders meetings or with the meetings of trade ministers. To blame A PE C for failing to resolve the A sian nancial crises would be unfair clearly, the crises were a matter primarily for the global institutions, especially the IMF. It is, however, a telling commentary on A PE Cs perceived lack of effectiveness that the regional nancial groupings established in the wake of the crisis the Manila Framework and the G roup of 22, whose memberships substantially overlap with that of A PE C were not placed under A PE Cs auspices.

Lack of a driving force


Most of the major initiatives that A PE C has adopted had their origins outside the process of meetings of government of cials. The E minent Persons G roup was particularly important in setting an agenda for action and, through public advocacy of its proposals, in placing pressure on the member states to move forward on trade liberalization. Many members, particularly A sian governments, however, were uncomfortable with the E PG s role and forced its dissolution in 1995. Since then, A PE C has lacked a body to provide it with vision and to drive it forward. A signi cant factor here is the weakness of the A PE C Secretariat. A lthough the O E CD was the initial model, A PE C was intended to be an A sia-Paci c counterpart without the Paris-based organizations large, centralized bureaucracy. R ather, A PE C would follow the practices of the A ssociation of Southeast A sian Nations (A SE A N), which, since its establishment in 1967, had eschewed creating a substantial secretariat. Instead, the bureaucracies of individual A SE A N member countries service its meetings and activities. A desire to avoid the costs of a large bureaucracy was indeed one consideration but far more important was the concern of A sian governments that an international secretariat not impinge on their sovereignty. The E uropean Commission provided an archetype of what had to be avoided. When A PE C decided to establish a secretariat in 1993, the objective was to keep the organization small and lacking in autonomy. The secretariat has only twenty-three professional staff, all of whom are on secondment from member governments rather than being permanent employees. The professional members of staff typically are each responsible for four or ve areas of the groups activities and can scarcely monitor them adequately let alone provide any leadership. A nother feature designed to ensure that the secretariat lacks a capacity to take initiatives is the annual rotation of its executive director. A senior of cial from the country that will host the groupings next leaders meeting holds this of ce. The secretariat itself controls no funds for the groups activities: this factor, coupled with its inadequate staf ng currently prevents it playing a role in

John R avenhill: E conom ic regionalism in the A sia-Paci c

327

resolving the lack of coordination in the groups economic and technical cooperation projects.

Lack of engagement with civil society


That A PE C is not an acronym that is widely recognized in its member countries is scarcely surprising. Some areas of its activities involve technical complexities that are unlikely to capture the popular imagination. O n the other hand, the grouping has not seized opportunities to broaden its support base by engaging with non-governmental organizations and by capitalizing on their expertise. U ltimately its success will depend on selling a message of the bene ts of trade liberalization to an often-skeptical public. O f cial observers at A PE C meetings are limited to the A SE A N Secretariat, the South Paci c Forum, and the Paci c E conomic Cooperation Council (a tripartite forum of government, business, and academics). To date, A PE C has only engaged systematically with NG O s representing the business sector. A PE C leaders established an A PE C Business A dvisory Council in 1995 to advise them and other A PE C fora on matters of interest to business. Some individuals who are not governmental of cials have participated in the working groups and been members of some government delegations. O nly a few governments, notably the Canadian, have actively promoted NG O participation in A PE C fora. O therwise, governments have shown a reluctance to involve outsiders to move beyond the of cials and academic economists that have dominated the grouping. Labor, consumers, small and medium enterprises, and community groups have all been excluded. A s a consequence, rather than NG O s being constructive critics within the regime, their relationship with A PE C has been primarily adversarial. The exclusion of groups seeking to engage with A PE C has left a rump of NG O s opposed in principle to its agenda. The groups view free trade as antithetical to their own agendas of promoting human rights and environmental objectives. The alternative peoples summits that NG O s have staged at the time of the leaders meetings have been small-scale rehearsals of the protests at the Seattle WTO ministerial meeting in D ecember 1999.

Downloaded by [Academia Sinica - Taiwan] at 18:28 18 March 2014

What is to be done?
E xaggerated claims for what A PE C might achieve, in combination with an excessive emphasis on trade liberalization, have jeopardized some of the useful contributions that A PE C is making to cooperation in the A sia-Paci c region. In particular, unrealistic expectations have put at risk what is arguably A PE Cs single most important achievement: the annual meeting that brings together leaders from around the Paci c R im. This unique forum is too important to be held hostage to squabbles over the

