[ANALYSIS] APEC Searching for Relevance

Makiko Yamazaki

Pusan, South Korea, Nov. 19 (Jiji Press)–This year’s summit of the Asia-Pacific Economic Cooperation forum highlighted the regional forum’s struggle to redefine its role on the global trade front.

Aiming to demonstrate afresh APEC’s relevance in promoting open trade, leaders of its 21 member economies adopted a special statement at the two-day summit that ended here Saturday, calling for global efforts to successfully conclude the Doha Round of trade liberalization negotiations under the World Trade Organization by the end of 2006.

“We are ready to provide strong political leadership and the commitment” necessary to produce, at a key WTO ministerial meeting in Hong Kong in December, “a sound platform” for the completion of the WTO round, the statement said.

But APEC’s plea alone would not suffice in expelling the gloom over the Hong Kong meeting, which could possibly fail to produce tangible progress for the Doha Round conclusion due to the impasse over farm trade issues.

Sources close to the WTO negotiations say that the APEC statement’s impact on the Doha Round process will only be marginal, pointing out that APEC is the kind of group that does what the WTO tells it, not vice versa.

APEC, created in 1989 as a forum pursuing the liberalization and facilitation of trade and investment in the region, accounts for about 60 pct of the world’s gross domestic product and nearly half of global trade. Losing Edge

APEC’s weakening presence in the international community is now evident as bilateral free trade agreements have grown a popular vehicle across the globe to help achieve trade liberalization between countries involved.

This year’s APEC summit was also overshadowed by the upcoming first East Asia Summit among the 10 member countries of the Association of Southeast Asian Nations and its three dialogue partners–Japan, China and South Korea–plus India, Australia and New Zealand.

The East Asia Summit, to be held in Kuala Lumpur on Dec. 14, could be a first step toward establishing a new economic bloc among them that would be called the East Asian Community. Such a bloc could be an alternative to APEC for East Asian nations.

APEC’s consensus-based but non-binding approach is often blamed for its slowness in promoting open trade and economic cooperation.

“APEC members talk big, but they don’t take any action,” says a researcher at a Japanese government think tank.

APEC could have regained credibility if the Pusan roadmap, which was endorsed at the summit for the promotion of the region’s trade and investment liberalization, had contained concrete steps to ensure the attainment of the ambitions.

Actually, however, the roadmap failed to clarify specifics on how to achieve the so-called Bogor Goals, which were set at an APEC summit in Bogor, Indonesia, in 1994. Under the Bogor initiative, developed member economies of the regional forum are required to achieve trade and investment liberalization by 2010 and developing members by 2020.

“Zero tariffs are like pie in the sky,” a Japanese government official says. Instead of discussing such unrealistic goals, APEC should focus on improving investment conditions in the region to better respond to the needs of businesses, the official says. Its Role Should Also Be Recognized

Still, proponents of APEC say the value of the forum should not be ignored, noting that it provides leaders of member economies with opportunities to meet together on a regular basis and hold bilateral talks.

This year’s summit, for example, provided Japanese Prime Minister Junichiro Koizumi the first opportunity to talk with South Korean President Roh Moo Hyun since he angered South Korea with his latest visit to Tokyo’s Yasukuni Shrine that honors Japanese Class-A war criminals among the war dead on Oct. 17.

APEC might have little relevance in lowering tariffs, but it boasts an impressive record in accelerating the cross-border movement of goods, services and people through reductions in costs, some say.

APEC’s efforts in the field, called trade facilitation, include simplifying time-consuming customs procedures, harmonizing product standards and simplifying the procedures for short-term business visa issues through the launch of APEC business cards.

“APEC is complementary to the WTO as it aims to move forward in the areas that are not covered by the WTO,” says Nobuto Iwata, director of Aoyama Gakuin University’s WTO Research Center. “The WTO sets minimum goals for member nations to comply with, but APEC economies are trying to do something extra to promote trade.”

Iwata adds, “APEC-set goals might be too idealistic, but it is always good to have a place where countries can seek ideals.”

There is no doubt that 16-year-old APEC stands at a crossroads, analysts say. It remains to be seen whether the forum will let its presence decline further or regain its clout, they say.END