August 19, 2000	atimes.com

Southeast Asia Apec: Trade saviors or talking heads? Compiled by Tony Allison Contents Summary A: Introduction B: Apec 2000 in Brunei C: Development of Apec and previous leaders' meetings D: The Apec Business Advisory Council (ABAC), the Committee on Trade and Investment (CTI) and Small and medium Enterprises E: Facilitating business F: Apec and Asean G: Apec and the Asian crisis H: Costly talking heads? Summary Since its inception in 1989, Apec has evolved into the primary regional vehicle for promoting open trade and economic cooperation. The goal of its 21 members is to advance Asia-Pacific economic dynamism and sense of community. The Asia-Pacific is one of the fastest growing regions in the world as it includes all the major economies of the region. Apec's members have a combined Gross Domestic Product of over US$16 trillion and nearly 50 percent of global trade. After a low start, bold steps were taken in 1994 to transform Apec's vision into what is known as the Bogor goal of achieving free and open trade by 2010 for developed member countries and 2020 for developing member countries. In 1996, the Osaka Action Agenda took a more concrete form with the formation of Individual Action Plans (IAPs) and Collective Action Plans (CAPs) for members countries, both of which outlined how Apec should move towards the Bogor targets. Apec is not a free trade agreementand since the onset Apec members have agreed that they will make commitments on a most-favored nation (MFN) basis, meaning that commitments are not preferential to members of the Apec forum only. Apec is not a negotiating body. It operates by consultation and consensus which recognizes the different stages of economic development and priorities of members. Apec has three main pillars: trade liberalization, trade facilitation, and economic/technical cooperation (Ecotech). This year's Apec leaders' meeting, the 8th since the body's inception, will be held in Bandar Seri Begawan, the capital of Brunei Darussalam, under the broad theme of "Delivering to the Community". Priorities for the event include continued efforts to advance Apec's agenda on trade and investment liberalization and facilitation; focus on the development of human resources with a particular emphasis on capacity-building; focus on the development of small and medium enterprises (SMEs) and a strengthening of work in the areas of information and communication technology. Apec has helped raise the international profile of the 10 Association of Southeast Asian Nations (Asean) economies. Critics, however, argue that Apec has conducted a concerted policy of undermining and replacing the regional economic policy of Asean with those of the World Trade Organization (WTO), which commits each individual nation to a free-trade global economy; the gradual elimination of barriers to trade and the liberalization of conditions for foreign investment, through global multilateral agreements in place of regional multilateral agreements. Apec has also drawn criticism for its lackluster role during the Asian economic crisis. It is pointed out that it could have been more instrumental in facilitating joint cooperative actions on the crisis in conjunction with the International Monetary Fund (IMF) and the World Bank (WB) to provide financing. In addition, Apec could have made agreements to help address the institutional weaknesses and structural deficiencies of the systems that were so glaringly exposed during the crisis. The high-profile Apec leaders' meetings have over the years attracted intense interest - and not necessarily for the right reasons. Apec has gained the reputation of being hostile to civil society participation in its deliberations and of doggedly pursuing an agenda of trade and investment liberalization to the exclusion of other issues. A strong body of opinion therfore believes Apec should shift its priority away from trade liberalization to focus more on its other two pillars - trade facilitation and Ecotech. The Apec targets for tariff reduction can be adopted in WTO negotiations. Apec can support trade liberalization by urging its members to keep them as domestic targets and pushing them in the WTO. A: Introduction Apec was established in 1989 as an informal dialogue group to better accommodate the growing interdependence among Asia-Pacific economies, and as a response to a perceived threat from the European Union (EU), or Fortress Europe. Apec also came as a response to growing trade disputes across the Pacific - Japan and the United States, China and the United States - which if left unresolved could have an adverse effect on future economic exchanges in the region. It has evolved into the primary regional vehicle for promoting open trade and economic cooperation. Its goal is to advance Asia-Pacific economic dynamism and sense of community. Despite the financial instability of 1997-98, the Asia-Pacific is one of the fastest growing regions in the world as it includes all the major economies of the region. Apec's 21 member countries have a combined Gross Domestic Product of over US$16 trillion and close to half of global trade and 55 percent of world income. It has been estimated that by 2020, Apec will include nine of the world's largest 15 economies. In the initial years, Apec made slow progress, with a breakthrough coming in Seattle in 1993 with the formation of the vision of creating an Asia Pacific Economic Community. Bold steps were then taken in 1994 to transform the vision into what is now known as the Bogor goal of achieving free and open trade by 2010 for developed member economies and 2020 for developing member economies. The roadmap on how the Apec vision and goal will be achieved was crafted in 1995. Known as the Osaka Action Agenda, it outlined the principles and areas for trade and investment liberalization and facilitation, and the elements and areas for technical cooperation. In 1996, the Osaka Action Agenda took a more concrete form with the formation of Individual Action Plans (IAPs) and Collective Action Plans (CAPs), both of which outlined how Apec should move towards the Bogor targets. Collectively known as the Manila Action Plan for Apec or Mapa, the action plans have brought Apec into a much sharper public focus as their implementation now characterizes the Apec process. The action plans are unique to Apec. Under this approach, each member country announces its own liberalization programs and implements them according to its own pace and domestic rules. However, each economy watches the implementation of each other's liberalization program and hence, pressure builds up for each member to implement its program so as not to lose face. The approach therefore collectively urges each member to join the liberalization program. 