Author: Peter McCawley, ANU Indonesia Project

Finance Minister Sri Mulyani was in Australia recently (Monday 4 August) to attend an APEC Finance Ministers meeting in Melbourne.  The issues discussed at the meeting may (or may not) signal an important change in approach to some aspects of regional economic policy-making in the ASEAN region.

For a long time APEC meetings have tended to focus on “at the border” trade issues.  Top priority issues have been tariffs and other border restraints on trade.  Much of this discussion has proceeded as if all the action took place at the border!  But recently there has been an increasing awareness in APEC meetings that other “non-border” barriers to trade might perhaps be important as well.  Some people who have worked on the broad range of development issues in Asia for a long time would say “About time, too!”

The main outcome of the APEC Finance Ministers meeting in Melbourne was a clear recognition that “behind the border” problems impose important restraints on international trade.   This is an important step forward.  However one wonders whether the APEC club fully appreciate what they are biting off by broadening the agenda in this way.  One hopes that they do.

The basic problem with widening the APEC debate to “behind the border” issues is that a considerable range of domestic economic policy issues are suddenly relevant.  And many of the issues are very difficult.  They include such things as competition policy, infrastructure policy, domestic regulatory issues, legal reform, capacity-building to handle these issues, and so on.  The truth is that a number of the ASEAN countries simply do not have the administrative or financial capacity to cope with a focus on these issues.  Rich APEC countries need to be very realistic in setting targets that APEC might reasonably attain.  More realistic than in the past.