Ever since 1993, when U.S. President Bill Clinton turned the annual meeting of the Asian Pacific Economic Cooperation forum into a gathering for heads of state, critics have had a field day. Expectations have usually outpaced results, forcing participants to justify their attendance at what has been derided as a “two-day photo op.” Such cynicism comes easily, but it is misplaced. APEC matters, and the reason why is simple: Its 21 members account for half the world’s population, 45 percent of world trade and $16 trillion in economic output. Any forum that allows them to hammer out common positions on important issues is to be welcomed. And even if no single stand is developed, the exchange of views lays the groundwork for eventual agreements.
This year’s meeting went according to script. Participants agreed to support a “millennium round” of trade negotiations that would produce a wide-ranging agreement within three years. The declaration pledges to pursue a “broad-based and balanced agenda” that would yield deep cuts in tariffs on industrial products, agriculture and services. Members vowed to increase market access for all trade-round participants, especially emerging economies. They backed early entrance to the trade group for APEC members not yet in the World Trade Organization. They also promised to increase transparency in their own economies.
Detractors are quick to note what the APEC meeting did not accomplish. The declaration omits specific measures for trade liberalization or for increasing transparency. There was no deal on China’s admission to the WTO, even though negotiators from Beijing and Washington held talks on the fringes of the meeting. Nor did the group produce a statement on the crisis in East Timor, despite the proximity of the turmoil and its relevance for almost all the attendees.
Most of the criticisms can be dismissed fairly easily. Since APEC is a forum for economic cooperation, the crisis in East Timor — a political problem — is beyond its ambit. Hopes for a deal between the United States and China were misplaced: After the events of the last few months, progress should be the yardstick, not a final agreement. Insofar as APEC provides an opportunity and venue for talks, it is useful.
But APEC’s biggest contribution continues to be the promise it secured three years ago at the summit held in Jakarta. Then, the group pledged to achieve free trade and investment among its developed members by 2010 and by 2020 for its developing ones. While there has been stuttering progress, the commitment to liberalization remains. Even without a binding agreement, the moral force of that pledge — and the efforts of other nations to move forward — will motivate otherwise reluctant governments to liberalize.
Finding common ground will always be difficult for a group with more than 20 members. The political costs of economic liberalization only magnify the challenge. Overcoming the different perspectives requires confidence building; that is why the often-derided “technical measures” can play a great role in APEC. They are the framework upon which future cooperation will hang. For example, Japan will host a meeting of energy experts from APEC members later this month to discuss ways to tackle the Year 2000 computer bug.
It is tempting to dismiss such projects as marginal, but that is precisely the point. After a decade, there is no more room for illusions about APEC. Hopes that it would provide a regional counterweight to the European Union or the North American Free Trade Agreement have vanished. Since the onset of the region’s economic crisis in 1997, divisions among ASEAN members — in many ways, APEC’s core — have widened. The cost of the cure, in the form of International Monetary Fund bailout packages, has forced governments to rethink the wisdom of liberalization policies previously taken for granted. Malaysia’s willingness to flout economic orthodoxy — and its apparent success — have dealt a blow to the drive to further reform national economies.
As the world heads into a new round of trade negotiations, it is critical that there be a push for continuing reform. To merely assume that there is widespread support for such measures is a big mistake. Common ground must be found; consensus must be created. That is APEC’s chief task in the months and years ahead. East Asia’s economic successes were an example for the rest of the world. The setbacks of the last few years result, not from the liberalization process, but from the failure to complete that process. That lesson is important for the WTO. APEC members are now pledged to teach it.
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