1997 was designated as the Apec's Year of Action as it marked the first year of implementation of the Mapa. The leaders' meeting in Kuala Lumpur in 1998 took place at a critical time as the East Asian member economies were battered with the financial crisis. Pushing its liberalization agenda through the Early Voluntary Sectoral Liberalization (EVSL) initiative in the wake of the crisis proved untimely as Apec failed to arrive at a consensus on the early liberalization of the proposed sectors. In the end, Apec's credibility was hurt. Services is also an important area where member countries have made significant commitments towards liberalization and facilitation. The sectors include financial services, telecommunications services, energy, transportation and professional services. As a result of the financial crisis of the past few years, member countries, particularly those in East Asia, have undertaken a number of measures to liberalize the financial sector and to ensure its continuing stability. These measures include the introduction of new regulatory systems, new frameworks for the entry of foreign banks and elimination of restrictions on market access. Apec also took the leadership in advancing in the World Trade Organization (WTO) the conclusion of the Agreements on Information Technology (ITA) and Basic Telecommunications. Many of the member countries have unilaterally opened up their telecommunications sector to foreign participation and hence, to more service providers. Apec has three main pillars: trade liberalization, trade facilitation, and economic/technical cooperation (Ecothech). Within these aims, Apec's general principles are: Mutual respect and equality Mutual benefit and assistance Constructive and genuine partnership Consensus building. The members: Australia, Brunei Darussalam, Canada, Chile, People's Republic of China, Hong Kong, -China, Indonesia, Japan, Republic of Korea, Malaysia, Mexico, New Zealand , Papua New Guinea, Peru, The Philippines, Russia, Singapore, Chinese Taipei, Thailand , United States and Vietnam. There are three official observers: The Association of Southeast Asian Nations (Asean) Secretariat, the Pacific Economic Cooperation Council (PECC), and the South Pacific Forum (SPF). The Apec process has many levels - leaders' summits, ministerial meetings, senior officials meetings (Som), three sub-committees (Committee on Trade and Investment, Economic Committee and Budget and Administrative Committee), working groups and other sub-committees, and a Secretariat based in Singapore. Separate meetings have also been organized for finance ministers, trade ministers, infrastructure ministers, education ministers and environment ministers. In 1998, Apec expanded its support base by including a ministerial meeting on women in its agenda. Recognizing the role of the business sector in the economic development of the region, Apec also established the Apec Business Advisory Council (ABAC) as its permanent business advisory body. Likewise, Apec maintains a close working relationship with the Pacific Economic Cooperation Council (PECC) whose tripartite membership of government, business and the academe is committed to promoting economic cooperation and market-driven integration in the Pacific Rim. Policy decisions are taken at the annual meetings of Apec. While Apec was conceived as a government-to-government forum, it has from the outset viewed service to the business community in the region as one of its primary objectives. Even though it has had limited success in actually moving forward on its agenda, there is general agreement that in its formative period up to 1995, it consolidated around a free trade agenda promoted particularly by the United States as well as by Canada, New Zealand and Australia. Nowadays, Apec is based explicitly on a government/private sector partnership, evidenced by the large numbers of CEOs who attend meetings parallel to the economic leaders' meeting each year. Apec is not a free trade agreement, and there are no plans to change this. Since the beginning, Apec members have agreed that they will make commitments on a most-favored nation (MFN) basis, meaning that commitments are not preferential to members of the Apec forum only. Apec is not a negotiating body. It operates by consultation and consensus, the so-called "mushawara approach" - consultative and collaborative approach which recognizes the different stages of economic development and priorities of members. B: Apec 2000 The first meetings of Apec in 2000, hosted by Brunei Darussalam, were held in the capital city of Bandar Seri Begawan from February 12-21 when Apec Senior Officials met to launch the new Apec year. Shortly afterwards, the Apec Business Advisory Council (ABAC) held its first meeting of the year in Bangkok February 24-27. At this meeting it adopted the theme "Facing Globalization the Apec Way." ABAC again met May 25-28 in Beijing. Apec's official process was highlighted by the meeting of Apec Trade Ministers in Darwin, Australia June 6-7 and the Apec SME Ministerial in Brunei June 21-23. In addition, Apec Senior Officials held their second meeting in Brunei May 25-June 3. Apec senior officials meet in Brunei from the 12-23 September. This year's Apec leaders' meeting, the 8th since the body's inception, will be held in Bandar Seri Begawan, the capital of Brunei Darussalam, under the broad theme of "Delivering to the Community". Brunei's Apec 2000 Website can be accessed at: http://www.apec2000.gov.bn. Schedule: 10-11 November: Senior Officials Meeting 12-13 November: 12th Apec Ministerial Meeting 13-15 November: Apec CEO Summit 13-15 November: Apec Business Advisory Council Meeting 15-16 November: 8th Informal Apec Economic Leaders' Meeting China is scheduled to host Apec 2001 in Shanghai. Mexico has offered to take over as hosts for 2002, as have Thailand and Chile for 2003 and 2004 respectively. Priorities in Brunei: The emerging signs of economic recovery in the region following the crisis that broke in mid-1997 present Apec with a greater prospect of working towards preserving and strengthening market opening in the region as well as sustaining economic recovery. For Apec 2000, Brunei Darussalam will map the direction with the objective of delivering on the various agreements to the people and the community Apec aims to serve. As hosts, Brunei