From APEC to Ashes
by Marissa de Guzman & Walden Bello
It has been ten years since the creation of the Asia Pacific Economic Cooperation
(APEC). What started out as a lofty dream of encouraging unity and interdependence
among Asia Pacific countries is now at the crossroads. It appears to be headed
nowhere with no clear vision of what it intends to achieve. A lot of tags
have been attached to it, from being a flailing horse to being nothing but
four adjectives in search of a noun. Without a doubt the organization is facing
a stalemate. And what we are all eagerly awaiting is the next step. Will the
horse forge on ahead in a do-or-die stance? Will the king scurry about and
retreat in every move? Who can predict that? Who is bold enough to even make
the suggestion?
Now that ten years have passed since the inception of APEC, analysts have
found it a worthwhile pastime to critically examine what APEC has been able
to accomplish so far. Has APEC been able to deliver on its promises? Do the
benefits derivable from APEC far outweigh the costs?
The Three Pillars of Apec
APEC started out with three main objectives - to promote trade and investment
liberalization, to facilitate business and to foster economic and technical
cooperation. Furthermore, according to the APEC Declaration, "the ultimate
objective of our individual and collective endeavors is to enrich the lives
and improve the standards of living of all our citizens on a sustainable basis.
"
The Beginning
Initially the idea behind APEC, as conceived by the former Japanese Chief
of the Ministry of Trade and Industry, was for it to serve as a venue for
consultative interaction among the Pacific Rim countries discussing economic
issues. With membership reaching far and wide, APEC was hit with the issue
on diversity. To accommodate its growing membership, two cardinal rules were
then enshrined in the APEC ideal - agreements being non-binding and any action
taken under APEC ought to be undertaken voluntarily.
It is a wonder how APEC can expect itself to be a truly consultative body
that fosters cooperation and equality. Even its membership triggers apprehension.
What would the US, the most powerful country in the world, do in an organization
with Vietnam, a poor country known for its communist inclinations? How do
we reconcile differences and balance needs and interests of a country like
China, with its multi-million population, with that of Brunei, an oil-rich
country with a meager head count of about 500,000 to account for?
The issue on diversity
Undoubtedly, diversity plays a major role in APEC. The question is how does
APEC deal with and handle this diversity? Common knowledge dictates that with
diversity come different realities, different needs, different perspectives,
different goals, and various methods of attaining these goals. For an organization
with such a diverse set of membership, it will forever be a wonder how it
can establish and work on a shared goal and a common vision. The APEC goal
reached in Seattle speaks of "deepening our spirit of community based on our
shared vision of achieving stability, security and prosperity for our peoples.
" The nagging question is this: if each member country has a personal agenda
backed with cultural, social, political, and economic interests that ultimately
serve personal preservation, how could there be a space for a shared vision
towards global prosperity and unity?
APEC aims at interdependence among member countries. In the pursuit of economic
prosperity and in the opening up of markets, APEC encourages cooperation among
its members. But how could there be absolute cooperation among countries that
are first and foremost competitors in the economic front? Competition is as
real as the sun's rising in the east. And though cooperation seems to be the
supposed driving force of APEC, competition and self-preservation lurk in
every member countries' interests. Each member country usually goes by the
mantra of trade liberalization in the pursuit of penetrating foreign markets
while at the same time protecting the domestic market in the best way it could.
What this means then is each nation hopes to penetrate foreign markets while
also keeping their domestic markets relatively un-exploited by foreigners.
So in the end what we have is real competition masquerading beneath a cloak
of cooperation.
The issues of non-binding contracts and voluntary actions To expound on an
earlier statement, another consequence of APEC's diversity in terms of membership
is the incorporation of two cardinal rules in the APEC system - that of agreements
being non-binding and that any action undertaken in the name of APEC ought
to be done voluntarily. These two provisions clearly present a setback to
a seemingly powerful organization. With no teeth to keep countries in check,
agreements in summits oftentimes remain just that - signed agreements or commitments
with no strict implementation. Non-compliance is not a ground for an imposition
of any sanction. Unlike therefore the General Agreement on Tariffs and Trade
(GATT, or what is now known as World Trade Organization - WTO), which has
a dispute settlement body and which has binding contracts among members, APEC
merely has commitments which heads of state sign into without the real threat
of an urgent compliance.
