While ASEAN Advances, APEC Is Slowing Down
International Herald Tribune
December 20, 1995
Philip Bowring

The Association of South East Asian Nations continues to surprise the skeptics with its dynamism.

Like all summits, the ASEAN one just ended in Bangkok had its fair share of empty rhetoric. But the group's continued progress on trade liberalization, adoption of a treaty banning nuclear weapons from the region, and moves toward eventual entry of Burma, Laos and Cambodia represented substantive advance in members' attempts to broaden and deepen regional economic and political cohesion.

All this stands in contrast to the APEC (Asia-Pacific Economic Cooperation) summit in Osaka last month which singularly failed to put any flesh on the 2020 free trade agenda declared at Bogor a year earlier by an all-star cast headed by the leaders of the United States, China, Japan and Indonesia.

The failure of APEC to be anything more than a talking shop and photo opportunity is a warning to ASEAN not to try to be all things to all people, and a reminder that political and economic objectives are not always compatible. Indeed, the desire both to enlarge the body and, with the anti-nuclear treaty, give it a strategic dimension is seen in some quarters as possibly diverting energies away from its trade agenda — an ASEAN Free Trade Area by 2003.

The Bangkok meeting had rather mixed results on the trade front. Liberalization of services is being speeded up, but there is no real progress toward free trade in farm products. ASEAN, most of whose members have trade-oriented economies, could fall behind some other regions, including Latin America, in trade opening.

Vietnam's recent joining of ASEAN was desirable from the perspective of regional solidarity — particularly in relations with China — but, even with the adjustment allowances it will be given, Vietnam will be a drag on economic integration.

The next two candidates, Laos and Cambodia, are small enough, and already quite integrated with larger neighbors, not to be a problem when they join, probably in 1997. But Burma — for which there is as yet no timetable — will be even more difficult to digest than Vietnam.

Skeptics will say the Nuclear Weapons Free Zone declaration is of no more practical use than the declaration of a Zone of Peace, Freedom and Neutrality by the original ASEAN five in Kuala Lumpur in 1971. Then as now, most members had close if informal military ties to America.

However, by including members' 200-mile exclusive economic zones in their definition of the nuclear zone, they have sent a particular message to China, whose sea and island claims in the South China Sea extend well into ASEAN economic zones.

While ASEAN makes practical advances, APEC looks good on paper but is marginal to the real world of trade and investment in the regions it embraces. Proponents point to the progress made by most APEC members in bringing down barriers to trade and investment. They point, for instance, to President Jiang Ze min's announcement in Osaka of a major trade liberalization package. But APEC was not the cause of any liberalization.

In China's case, Mr. Jiang chose Osaka because it afforded him maximum publicity. It was not to honor APEC but to improve China's chances of early entry into the World Trade Organization. Other liberalizations are owed to the completed Uruguay Round, or to U.S. bilateral pressure, or to hopes of joining the OECD (South Korea) and the WTO (Taiwan). Others are owed to the ASEAN Free Trade Area, or the North American Free Trade Agreement, or just to enlightened self interest.

APEC's economic irrelevance is underlined by the fact that Malaysia, which is heavily dependent on trade, is the least enthusiastic about it.

Mahathir Mohamad may be venting his irritation at U.S. opposition to his all-Asian East Asia Economic Caucus proposal. But the Malaysian prime minister is not one to throw away economic opportunities for his country.

Others share Malaysia's skepticism but find it politic to keep quiet. Asian members mostly take no notice at all of Latin American membership.

APEC's other goals are equally vague, as perhaps indicated by U.S. Defense Secretary William Perry talking about the possibility of APEC becoming a security organization. The truth is that the United States began by ignoring APEC, then saw a need to counter the EAEC and use APEC as a forum for free trade rhetoric. Meanwhile, it pursues substantive issues either bilaterally or through the WTO.

The dreamworld quality of APEC aims was demonstrated by the discussion of agriculture in Osaka. The meeting eventually came up with a meaningless formula that all could swallow. But if even small groups like the ASEAN Free Trade Area, most of whose members are farm exporters, cannot agree on free trade, what hope is there in the vastly more diverse APEC?

Does anyone seriously imagine that China, which has been obsessed with food security for millennia, will put its grain prices entirely at the mercy of international markets?

The lesson of the Osaka and Bangkok summits is that realistic trade agendas for all members of APEC will be either in the global forum of the WTO or in smaller arenas like AFTA and NAFTA. That is as it should be.

Copyright © 2006 The International Herald Tribune