Darussalam is consulting with member countries to consolidate the Apec agenda.The priorities set so far include: Continued efforts to advance Apec's agenda on trade and investment liberalization and facilitation. Focus on the development of human resources with a particular emphasis on capacity-building. A focus on the development of small and medium enterprises (SMEs), continuing to take into account input from the business community and looking into ways of enhancing Apec's relevance to businesses. With the increasing emergence of knowledge-based economies, a strengthening of work in the areas of information and communication technology, including growing problems of the "digital divide" in electronic commerce and information technology infrastructure. C: Development of Apec The initial years of Apec were focused largely on exchanges of views and project-based initiatives in an effort to advance the process of cooperation. Today, Apec serves as a forum of greater substance to build the Asia-Pacific community through achieving economic growth and equitable development through trade and economic cooperation. Previous leaders' meetings 7th meeting in Auckland, New Zealand, 1999: Leaders' discussions focussed on the challenges of sustaining domestic economic reform and liberalization as the region continued to recover from the financial crisis. In their Declaration, leaders also reaffirmed the importance of promoting open, transparent and well-governed markets (particularly domestic financial markets) and to achieving the goals of free and open trade and investment in Apec by 2010/2020, as they had agreed at the 2nd Apec Economic Leaders' Meeting in Bogor, Indonesia. Specifically, leaders endorsed: the recommendations of finance ministers on strengthening international financial architecture and domestic financial market supervision, bond market development and corporate governance; the launch at Seattle of a new round of multilateral trade negotiations in the World Trade Organization (WTO) as recommended by Trade Ministers; Apec principles to "Enhance Competition Policy and Regulatory Reform" and an initial work program aimed at supporting the further development of open, competitive and efficient markets in Apec member countries (in particular in developing member countries); a framework for the "Integration of Women into Apec". Leaders also underlined the importance of Y2K remediation and contingency planning. They called on trade Ministers to strengthen Apec's work in the area of trade facilitation, including through closer dialogue with business and greater peer review. They also called for more work on standards for banking supervisory regimes. Following the earlier special meeting of Apec foreign ministers, the leaders lent considerable momentum to international pressure on Indonesia to end the bloodshed and address the humanitarian crisis in East Timor, which culminated in the announcement in the early hours of September 13 by then President Habibie of Indonesia's willingness to accept United Nations peacekeepers. The challenge of building popular support for economic reform and further trade and investment liberalization was an important theme of the New Zealand year and is likely to remain so at the summit in Brunei. 6th meeting in Kuala Lumpur, Malaysia, 1998: Leaders focused on economic recovery in the region and Apec's response to the crisis. The meeting was preceded by the 10th Apec Ministerial Meeting. In their Declaration, leaders agreed to pursue a cooperative growth strategy to end the financial crisis. They pledged efforts to strengthen social safety nets, financial systems, trade and investment flows, the scientific and technological base, human resources development, economic infrastructure, and business and commercial links so as to provide the base and set the pace for sustained growth into the 21st century. Leaders adopted the Kuala Lumpur Action Program on Skills Development with the objective to contribute towards sustainable growth and equitable development while reducing economic disparities and improving the social well-being of the people, through skills upgrading/improvement. Ministers reviewed recent developments in the world economy, and expressed concern that the Asian financial crisis had had serious socio-economic implications fro growth, employment and poverty levels in member economies. Ministers tasked senior officials to intensify Apec's efforts to address the social impacts of the crisis as a high priority, and supported the work program of Apec finance ministers in strengthening the international and domestic financial systems. Ministers also called for intensified work on trade facilitation which encouraged the use of technologies and techniques that would help members to build up expertise, reduce costs and lead to better movement of goods and services. They approved the Kuala Lumpur Action Program on Skills Development to further intensify efforts towards upgrading the skills of the region's human capital and instructed Apec fora, particularly the Human Resources Development working group, to implement the Action Program. But Apec countries were not able to conclude successfully the tariff negotiations mandated under the Early Voluntary Sectoral Liberalization (EVSL) initiative; the tariff elements of these negotiations were transferred to the WTO. 5th meeting in Vancouver, Canada, 1997: Leaders focused on financial developments in the Asia-Pacific region. The meeting was preceded by the 9th Apec Ministerial Meeting. In their Declaration, leaders agreed to strengthen Apec cooperation in support of the International Monetary Fund. They endorsed the Vancouver Framework for Enhanced Public-Private Cooperation on Infrastructure, and called for further efforts to ensure long-term sustainability especially in highly populated urban centers. Ministers agreed on the EVSL initiative towards tariff reductions in 15 specific sectors, with work on nine to begin on a priority basis in 1998. The nine sectors comprised the sensitive areas of fish, fish products and forest products, as well as medical equipment and instruments, environmental goods and services, the energy sector, telecommunications and mutual recognition arrangement, toys, gems, jewelry and chemicals. The ministers launched cooperative work programs on emergency preparedness, electronic commerce and the impact of trade liberalization, and endorsed the creation of a new sub-committee to increase cooperation on economic and technical cooperation. Ministers also endorsed the Blueprint for Customs Modernization to streamline customs procedures by the year 2001. They encouraged further initiatives to bring labor, management and government representatives together to discuss human resource issues. 