The test of any institution is its response to crisis. By that benchmark the annual meeting of leaders of the Asia-Pacific Economic Cooperation (APEC) forum is found wanting. This year the 21 assembled grandees, whose countries represent more than 50 percent of global wealth, vowed to “act quickly and decisively” to battle the worst financial crisis since the Great Depression.
Substance, however, was lacking. For the most part, they merely backed the decisions of the Group of 20, a similar group of nations — whose membership overlaps substantially with that of APEC — that met recently in Washington and outlined a real response to the crisis. That raises a fundamental question: Should we spend our time and money on an APEC cheerleader?
Spanning both sides of the Pacific Ocean with members that include some of the world’s richest nations and some of the poorest, as well as some of the largest and smallest economies on the globe, finding APEC’s lowest common denominator has always risked settling for too little. Members are torn between competing missions: pushing aggressive plans for the region (such as an Asia-Pacific Free Trade Agreement) or promoting low-level capacity building programs. More recently, a new divide has emerged between governments that promote a more security-focused agenda (chief proponent of this view has been U.S. President George W. Bush) and those that want to get back to basics such as trade and economic policy.
The result has been a series of high-level meetings that offer boilerplate rhetoric exhorting members to back various initiatives, but little in the way of concerted action. Progress has been made at the working level, but this hardly justifies the photo opportunity at the annual summit.
This year’s final declaration identified the usual list of concerns: regional integration, structural reform, the negative impact of growth and development, corruption and building capacity. The security agenda embraced the standard pledges to combat terrorism, increase trade security and better prepare for disasters. Efforts to fight global warming, increase energy security and promote clean development also got their due. This year’s spike in food prices made food security an inevitable element of the final declaration: The leaders pledged to “expand food and agricultural supply in the region” through the use of “market forces to encourage new investment in agricultural technology and production systems.”
The worst financial crisis since the Great Depression spurred the leaders to adopt an additional statement. This document supports the Washington Declaration from the G20 meeting that Mr. Bush hosted a few weeks ago, and specifically endorses the Action Plan for the reform of financial markets that they agreed on. Consistent with that position, the statement embraces the idea that “the principles of free trade and investment rules and open trade will continue to guide global growth, job creation and poverty reduction.” The leaders promise to refrain from any protectionist measures for the next 12 months. Keeping that promise will be tough: One government’s protectionism is another country’s effort to stave off real hardship.
The leaders called for more APEC participation in international financial institutions. Japan repeated its promise to provide $100 billion to the International Monetary Fund for emerging economies, a pledge that went unmatched. And, as at all meetings of the last few years, they called on each other to do more to make the Doha Development Round of trade talks a success.
That last statement makes plain APEC’s shortcomings. APEC members have the capacity to push a Doha deal; among them are governments that have blocked agreement. The gap between their rhetoric in APEC and their actions at trade talks raises questions about sincerity and commitment. Sending trade ministers back to Geneva next month for another round of talks looks like the triumph of hope over experience: It is hard to believe that negotiators are prepared to make thus far impossible political compromises when economic circumstances are more dire and the costs of adjustment even harder to absorb.
APEC has its uses. Building capacity at the government level, promoting the dissemination of best practices for both the public and private sectors, and creating regional networks that will develop constituencies for free and fair trade are invaluable contributions and essential to the Asia-Pacific region’s march toward prosperity. But the larger message from the most recent meeting, especially when contrasted with that of the G20, is that APEC has not shown that it can inspire or lead its members. The failure to acknowledge that fact, or to remedy it, risks creating expectations that APEC cannot meet.
To maximize its effectiveness, APEC should focus on what it does best — trade and economic policy. If leaders are not prepared to put together action plans that require real action — and implement them — then maybe they should spend their time elsewhere. It is not clear that the Asia-Pacific region needs a high-level meeting of cheerleaders.
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