328

T he Paci c R eview

minutiae of trade packages. It currently suffers from the expectation that each meeting will produce a signi cant announceable a new declaration, a substantially revised action package, etc. A nd each new announcement further enlarges the credibility gap between A PE Cs aspirations and achievements. The leaders meeting needs to be routinized. Like the regular summit meetings of the G roup of Seven, the expectations for concrete outcomes should be modest. A high-level discussion forum has its own merits. The Auckland meeting demonstrated this by paving the way for a resumption of negotiations between the U S and China on the PR Cs admission to the World Trade O rganization. The meeting will be remembered more for its deliberations on the E ast Timor issue than for any progress made on trade liberalization in A PE C. Modest changes to its organizational procedures can also enhance A PECs prospects. In particular, the group ings E cotech agenda needs to be focused on projects that deliver substantive outcomes. More selectivity is required in identifying projects that will contribute directly to its core goals. This in turn demands more coordination at the center. While no one wishes to see an A PE C secretariat of the size of that of the O E CD, the current body clearly is under-resourced for the role that it should be playing. With a stronger secretariat, A PEC might have a signi cant hand in mobilizing funding for projects with practical bene ts for trade facilitation across the region. Meanwhile, A PE Cs legitimacy could be substantially enhanced by greater engagement with civil society through inviting more representatives from NG O s to participate in its working groups, and through giving more attention to the social consequences of its trade liberalization agenda. G reater selectivity is also required in the tasks that A PE C sets for itself. The proliferation of groupings with an interest in trade issues the WTO at the global level, selective bodies such as the O E CD, and transregional and regional groups such as the A siaE urope Meeting and NA FTA has strained increasingly scarce governmental resources. G overnments have found themselves nego tiating the same issues in various fora, often simultaneously. Some groupings are clearly better placed to achieve substantive outcomes on speci c issues than others: it is a matter of picking horses for courses. A PE Cs consensual principles make it an unlikely vehicle for moving forward on issues of signi cant political sensitivity. R egardless of this problem, it has taken on some issues sure to raise political hackles, for instance, negotiation of investment principles. Not surprisingly, it delivered outcomes inferior to those that might have been attained elsewhere. Scarce negotiation resources were squandered, political goodwill lost, and A PE Cs reputation damaged in the process. A PE C has committed a disproportionate share of its energies to negotiating trade liberalization. Its rst decade has demonstrated the very limited prospects of an approach that rests on concerted unilateralism.

Downloaded by [Academia Sinica - Taiwan] at 18:28 18 March 2014

John R avenhill: E conom ic regionalism in the A sia-Paci c

329

Downloaded by [Academia Sinica - Taiwan] at 18:28 18 March 2014

The WTO will continue to be the main game in trade liberalization. A PE C can at best provide a modest supplement to the trade negotiations that occur in this global forum. Its origins point, however, to a role that it might usefully play in the next few years. A PE C came into being in part because of frustrations that its members had at the slow pace of progress of the G ATTs U ruguay R ound of negotiations and, in particular, the recalcitrance of the E uropeans on agricultural issues. With a new round of WTO negotiations about to get under way, A PE Cs most useful contribution to trade liberalization may be to act as a cheerleader in this more effective forum. E ven here, however, A PE Cs role may be limited. To the extent that it was successful in fostering progress in the U ruguay R ound, this was because the E uropean U nion was concerned at facing a united front of North A merican and E ast A sian economies.2 The preliminary skirmishing suggests, however, that a principal cleavage in the millennium round of WTO talks will be between the North A mericans and the Cairns G roup, on the one hand, and a coalition of agricultural protectionists comprising the E U and Northeast A sian countries on the other. The issue of liberalizing agricultural trade is likely to divide the A PE C group.

A PEC and A sia-Paci c economic regionalism in the new millennium


Implementation of the modest proposals suggested above may bring some incremental improvements in A PE Cs performance, especially in trade facilitation and its promotion of economic and technical cooperation activities. For the reasons identi ed, however, trade liberalization under A PE Cs auspices is unlikely to be signi cantly more effective in the groupings second decade than it was in its rst. Will A PE Cs ineffectiveness open the way for the emergence of other E ast A sian regional economic organizations? A PE C is a peculiar regional economic grouping. Indeed, it is more appropriate to regard A PE C as a trans-regional rather than a regional body. In its geographical scope and breadth of membership, it is more akin to the A siaE urope Meeting (A SE M) and to the TransA tlantic E conomic Partnership (TE P) than to the longest established of the regional economic groupings, the European U nion. A nd while A PE C is more institutionalized than either A SE M or TE P, it falls closer to their end of the institutionalization spectrum than to either the EU or NA FTA . A PE Cs position as the only regional economic grouping in which all E ast A sian economies participate makes for a lack of symmetry in the contemporary global economy. E ast A sia is the only major region that lacks its own economic organization committed to trade liberalization on a discriminatory basis. The historical reasons for this asymmetry are multiple. O ne signi cant factor in A PE Cs foundation was an attempt to head off the emergence of an E ast A sian trading bloc, as later formally