4th meeting in Subic, the Philippines, 1996: The meeting was preceded by the 8th Apec Ministerial Meeting, in Manila. In their Declaration, leaders endorsed the Manila Action Plan for Apec (Mapa) and reaffirmed their support of the WTO by calling for the conclusion of an information technology agreement (ITA). Leaders established six priority areas for strengthening economic and technical cooperation including: human resources, efficient capital markets, economic infrastructure, technologies of the future, sustainable development, and small and medium-sized enterprises. Leaders also met with the ABAC for the first time. Ministers adopted the Manila Action Plan for Apec (Mapa), integrating the Individual and Collective Action Plans (IAPs, CAPs) as well as progress reports on joint activities. Member countries confirmed their commitment to implement the IAPs and CAPs starting January 1, 1997, and to review progress and chart next steps in November 1997. 3rd meeting in Osaka, Japan, 1995: Their primary agenda was to initiate the work of translating the Blake Island vision and the Bogor goals into reality, as set out in the previous two meetings. The meeting was preceded by the 7th Apec Ministerial Meeting, also in Osaka. In their Declaration, leaders endorsed the Osaka Action Agenda, a blueprint for implementing their commitment to what have become the three pillars of Apec free and open trade and investment, business facilitation, and economic and technical cooperation. The ABAC was established to increase business sector involvement in Apec. Leaders also initiated the Feeep Program (food, environment, energy, economic development, population) to evaluate how to sustain the region's valuable resources in the context of growing population demands and rapid economic development. Ministers agreed to an Action Agenda that would facilitate the Bogor commitment. Apec members agreed to compile Individual and Collective Action Plans outlining unilateral and collective measures required to achieve free and open trade and investment by 2010/2020. Part of the Action Agenda deals with economic and technical cooperation based on principles of mutual respect and consensus-building to sustain growth and narrow regional disparities. The Partners for Progress (PFP) mechanism was introduced to support projects that promote economic and technical cooperation more efficiently in Apec, with a particular focus on projects supporting trade and investment liberalization and facilitation (TILF). 2nd meeting in Bogor, Indonesia, 1994: Leaders took this opportunity to exchange their views on where the economies of the region needed to go for the next 25 years. The meeting was preceded by the 6th Apec Ministerial Meeting. In the Declaration they issued at the end of their meeting, leaders pledged to achieve free and open trade and investment in the Asia-Pacific region by 2010 for developed members and 2020 for developing economies, thus responding to the call of the Eminent Persons Group and the Pacific Business Forum to establish timelines and targets. Ministers identified twelve Non-Binding Investment Principles for Apec economies to facilitate investment flows within the region. The ad hoc group on Economic Trends and Issues was transformed into the Economic Committee, chaired by Canada from the end of 1994 to 1998. A Policy Level Group on Small-and-Medium-Sized Enterprises (SMEs) was established to address the special needs of this business sector in the region. 1st meeting at Blake Island, near Seattle, United States, 1993: Leaders met for informal discussions on the newly established community of Asia-Pacific countries. This historical meeting was preceded by the 5th Apec Ministerial Meeting. Leaders shared their vision for Apec. In their Declaration, they stressed the importance for the new forum to strengthen cooperation and promote prosperity in the region while harnessing the energy of its diverse economies. They pointed to the reduction of trade and investment barriers as one of the vehicles to achieve these goals through the expansion of trade in the region. Ministers established the Committee on Trade and Investment (CTI) to increase cooperation on issues such as global trade and investment, flow of goods, services, capital and technology within the region and globally in a manner consistent with WTO principles. A Budget and Administrative Committee (Bac) was also created to handle budget and administrative issues. It is now known as the Budget Management Committee (BMC). D: The Apec Business Advisory Council (ABAC) and the Committee on Trade and Investment (CTI) ABAC is a permanent high-level advisory group created by Apec leaders in 1995. It is the primary mechanism for ensuring that the business sector plays a leading role in maintaining the momentum for the commitment to the Bogor Declaration which seeks free and open trade and investment in the region by 2010 for developed economies and 2020 for developing countries. To this end, each year ABAC produces a report with recommendations it presents to ministers and leaders. ABAC brings together three business leaders from each Apec country and ensures that Apec policies and directions are fully informed by the views and interests of the private sector. ABAC usually holds two to three meetings a year prior to attending the Apec Economic leaders' meeting. The year 2000 Chairman of ABAC is Brunei's Timothy Ong Teck Mong. Ong is the owner of the National Insurance Company (NIC) of Brunei. Before ABAC was formed in 1995, Ong was already The Committee on Trade and Investment (CTI) was established in November 1993 to coordinate Apec's efforts toward achieving the Bogor goals. The CTI works to reduce barriers and distortions that impede business activity in 14 specific areas as outlined in the Osaka Action Agenda. The CTI also provides an important regional forum for the discussion of trade policy issues. The CTI has five general responsibilities: Develop policy issues on the interrelationship of Apec economies within the global economic environment Work to eliminate impediments and distortions to the movement of goods, services, investment and technology Reduce transaction costs which affect the flow of trade and investment in the region Oversee trade and investment issues evolving from the work of the working groups Enhance the contribution of the Apec