What rocked APEC
The first few years of APEC saw encouraging advances. However, in 1994, during
the Bogor Declaration, the once-smooth sailing trajectory of APEC has been
rudely interrupted at the wings by the incorporation of trade liberalization
in APEC's vision. Succumbing to US pressures and insistence, APEC countries
were prevailed upon to join the free trade bandwagon. The move however proved
costly as this signaled the start of the political cleavage building up within
APEC. Free trade split APEC into two. There is the US agenda, along with other
developed countries, which sought to transform APEC into a trading bloc and
open Asian domestic markets. Then there is the Japanese ideal of keeping APEC
the way it was initially designed to be - a mere consultative arena focusing
on economic issues.
Undoubtedly, both sides were primarily protecting national interests. The
US saw APEC as a venue for trade liberalization and as an excellent supplement
to the goals set at the GATT-WTO, another US- backed organization espousing
free trade. To understand US's interests with APEC, it is necessary to understand
the call of the time back then.
The incorporation of free trade into the APEC agenda was primarily an American
offensive in the brewing trade wars. The early 1990s saw a fast rising European
Union and the continued dominance of Japan in the East Asian markets. US was
falling behind Japan and it needed a supplementary course of action to back
up its programs in the General Agreement on Tariffs and Trade, or what is
now known as the World Trade Organization. The 1990s was also a time of boom
for East Asian nations and the region was attracting a lot of attention and
investments. US wanted a crack at the booming market. For a long time, US
was looking for ways to pry open the domestic markets of Korea, China, and
Japan among other Asian nations. In APEC it saw the vehicle it needed to get
a chance to penetrate the Asian markets. And so US went into APEC with the
interest of using it as a free trade bloc to lobby for borderless trade. Implicitly,
what the US wanted was a venue where they can dump their agricultural surpluses
to. They also wanted to neutralize a bit Japan's stronghold and dominance
over East Asia.
Japan, on the other hand, was happy with APEC the way it was - as a mere consultative
framework where economic issues can be discussed and as a provider of technical
support. Japan, although it was at the time enjoying sweeping successes across
Asia in terms of economic supremacy, was highly protective of its domestic
market. It therefore found the move to turn APEC into a free trade bloc with
the vision of adopting borderless trade by the year 2020 an unwelcome development.
From just these two perspectives, we clearly see that APEC is indeed faced
with a dilemma. Structural problems pose great threats as they do but no other
problem poses en even greater challenge than a conceptual dilemma. Apparently,
it is not even clear to member countries what APEC essentially is, what it
represents, and what it ultimately wants to achieve. What good will an organization
serve when its very essence is in shambles? What semblance of strength will
it show when even from within there is no agreement as to what it stands for?
Being hit with a conceptual dilemma, it is no wonder that APEC is seen as
a flailing horse void of any notion of where it is headed. As if it is not
enough for APEC to suffer from its structural problems, it even has to worry
about resolving the conflict in how it is to be perceived. Nothing can move
on to achieve something before it has first a clear picture of what it essentially
is. Only in knowing what you are, what you stand for, what you intend to achieve
will you be able to draw up a plan on how to reach destinations. Nothing is
ever achieved until you know for sure why there is a need to exist in the
first place. So then APEC, which from the onset was besieged with an 'identity
crisis', has to search for that missing and quite elusive noun for which it
stands for, something to give it the essence it was in need of.
As earlier stated, diversity could work both as a virtue and a vice. Diversity
at the price of consensus of course is not beneficial to the organization.
What's more a diverse set logically has with it diverse interests. The more
interests to be pooled together, the more dangerous this becomes. Once diversity
influences members to go ahead and pursue personal/ national interests first
and foremost, then the illusion of a true cooperation within the organization
crumbles. Furthermore, more interests translate into many needs that require
attention. Given the limitations of any organization, priority projects or
needs would of course have to be dealt with first. And therein lay another
problem. Whose needs get to be responded to first? Which needs get priority?
To this end, a sub-issue arises. If APEC's objective is to be able to offer
better times ahead economically, then it has as beneficiaries the growing
masses. It is therefore whatever serves the masses's interests that ought
to get top priority in the need fulfillment. That has to be the case always.
To review then the past ten years, we wonder at what instance was the need
of the masses responded to first. The journey down memory lane however makes
it clear that primarily, APEC responds to US interests and thus becomes incompatible
with the APEC ideal or vision. If this goes on, then APEC fails to fulfill
a promise - it is unresponsive to the masses's needs. It fails to deliver
on its objective and thus it becomes a meaningless organization.