330

T he Paci c R eview

proposed by Prime Minister Mahathir (H iggott and Stubbs 1995). Without a regional grouping of its own, however, E ast A sia has a weaker bargaining position in international trade than if the diverse countries of Northeast and Southeast A sia were able to form a cohesive grouping. Prime Minister Mahathirs E ast A sian E conomic Caucus already exists both as a grouping within A PE C and as the A sian component of the A siaE urope Meeting. A nd the economic crises of 199798 encouraged closer collaboration among the governments of E ast A sia not least because of the perception that Washington, London, and the IMF were conspiring to exploit the circumstances to impose unwelcome economic restructuring. The principal forum for this new collaboration has been the A SE A N Plus 3 grouping, meetings between the ten members of A SE A N and China, Japan, and Korea. A n annual informal A SE A N Plus 3 summit, held in association with the A SE A N summit, was initiated in 1997. The leaders issued an unprecedented joint statement following the 1999 meeting. The host of the summit, Philippines President Joseph E strada, asserted that cooperation might one day lead to an E ast A sian common market, one E ast A sian currency; one E ast A sian Community. Further institutionalization of an E ast A sian economic grouping in the coming decade faces formidable obstacles, however. A continuing deterrent against an E ast A sian discriminatory trading grouping is the dependence of regional economies on markets outside A sia. A lthough the share of intra-regional trade grew rapidly in the decade before the onset of the nancial crises, A sian economies still depend on other markets for more than half of their export sales. The fear that the institutionalization of a discriminatory E ast A sian grouping might trigger a global trade war in which A sian economies would ultimately be the major victims still worries decision-makers in many A sian capitals.3 Perhaps of greater long-term signi cance are questions about the composition and leadership of any E ast A sian grouping. H istorical tensions between states abound: Chinas aspirations to the position of regional leader currently sit uneasily with Japans greater economic strength. Whether Taiwan would be welcome in an E ast A sian grouping is questionable. O ne of the most delicate negotiations within A PE C involved the formula for the admission of the three Chinas to the grouping. The recent meetings between A SE A N and its Northeast A sian partners have excluded Taiwan. Moreover, A SE A Ns determination to maintain and strengthen its own cooperative arrangements and regional presence (seen most recently in its D ecember 1998 H anoi D eclaration and Plan of A ction) arguably will be even more an obstacle to the institutionalization of an E ast A sian grouping than it has been to A PE C. A SE A Ns own trade liberalization efforts pale in comparison with progress among other less developed economies, most notably Mercosur.4 Nonetheless, it continues to insist on playing a central role in regional economic cooperation, as it does in the regional security forum, the A R F.

Downloaded by [Academia Sinica - Taiwan] at 18:28 18 March 2014

John R avenhill: E conom ic regionalism in the A sia-Paci c

331

Downloaded by [Academia Sinica - Taiwan] at 18:28 18 March 2014

Frustration with the slow pace of trade liberalization in A PE C has caused some governments to propose new discriminatory regional arrangements, most notably a free trade area between North A merica, Chile, New Z ealand, and Singapore. The participation of the Singaporean government is testimony not just to its continuing commitment to a liberal trade regime but also to the global interests of its economy and consequent insigni cance for it of A SE A Ns ineffective trade liberalization efforts. E ven the Japanese government, a longstanding opponent of preferential trading agreements, has indicated its interest in exploring such arrangements with Korea and Singapore. Such bilateral and plurilateral arrangements may proliferate, especially if the millennium round of WTO negotiations fails although for many E ast A sian go vernments regional negotiations on trade liberalization remain a low priority. What are A PE Cs prospects within this ever more complex m lange of regional institutions? A PE Cs lack of success in promoting trade liberalization is of little concern to most E ast A sian governments. A PE C is valued more as a con dence-building process than as a results-oriented forum. Lack of progress in trade liberalization is likely to lead to greater emphasis being placed in A PE C on its two other pillars: trade facilitation and economic and technical cooperation. Such a change in direction would not only return A PE C to its roots but also be very much in accord with the priorities of E ast A sian governments. A PE Cs weaknesses notwithstanding, it is therefore likely to continue to be the major regional economic organization for E ast A sian economies in the rst decade of the new millennium.