business/private sector in the evolution of trade policies, identification of barriers to trade within the region and possible solutions of mutual benefit to the region. In addition, the CTI also oversees the work done in the nine individual CTI sub-fora. The CTI sub-fora, which focus on more detailed issues within the 14 specific areas of the Osaka agenda, includes the Market Access Group (MAG), Group on Services (GOS), Investment Experts' Group (IEG), Sub-Committee on Standards and Conformance (SCSC), Sub-Committee on Customs Procedures (SCCP), Intellectual Property Rights Experts Group (IPEG), Workshop on Competition Policy and Deregulation (CPD), Government Procurement Experts' Group (GPEG), and the Informal Experts' Group on the Mobility of Business People (IEGBM). Until 1999, two other sub-fora existed under the CTI: the Informal Group on Uruguay Round Implementation (URI) and Rules of Origin (ROO) and the Dispute Mediation Experts' Group (DMEG). However, CTI representatives have agreed to realign work in these areas, placing all substantive work under the direct responsibility of the CTI Chair, leading to the disbandment of these two groups. Small and medium enterprises. Apec is committed to creating business environments that address the special needs of SMEs and to providing them with a forum for facilitating their transition to a liberalized trading system. In September 1997, Ministers at the 4th SME Ministers Meeting in Canada endorsed the Framework for Apec SME Activities for consideration by all Apec fora in designing and implementing SME-related activities. In 1998, they approved the Integrated Plan of Action for SME Development (Span). Span is designed to facilitate the development of entrepreneurs and enterprise development (with special attention to women entrepreneurs and micro-enterprises) through the use and application of technology. An Ad Hoc Policy Level Group specifically on SMEs (PLGSME) also exists in Apec. It was established in February 1995 following a recommendation made by SME ministers at their first meeting in Osaka in October 1994. Its original mandate was for two years, but it has since been extended: once in 1996 and again in 1998, thereby extending its mandate up to the year 2001. When the PLGSME met in Christchurch, New Zealand, in April 1999, it approved five new project proposals for implementation in 2000: Business matching Management capacity building Consumer education and protection A workshop on electronic commerce A workshop on financing and business management. The 7th PLGSME meeting took place in Lima, Peru, in March, 2000 while Brunei Darussalam hosted the 7th SME Ministerial Meeting in June. E: Facilitating business Easing the movement of goods, services and people across borders is at the heart of Apec's mandate. The ABAC is the channel for private-sector ideas on key areas for attention and cooperation among governments. Customs: Faster clearances and more consistent evaluations. An average trade transaction currently requires 40 documents, 200 data elements and the re-keying of 60 to 70 percent of the data. To eliminate this time-consuming process, Apec is aiming at paperless trading by 2005 for developed economies and 2010 for developing economies. APEC is helping members to reach this objective by improving electronic access for business to markets through its Blueprint for Action on E-Commerce. The blueprint provides a guide to the legal, regulatory, technical, operating and trading environments required by business to adopt paperless trading. Member economies are also working towards the adoption of a uniform electronic communications system for regional customs computer networks. Already, Apec has provided technical assistance to help some member countries which had infrastructure limitations to finally adopt the UN-EDIFACT, a communications system that was developed by the United Nations in 1985. With Apec assistance, countries such as Brunei, Chile, China, Hong Kong, Indonesia, Mexico, the Philippines, Papua New Guinea, Thailand and Vietnam now benefit from this system. Apec has been providing training and technical assistance to help its members implement the internationally-recognized WTO Valuation Agreement in order to eliminate distortions in customs levies and to make customs evaluations more consistent in the region. Except for Russia, the WTO Valuation Agreement CAP project was completed in December 1999. Fresh seafood trade: The Apec Manual on Air-shipped Live and Fresh Seafood provides customs, health and technical guidelines on preparing and packaging live and fresh seafood air-shipments into Apec markets. Apec is also working on cutting wastage and transport times. With the demand for these products growing worlwide, the contribution that this makes to facilitating trade for fish harvesters, importers, wholesalers and retailers in APEC countries, particularly recent entrants (most of whom are small enterprises) is significant. The current value for trade in live fish alone is estimated at over US$ 1.2 billion. Government procurement: Easier access to these markets. Government procurement markets in the region are worth about US$2 billion. Through the Apec Principle on Government Procurement, Apec provides more open and consistent procurement systems and practices for firms competing for government contracts. Investment in energy infrastructure: The Apec Manual of Best Practice Principles for Independent Power Producers intends to give energy suppliers information on institutional and regulatory structures, tender/bid processes and evaluation criteria, power purchase arrangements and associated tariff structures, and financing, so that they can make better informed investment decisions. The Apec Energy Working Group has focused on promoting transparency and predictability of investment conditions (particularly electricy/natural gas) to promote a level playing field for foreign investors. Professionals: Easier saleable services for engineers, architects and accountants. The Apec Directory of Professional Services provides fast and easy access to information on the requirements and procedures for qualification, licensing of individuals and firms, and establishment of a temporary or permanent presence in APEC countries. Standards: More uniformity for electrical goods, food, machinery and rubber products. Manufacturing products under different standards, and meeting various labelling and testing requirements for each Apec market, can be expensive for businesses. Apec therefore encourages its members to align domestic