APEC's credibility as of late has also been challenged and put to the test
what with three fundamental issues that rock APEC's boat.
First is the shortsightedness of APEC countries. Popular knowledge dictates
that summit outcomes are heavily influenced by which country gets to host
it for the year. It is therefore the host country's ploy to use the event
to pursue national interest. It then becomes a battleground literally when
hosts welcome guests and feed the latter the agenda best responsive to the
needs of the host. Hosts could therefore stall decision on other key issues
once it sets as priority some other issue. To this end we realize how crucial
the EVSL project was. Able to divert attention away from it and to stall decision
on its implementation was a big blow to trade project of APEC. Had it been
passed APEC would have enjoyed fresh votes of confidence from all sectors.
As it is a failure in pushing forth the EVSL project, outsiders were left
to thinking that APEC is all talk and no work. Credibility and ability problems
therefore rise. For the longest time, APEC has been besieged with the issue
on its being able "to talk the walk but not walk the talk."
Second is the problem posed by politicizing APEC. As US Vice President Al
Gore turned APEC into a political exercise by using the event as an arena
for a Mohamad Mahathir bashing, people start getting disillusioned with APEC
as it appears to be US's political platform for non-economic objectives. Split
primarily on the issue of a conceptual analysis, with US seeing APEC as a
free trade arena and Japan regarding it merely as a venue for consultation
on economic matters, numerous other cleavages have split the organization.
People then feel that APEC is an arena for squabbling countries, a venue for
releasing ire and tension against other member countries. With several cleavages
cutting through the organization, consensus appears to be an elusive dream.
Third problem deals a lot with expectations. During the 1997 Asian financial
crisis, people felt that APEC was not able to play an active role in trying
to quell the crisis. With the entire Asian region being badly hit by the crisis
that had its roots in the spiraling of the Thai baht, everyone was expecting
the APEC to do something remarkable or at the very least to offer assistance
to members who needed all the help they can have at the time. Unable to put
fears to rest during the crisis, APEC was then hit with the critique that
it merely stood there and watched as the region went through tough times.
Of course APEC countered that it does not have within its mandate financial
crisis management. The thing that sticks to the people however is the fact
that APEC failed to play the role of a crisis fireman and thus it failed to
take on the mask of a human face.
Who is APEC for?
Looking into the deeper structure, we see that a point of confusion in APEC
lies in identifying whom APEC is for. When it boldly claims that it aims to
enrich the lives and improve the stocks of all of its citizens, whom would
these citizens pertain to? Does the declaration mean that APEC promises to
each and every citizen of its member-countries better standards of living
at the turn of the century? If rightly so then APEC ought to work towards
goals that indeed respond to the needs of its constituency.
Looking at ten years of APEC The problem with APEC is that it masqueraded
behind a messianic purpose. It went in with a bang, a big splash. Promising
better times ahead through trade liberalization, people tended to expect a
lot from it. APEC, with its broad-based membership and lofty goals mystified
the masses who pinned all their hopes on APEC and the fruits of labor it promised
to deliver at the turn of the century. But ten years into it, we realize that
APEC is all hype. It promised too much and delivered too little. What's more
it even has the gall to assert that the problem lies in our grand expectations.
It has been reiterated that "with lowered expectations, the public may become
more generous in its judgment, allowing smaller advancements to be valued
as worthwhile accomplishments. "
APEC does not only face the reality that it has failed to deliver in its promises.
It also has been unsuccessful in responding to the objectives it set. With
no clear fruits of labor and a questionable adherence to its very objectives,
APEC is rendered meaningless these days. We were all awestruck with what APEC
was promising. We believed the promise. We got excited and set our expectations
high. We were ready to wager so much with the promise that better times lay
ahead and benefits are forthcoming.
Then we wake up ten years after. We find ourselves not far from where we were.
We count the costs and we wonder why we waged so much only to get the most
minimum of dividends in return. What has APEC done for us?
Ten years is a long time to wait for initial fruits of our APEC labor. We
have paid a large sum to get into this game. Ten years is enough to take a
look back and re-examine where it has taken us. Ten years of APEC and we must
see for ourselves if our bold steps towards free trade liberalization has
paid off handsomely. After ten years, have the benefits outweighed the costs?