Notes
1 Illustrative of the disappointment with A PE Cs achievements was the report of A PE Cs Business A dvisory Council to the host of the 1999 leaders meeting, New Zealand Prime Minister, Ms Jenny Shipley. The report suggested that A PE Cs approach to trade and investment liberalization was not delivering results, and lacked transparency and speci city. See A PE C lost sight of its goals, says report, A ustralian Financial R eview (25 August 1999) . O pinion varies as to whether the creation of an A PE Cs Leaders Meeting and fears that A PE C would be turned into a discriminatory trading bloc forced the E uropeans back to the bargaining table in the U ruguay R ound. Contrast Bergsten (1997b) with D rysdale (1997) and Winters (1996) . The rationality of such concerns is questionable. The response of the global economy to the formation of NA FTA was not a retreat into protectionism but further liberalization through the successful conclusion of the U ruguay R ound of G ATT talks. Moreover, although intra-regional trade in A sia is lower than in the EU, it is higher than in NA FTA . Member economies are committed to complete A FTA by 2002 (for the six original signatories of the treaty). Z ero tariffs will not be achieved, however, until 2015 for the six original signatories and until 2018 for the four more recent members. Trade between A SE A N member economies in the 1990s grew only slightly more than 1 per cent more rapidly than their trade with other

332

T he Paci c R eview
countries. Moreover, A SE A N trade preferences probably contributed little to this modest growth in the share of intra-regional trade in the total exports of A SE A N economies. A study by the A SE A N Secretariat (R obert R . Teh Jr 1999) estimated that only 1.5 per cent of intra-A SE A N trade used the certication required to attain preferential tariff treatment under A FTAs rules of origins. Preferential tariffs are lower than MFN rates in less than one-third of the tariff lines.

References
A ggarwal, V. K. (1993) Building international institutions in A sia-Paci c, A sian Survey 33(11): 102942. Bergsten, C. F. (1994) A PE C and world trade: a force for worldwide liberalization, Foreign A ffairs 93(3): 206. (1997a) A PE C in 1997: prospects and possible strategies, in C. F. Bergsten (ed.) W hither A PE C? T he Progress to D ate and A genda for the Future, Washington, D C: Institute for International E conomics, pp. 317. (1997b) O pen regionalism, T he World E conom y 20(5): 54565. Bernard, M. and R avenhill, J. (1995) Beyond product cycles and ying geese: regionalization, hierarchy, and the industrialization of E ast A sia, World Politics 45(2): 179210. D rysdale, P. (1997) A PE C and the WTO : complementary or competing? Paper presented at the A PE C R oundtable 1997: A PE C Sustaining the Momentum, Singapore, 6 August. E rnst, D. (1994) Carriers of regionalization: the E ast A sian production networks of Japanese electronics rms, Berkeley R oundtable on International E conomics Working Paper No. 73, U niversity of California, Berkeley, November. E rnst, D. and R avenhill, J. (1999) G lobalization, convergence, and the transformation of international production networks in electronics in E ast A sia, B usiness and Politics 1(1): 3562. Funabashi, Y. (1995) A sia Paci c Fusion: Japan s R ole in A PE C , Washington, D C: Institute for International E conomics. H iggott, R . and Stubbs, R . (1995) Competing conceptions of economic regionalism: A PE C versus E A E C in the A sia Paci c, R eview of International Political E conom y 2(3): 51635. Panagariya, A . (1994) E ast A sia and the new regionalism in world trade, T he World E conom y 17(6): 81739. Petri, P. A . (1997) Measuring and comparing progress in A PE C, A SE A N E conom ic B ulletin 14(1): 113. R avenhill, J. (1999) A PEC and the WTO : which way forward for trade liberalization?, Contem porary Southeast A sia 21(2): 22138. Soesastro, H . (1998) O pen regionalism, in H . Maull, G. Segal and J. Wanandi (eds) E urope and the A sia Paci c, London : R outledge, pp. 8496. Teh, R obert R . Jr (1999) Completing the CE PT scheme for A FTA, Paper presented at the Conference: Beyond A FTA and Towards an A SE A N Common Market, Manila, O ctober. Winters, L. A . (1996) R egionalism versus multilateralism, Policy R esearch Working Paper No. 1687, Washington, D C: World Bank. Yamamoto, Y. and Kikuchi, T. (1998) Japans approach to A PE C and regime creation in the A sia-Paci c, in V. K. A ggarwal and C. E . Morrison (eds) A sia-Paci c Crossroads: R egim e Creation and the Future of A PE C , New York: St Martins Press, pp. 191211.

Downloaded by [Academia Sinica - Taiwan] at 18:28 18 March 2014

John R avenhill: E conom ic regionalism in the A sia-Paci c

333

Yamazawa, I. and U rata, S. (1999) A PE Cs progress toward the Bogor targets in trade and investment liberalization and facilitation: a quantitative assessment, Paper presented at the 25th Paci c Trade and D evelopment Conference, Kansai, 1618 June. Yunling, Z . (1998) China and A PE C, in V. K. A ggarwal and C. E . Morrison (eds) A sia-Paci c Crossroads: R egim e Creation and the Future of A PE C , New York: St Martins Press, pp. 21332.

Downloaded by [Academia Sinica - Taiwan] at 18:28 18 March 2014