standards with relevant international ones by questioning the existing variations and suggesting cases where economies can get rid of them. Members have commmited to reach uniformity of standards in Apec by 2005 in four priority sectors: electrical and electronic appliances, such as televisions, radios, videos and air-conditioners; food labeling; rubber gloves and condoms; and machinery. Telecommunications equipment: Endorsed in 1997, the Apec Telecommunications Mutual Recognition Arrangement (MRA) has been streamlining trade in telecommunications as well as cutting the cost of most telecommunications devices such as telephones, fax machines, modems and radio transmitters. At present it covers export product compliance in Australia, Canada, Japan, Hong Kong, Singapore, Chinese Taipei and the United States. The MRA ultimately aims at getting the automatic approval for a product accepted in any member country, based on an established testing process and regulatory arrangements. Apec estimates that the MRA will thus save five percent of the cost of new product placement, cut six months off the placement of new products in markets, and reduce marketing costs for new products by up to 30 percent. Trade in telecommunications equipment in the region is estimated at $US50 billion a year. Transportation: Reduce barriers to trade in the automotive sector. Apec has initiated the Road Transport Harmonization Project to reduce barriers to trade in the automotive sector. It is a multi-phased effort that aims at promoting standards harmonization taking into account traffic safety and environmental protection needs. Apec has also endorsed a Model Mutual Recognition Arrangement on Automotive Products to promote bilateral and multilateral arrangements between Apec members on the mutual acceptances of standards. Travel: Apec business card. Apec Business Travel Card holders are entitled to free, multiple entries to participating economies for up to three years. The card enables them to bypass the restrictions which apply to other travellers. It is the size of a credit card, with a machine-readable strip which contains the holder's details and the card expiry date. Apec cardholders are cleared before arrival so they can fast-tracked through a special Apec card lane on arrival. So far, more than 2,000 people have been issued with a card. Australia, Chile, Hong Kong China, Malaysia, New Zealand, the Philippines and South Korea are participating in the initiative. When the Apec Business Advisory Council met in February 2000, its Business Facilitation Task Force agreed to promote the expansion of the Travel Card scheme to 12 members (to include possibly Peru, Brunei, Singapore and Papua New Guinea) in the coming year. The Osaka Action Agenda of November 1995 commits Apec members to enhance business mobility by: Exchanging information on regulatory regimes Streamlining the processing of short-term business visitor visas Easing procedures for temporary residence of business people Maintaining a dialogue on these issues with the business community. The Experts Group on Mobility of Business People is the main forum in Apec where further work on these issues is discussed. The group also seeks to engage the Apec business community in general and ABAC more specifically in the group's agenda and continued efforts to improve business mobility in the region. Apec's work on mobility of business people focuses on technical cooperation to help members implement advanced border management techniques. In 1999, technical cooperation between Apec member countries aimed at raising their respective capacity to detect document fraud as a means to streamline entry for legitimate business travelers. Training sessions were organized in this regard by Canada, as well as Australia, Hong Kong and the United States. Economies participating in these and other sessions included Brunei Darussalam, China, Chile, Indonesia, Korea, Malaysia, Mexico, Papua New Guinea, Peru, the Philippines, Russia, Singapore, Chinese Taipei and Vietnam. F: Apec and Asean Apec has raised the international profile of the 10 Southeast Asian economies. This is best reflected in the current practice of Apec holding its annual meeting of the heads of the Apec member economies every other year in a Southeast Asian country. Similarly, Apec's East Asian "culture" is largely Southeast Asian. In many ways Asean's agenda for increased economic cooperation and integration in the Asean region follow Apec's agenda. Critics, however, argue that Apec has conducted a concerted policy of undermining and replacing the regional economic policy of Asean with those of the WTO, which commits each individual nation to a free-trade global economy; the gradual elimination of barriers to trade and the liberalization of conditions for foreign investment, through global multilateral agreements in place of regional multilateral agreements. In a recent speech, Rodolfo C. Severino, the Secretary-General of Asean, confirmed that Asean remained committed to sustaining regional and global trade and investment liberalization. "But it also insists on a greater balance in the agendas of both Apec and the WTO. This means taking into account the concerns of their developing-country members. It includes building the capacity of the developing countries to participate in the global liberalization process in a way that gives them real benefits. More than half of Apec's member-economies, after all, are developing countries, accounting for the bulk of the population of the Asia-Pacific," Mr Severino said. "The preponderance of developing-country members is even greater in WTO. These countries will continue to take a positive view of trade and investment liberalization and give it more enthusiastic support only if they are able more fully to partake of its fruits. This includes their technical and organizational ability to do so. ASEAN has a strong interest in seeing Apec continue to be a force for trade and investment liberalization not only in Asia-Pacific but in the world. But Apec can sustain this role only if it takes the lead in ensuring a more even sharing of benefits among its members. This means, for one thing, a greater balance between liberalization and what in Apec is known as economic and technical cooperation or Ecotech. Only in this way can Apec maintain its full relevance to its developing member-economies, Mr Mr Severino added. G: Apec and the Asian crisis The economic crisis that broke in Thailand in mid-1997 and quickly spread throughout the region tested Apec, and a widespread feeling