The final analysis makes us realize that APEC is indeed besieged with problems
it cannot just dismiss. APEC, as an organization, has to seriously consider
its options. In a stalemated situation, APEC has to decide whether it would
forge on ahead in a last ditch effort to try and reclaim lost glory or it
would quietly and humbly fold into the night.
When free trade came into the picture in the 1994 APEC summit in Bogor, it
brought with it lofty promises and goals achievable by the turn of the century.
It harped on greater economic prosperity, wealth to nations and alleviation
of global poverty. All these of course come as whipped creams to the main
pie - a creation of a truly cooperative global village where interdependence
and unity play key principles.
APEC tried to masquerade behind a messianic purpose and it promised economic
prosperity as well as better standards of living. Ten years hence, we look
for signs of initial benefits, initial fruits of our labor. What has APEC
accomplished so far? Painful to admit but true, APEC undoubtedly has made
little steps in the pursuit of its goals but these little steps are however
not enough to satisfy the people. We have all paid dearly to let APEC take
center stage in Asia for the last ten years. Specifically, the Philippines
shelled out about 370 million pesos to host APEC summit in 1996. Taxpayers'
money was used to fund the highly publicized event. Therefore each and every
little Filipino who has been diligent in tax payments helped stage APEC in
Subic. The promise was a few millions would not hurt to gamble on the APEC
betting table. Spending millions for preparation and the main event would
pay off handsomely in the form of greater foreign investments and the channeling
of aid our way. But to this day, we cannot point to one great benefit APEC
has done for us. Even more startling is the realization that the most people
would not even know what APEC is and what it has done to alleviate their plight.
It is about time therefore that we ask how high a price we have to pay for
an APEC education? How long before we can see concrete benefits? To what bounds
are we willing to sacrifice just so we wait in animated suspension for the
day we can finally cash in on APEC's promised benefits?
APEC has ceased to stand for something already. Once it was a mere venue for
consultative discussions but it took a leap forwards and dabbled in trade
liberalization. But the dip proved costly because with it the essence of APEC
began to cloud and the essence faded away. The road down trade liberalization
caused major rifts within the organization. Dissenting opinions surfaced with
Mohamad Mahathir being one of the bravest souls to voice apprehensions. The
concept of a standardized timetable was questioned. And the idea of a level
playing field was explicitly debated upon. Mahathir's position is not to debunk
liberalization's benefits en masse. His point merely was to allow countries
to decide for themselves when, how, and at what rate they plan to liberalize.
He was merely pointing out that no one country can impose a timeframe for
strict implementation regarding trade liberalization schedules. Like the Chinese
virtue of the Tao, Mahathir believed in the concept of the gains of doing
something "in its own time." Absolute timetables cannot be imposed, as there
is a relative difference among countries on how liberalization could work
best for them. Countries must hold the key and decide for themselves when
the right time for them to liberalize is. The US, through GATT-WTO and now
through APEC, must not impose schedules and timetables absolutely for all
member countries as there is no uniform scenario and reality among them. Liberalization
ought to take place in the specific country's own time, own pace, and own
strategy.
Leaving liberalization to a country's own timeframe simply comes from the
fact that there is no level playing field in the global market. Though countries
chose to be a part of APEC at the same time doesn't mean they can liberalize
and open up markets at the same time. No two countries come into APEC on equal
footing. Countries do not start the race at the same point and at the same
time. What others often forget to factor in to this level playing field concept
are the cultural factors and the social- political subconscious of the countries
involved. Furthermore, the concept of a level playing field has been debunked
because countries have different realities that operate on different needs,
different goals, different visions, etc.
Furthermore, it has to be stressed that liberalization ought not to be doctrinaire.
Countries have to be flexible when it comes to liberalizing their trade policies.
To this end, it becomes apparent that the priority must always be on development.
Liberalization ought to be used flexibly in the sense that when countries
feel it will serve their best interests, then go on with it. If liberalization
poses some threats and doubts, then state-assisted protectionism to a certain
degree may be implemented so long as this is seen as the better road to development.
We must always take on liberalization with a pragmatic eye. Go with it if
it seems to work for the best interests, abandon it if it does not. To this
end, it becomes apparent that the priority must always be on development.
It is important to note that liberalization ought not to be seen as an end
in itself. Always, it must be examined if it leads to development. Therefore,
development is the key.
The challenge
And so the analysis reaches a crossroad. The tough question to pose is this:
what is in store for APEC? How does it resolve its conceptual framework dilemma?
