APEC and community-building in the Asia Pacific
December 8th, 2009Author: Andrew Elek on behalf of the Australian Committee for Pacific Economic Cooperation (AUSPECC)
On December 4-5, 2009, the Australian Government convened a ‘one-and-a-half track conference’ of prominent government officials, academics and opinion makers. In this week’s digest, Peter Drysdale reports on the meeting which discussed the form an Asia Pacific community might take and the role of existing forums (including APEC) within evolving regional institutional architecture.
Drysdale and Hadi Soesastro have made a useful recommendation for how Prime Minister Rudd’s proposal, could be advanced by a council of the leaders of the G20 members of APEC, together with India.
As Gary Hawke explained in June, constructing a sense of community needs more than drawing organisation charts or caucusing within caucuses; it also needs to achieve legitimacy by working towards significant shared objectives to demonstrate the value of cooperation.
The Australian committee of the Pacific Economic Cooperation Council (AUSPECC) offers the following for consideration, among other potential objectives:
- the region should lead the design of a new regime for improving WTO trade rules, including those related to the response to climate change, and
- the region should set the global standard for deep economic integration by defining its own model of a single market.
PECC, the long-standing second-track network which helped to launch APEC, stands ready to help develop detailed policy options to implement these suggestions.
Global issues
Asia Pacific governments will benefit from a mechanism to project shared regional interests into the new G20 forum. One important interest is to develop policies which anticipate significant pressures for protectionism.
The bulk of the massive economic and strategic adjustments to the rise of new China and India is yet to come. The potential pressures for trade restrictions to slow down the adjustment to economic giants will be much greater than those generated by the 2008 global financial crisis.
The potential use of trade sanctions to enforce prospective commitments to limit greenhouse gas emissions adds to the risk of renewed protectionism.
No matter how the Doha Round of trade negotiations is eventually concluded, there will be much unfinished business. More work will be needed to reduce the extensive scope for potential trade restrictions which are compatible with formal WTO disciplines.
Options include:
- narrowing the gaps between applied and bound tariffs.
- avoiding the emergence of new sensitive products which become heavily protected, by building imaginatively on the WTO’s information technology agreement precedent: all new products can be immunised against protectionists.
- agreeing on WTO disciplines on any trade measures linked to climate change.
The Doha Round may be the last we see which is so comprehensive. The future is more likely to be a series of connected, but limited, sets of negotiations. The Asia Pacific, through its participation in the G20, can be the architects of this new global regime.
Anticipating some agreement to limit greenhouse gas emissions, Asia Pacific governments could also design policy options to create rewards for adhering to those commitments, rather than relying heavily on sanctions. There are ways to use the financing provided to support technological change to create strong incentives.
A 21st century vision for APEC – a single market
The time has come for APEC to set out a new longer term vision that reflects experience to date and the remarkable change in the nature of international commerce and economic integration since APEC was first conceived as a voluntary process of cooperation modeled on ASEAN.
APEC’s core objective remains building of confidence in integration while reducing its cost and risks, but the relative importance of obstacles has shifted.
Traditional border barriers to trade in some sensitive products remain costly, but affect a rapidly shrinking part of international commerce.
Today, it is more efficient to concentrate on:
- problems of communications and logistics, often linked to security concerns;
- lack of efficiency, transparency, needless divergence and sometimes arbitrary implementation of economic policies in different economies.
Cooperation to deal with these problems is a matter of encouraging gradually better policy making, including policies for many areas which are well inside the borders of our economies.
Progress will need thoughtful, cooperative policy development, with resources for capacity building, including the capacity of economic infrastructure and the ability to capture the benefits of structural change.
The effective constraint on collective action to create a more commerce-friendly domestic as well as international environment is not political will. It is limited capacity to design and implement the necessary policy reform. And capacity cannot be created by negotiation. For example, easier movement of business people cannot be achieved by negotiating statements of good intentions.
High-level political attention will be needed to catalyse resources to build capacity.
That, in turn, needs a unifying vision for the hard grind of devising and implementing policy to deal with the across-the-border and behind-the-border obstacles to genuine economic integration, that is, to build a single market.
In doing so, Asia Pacific governments can learn from the European Union experience. But we need to find a way to promote ever-deeper economic integration without relying on a supra-national authority and in a way which can create precedents, not only for region-wide, but for G20-wide integration.
Like free and open trade, a single market is a vision which can only be approached, rather than reached by any deadline. But, striving towards a single market is a useful point of reference for the many things that need to be done to integrate our economies in a meaningful way.
Related articles:
- Why do we want an Asia Pacific Community?
- Thinking about the Asia Pacific Community
- The Asia Pacific Community: objectives, not institutions
- Rudd in Singapore on the Asia Pacific Community idea
- Targeting by social background vs. economic status in anti-poverty programs in rural India
- Japan: The DPJ’s quiet revolution
- US protectionism’s other names
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