is that the forum was found wanting. This is, however, not entirely surprising. The trigger for the crisis was in the financial realm, an area which until very recently was not at the core of Apec. Moreover, balance of payments support and related policy issues are mainly the responsibility of the International Monetary Fund (IMF) and to a less extent, the World Bank (WB). Nevertheless, Apec could have been more instrumental in facilitating joint cooperative actions on the crisis in conjunction with the two leading multilateral institutions to provide the necessary adjustment financing. In addition, Apec could have made agreements to help address the institutional weaknesses and structural deficiencies of the systems that were so glaringly exposed during the crisis. The magnitude of the financial requirements of the affected countries stretched the resources of the IMF and the WB although a number of Apec countries, led by Japan, contributed substantially to the pooling of funds for the economic support programs for Thailand, Indonesia and South Korea. However, in contrast to the Mexican bailout in the mid-1990s, the United States contributed less to the pooling of funds for the bailout programs for the adversely affected East Asian countries. Apec has tackled institutional and policy coordination issues. The Apec finance ministers have agreed to surveillance mechanisms and they have . also discussed a proposal for a code of behavior for hedge funds, which have been blamed for the sharp movements in capital flows leading to the sharp devaluation of the affected East Asian currencies. However, there is a wide disparity of perspectives among the Apec members on the issue of controlling short term capital flows in the region, as best exemplified by Malaysia (anti) and the United States (pro). Nevertheless, the credibility of Apec has been affected by the crisis. In addition, there was the ill-timed focus of Apec on the Early Voluntary Sectoral Liberalization (EVSL). EVSL was meant as an Apec drive to push further trade liberalization in the Apec region. For Apec to push trade liberalization further during an economic crisis affecting a significant group of its economies (including the lingering recession in Japan) flies in the face of historical experience, especially where the push for liberalization includes politically sensitive sectors. H: Costly talking heads? Apec has drawn considerable criticism over the years, with it variously being described as A Perfect Excuse to Chat, or in the words of former Australian Foreign Minister Gareth Evans, who argued that it is neither fish nor fowl and that it is "four adjectives in search of a noun". Apec has evolved in an environment of cultural and economic diversity, and hence genuine reform of trade and investment remain challenging at the best. The Asia Pacific region has always had significant tensions over trade, with increased use of non-tariff barriers and a trend towards regional trading blocs. Traditionally, some countries in the region have had very closed markets. The grouping is complicated by the very size of the collective economies; the inclusion of several Asian countries with unresolved issues (China and Chinese Taipei); and the strong diversity among member countries. The United States and Japan are two key players in Apec with the largest bilateral trade in the world, yet their relationship is complex as they have different forms of capitalism. There are also significant differences in political ideology, culture, and degree of intervention in the economy by the government. Other major trading blocs such as the North American Free Trade Area (NAFTA), Mercosur (Common Market of the South), and the European Union (EU) are much more homogeneous. There is a mixture of Eastern and Western philosophies and cultures in Apec, which has the potential to reduce the effectiveness of any actions of the organization. There is no single issue that unites Apec beyond support for global trade liberalization, and even this relies on diplomatic pressure. The internal politics of Apec are important. This is manifested in the lack of a clear and acceptable leader within the group. Japan and the United States are the largest nations, and it is logical that they would figure in any leadership debate. However, other Apec countries, particularly Asean countries, are wary of the power and influence of these two countries, and believe that their own nations might be disadvantaged. Other countries lack the desire or clout to take a clear leadership role. However, given that consensus is the model by the Apec nations, rather than the legalistic WTO type of approach, the notion of leadership becomes less important. Early debates about Apec centered largely on whether or not regional liberalization would create a "free-rider" problem, with non-members, such as the European Union, benefiting from Apec's liberalization efforts without having to reduce their own trade barriers. Generally, this debate pitted the Americans against the Australians, who believed that the benefits of unilateral liberalization outweighed any free-rider problem. However, the debate has turned out to be hypothetical as there have been no cases of Apec members unilaterally removing trade barriers on a region-wide basis, although individual Apec countries have introduced tariff and non-tariff reduction measures in their annual individual action plans. But so far there is little evidence that tariffs among Apec members are any lower than they would be if Apec did not exist. There is nothing wrong with the Bogor targets and tariffs theoretically can easily be brought to zero or near zero within the10 and 20 years as envisaged. Critics have suggested, though, that most Asian governments have largely united behind the Japanese strategy of talking up free trade and free markets while in practice aiming to blunt and eventually killing the move towards full tariff liberalization While the Bogor targets might be realistic, the methods adopted in Apec to achieve them are not. The idea was that Apec members would act in concert to voluntarily cut trade barriers. If it were so easy to cut trade barriers there would be no need for international agreements, no WTO. Agreements with binding rules are made deliberately to enable governments to sell trade liberalization at home. Yet the leaders of Apec believe that they can collectively liberalize without binding rules. The EVSL initiative in 1997-8 was as close as Apec has ever come to the demand-and-offer trade negotiating approach typical of the