Clearly, it has not been as efficient as it wanted to be in terms of delivering
goods to the Pacific Rim countries. It has strayed from the founding principles
for which it has been established. Conflicts are brewing over political issues
that technically should not have been there in the first place. Credibility
has been tarnished because of the dilly-dallying in decisions regarding trade
liberalization agenda and the pursuit of economic prosperity. Ability to turn
vision into action has been challenged since APEC stood at the sidelines when
Asia was going through a laborious financial crisis. APEC has been taunted
as good with words and promises but short on mission and action. The question
on whether APEC indeed serves the best interest of the most number of people
over a sustainable scheme has been brought out in the open.
Faced with all these challenges, questions, and problems, what seems to be
the best alternative for APEC? Once more we ask, facing a stalemate, does
it charge on the battlefront again in a last ditch effort to reclaim glory?
Or would it be best if APEC just hung the gloves and retire when there is
still little face to show?
Clearly, APEC cannot go on and masquerade behind the same cloaks of cooperation,
solidarity and behind the veiled promise of economic prosperity at the turn
of the new century. To go on as if nothing halted its meteoric upshot as it
took on free trade liberalization would be stupid. APEC has to admit that
glory has been lost. Time has been wasted. Money and effort has been flushed
down the drain. Some say what APEC needs is a new face. They see APEC's future
as being not a major player in the free trade game anymore but rather it will
play a subdued role in negotiating trade deals under the auspices of the WTO.
They see APEC as channeling its efforts to what it was able to do best - in
the promotion of standardization, facilitation of information flow and in
harmonizing regulatory regimes. APEC will cease to be in the exact center
of everyone's attention and scrutiny. It will play in the sidelines where
it thrived all these years and contribute what little it can. This is what
some analysts propose. Some take on this suggestion with gusto as it clearly
offers APEC a saving face on its way out of the center stage. Basically, the
move will bring back APEC to what it once was - a consultative body designed
to engender interdependence among APEC countries.
However, we cannot but be skeptical with this proposed face-lift. It appears
to be an empty promise again in the making. Faced with numerous challenges
and problems, APEC has nowhere to go and appears to serve no purpose anymore.
At best, it can be regarded as a good excuse for technocrats to use taxpayers'
money to subsidize tourist junkets that mask as exercises in economic diplomacy.
It therefore seems that there is logic in the notion that it would be for
the best interest of the most number to abolish APEC.
At some point someone has to take a bold step and dissociate himself from
the crowd. Someone must be brave enough like that little girl in the tale
of the emperor's new clothes. There has to be a gutsy person who will step
aside from the drunken masses and assert without fear that it is about time
we abolish APEC. Let me be that little girl for you today.
A better vision
In the end, what we clearly see is a need to re-think the global economic
institutions, the IMF, WB, WTO, and more. Obviously, the old-world order and
the free trade bandwagon did not respond to the people's needs and failed
to deliver the goods. What we probably need is a new-world order, something
that would inspire countries to interact with one another cooperatively and
equitably.
It is therefore the duty of civil society and those in the NGO world to help
make this new vision a reality. It is our responsibility to take a more active
role in policy making and in the drive towards development. It is all our
duty to see to it that the state and the business sector do not monopolize
decisions once more. We need to make our voices heard. We must learn from
the story of APEC. The drive towards real cooperative and equitable development
needs the whole of society to take part in it. It needs all of us.
"Starting point of all achievement is desire. Weak desire, weak resource.
Small amount of fire, small amount of heat." So let us in this September hall
start a small flame that will enlighten everyone's mind to lead us all to
the better road.
* Marissa de Guzman is a research associate with Focus on the Global South
and Walden Bello is the director. This paper was presented at the recent APEC
meeting in Auckland.
References
Marc Castellano; What Happened to APEC? A Decade of Taking Two Steps Forward,
One Back;
Japan Economic Institute Report; No. 18A; May 7, 1999
Romeo Geroy, Jr.; A Conversation; August 8, 1999
Alejandro Lichauco; Looking Beyond APEC; Manila Chronicle; November 28, 1996;
page 5
Alejandro Lichauco; Struggle Within APEC; Manila Chronicle; October 14,1996;
page5
Mahathir Mohamad; Free Trade in the Real World; Manila Chronicle; July 12,
1996; page 5
Luis Teodoro; APEC Summit: For Whom?; Manila Chronicle; October 28, 1996;page
5