WTO. The EVSL initiative collapsed because Apec members could not agree, not just on the tariff elements, but also on the very nature of the negotiations which seemed to contravene Apec's voluntary and consensus-based approach to decision making. Opposition: The high-profile Apec leaders' meetings have over the years attracted intense media interest - and not necessarily for the right reasons. Apec has gained the reputation of being hostile to civil society participation in its deliberations and of doggedly pursuing an agenda of trade and investment liberalization to the exclusion of other issues. Beginning in 1993 at the Seattle summit, non-governmental organizations, including labor organizations, and human rights activists began to organize to protests against Apec's agenda. These have often been marked by rowdy and at times violent demonstrations. Opponents charge that Apec promotes an anti-people, anti-environment form of development which must be vigorously opposed in favor of building alternatives that do not subordinate people's needs to those of transnational corporations. Apec's members are referred to as "economies," not nations. This enables Chinese and Taiwanese representatives to sit at the same table - making Apec the only international arena in which officials from Beijing and Taipei can talk about common concerns and compare notes on economic strategies. It also points to a problem that goes to the essence of Apec's awkward nature. By resorting to deceptive language to circumvent internal diplomatic problems, Apec endeavors to divorce its overarching trade liberalization and deregulation agenda from any social or political context. Thus it turns a blind eye to principles essential to the international community, as embodied in the charters of organizations such as the United Nations. In 1995 affiliates of the International Confederation of Free Trade Unions (ICFTU) in Chile, Mexico, the US, Canada, New Zealand, Australia, Papua New Guinea, Singapore, Malaysia, the Philippines, Thailand, Hong Kong, Chinese Taipei, the Republic of Korea and Japan and sectoral groupings from the international trade secretariats (international industrial federations), created the Asia Pacific Labor Network (APLN) with the specific purpose of monitoring and lobbying Apec. Apec supporters have argued that increased trade leads to a more efficient allocation of resources, thus enlarging the pie that citizens are able to share, as impediments to the free flow of goods, services and capital across national borders are erased. A key element of this argument is that differences in labor standards between countries are a function of the comparative advantage among states, and so ought not to be subject to external control. Consequently, attempts to address exploitative conditions should not occur within bodies whose role is to negotiate or manage international trade arrangements. Those who hold this non-interventionist view frequently contend that introducing human rights-related labor issues into trade discussions amounts to peddling protectionism. The counter argument is that as a stand alone agenda, trade liberalization is inherently unbalanced, amounting to a one-legged stool. What is required to ensure improved living standards and democratic development for the bulk of the populace is sustained progress on civil, political, social, economic, and cultural rights. Outlook A strong body of opinion believes Apec should shift its priorities away from trade liberalization to focus more on its other two pillars - trade facilitation and economic/technical cooperation (Ecotech). Apec does not have effective machinery for trade liberalization and does not need it. The Apec targets for tariff reduction can be adopted in WTO negotiations. Apec can support trade liberalization by urging its members to keep them as domestic targets and pushing them in the WTO. However, Apec can facilitate trade and economic and technical cooperation better than the WTO. Trade facilitation has to do with behind-the-border issues that influence the cross-border flow of goods and services, such as common product standards, customs procedures, and domestic regulatory frameworks - cutting unnecessary red tape. Officials estimate that Apec's trade liberalization and facilitation so far had raised the region's annual gross domestic product by US$75 billion, or 0.4 percent. Of this, two-thirds came from business facilitation measures. Ecotech has been overshadowed, probably because the trade benefits of Apec have been oversold for political reasons. Developed member economies have viewed Ecothech as a trade-off or concession to the developing members in order to secure their continuing commitment to the trade agenda. However, the focus on trade and investment liberalization at the expense of Ecothech, most notably in the failed EVSL exercise, has eroded the sense of shared economic interests and mutual benefit to be derived from participation in APEC. Ecotech is focused on sharing best-practice information and expertise, and pooling resources to address regional bottlenecks and skills gaps. However, the vagueness of the concept, and its seeming inability to produce tangible results, has made it hard for many members to fully embrace it into the Apec agenda. If Apec is to seriously take on the role of pooling best practice information and developing policy options, it must approach the task in a much more systematic manner than in the past. In this regard, Apec is perceived to have a public relations problem. It has promoted trade liberalization so heavily that many people think that is all it does. The reality is that most of the work in Apec is not trade liberalization. There are substantial programs of policy development in a number of sectors, ranging from telecommunications to energy. As the only regional economic institution Apec is worth preserving, particularly if it can catalyze subregional (e.g., Asean, Northeast Asian) cooperative efforts on sustainable development. Notably, the key players such as the United States could gain support for a sustainable development agenda by stepping back from its liberalization-above-all-else approach, explore instruments to regulate short-term capital flows, provide resources to address the social and ecological costs of the recent economic crisis, and increase its support for capacity-building efforts, particularly at the sub-national level. Otherwise, Apec should be allowed to die a painless death. (Special to Asia Times Online)

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