Alphabet Soup

Jesse Bohnet

Mike Smitka

May 19, 2000 - Economics 286

The International Order

• Trade & intl finance issues– Establish and encourage adherents to

behavioral norms– Crisis intervention

• Security– Multilateral arrangements to enhance security– Crisis invention

• Misc: world "public goods" (environment)

Europe

• EU and predecessor organizations– Built upon natural trade ties among European

economies– Large role of (united) Germany

• NATO: in inverse order of importance?– Kept Russians out– Kept Americans in– Kept Germans down

The Americas

• Informal dominance by US

• NAFTA including possible expansion

• Monroe doctrine for security

• Clear hegemonic status meant formal organizations were not as central

• In a crisis, clear US interest in intervention

Asia - trade

• No clear economic power– Neither Japan nor the US nor (now) China dominate

• Tremendous diversity of interests• Initial and varied ex-colonial focus in 1950s

– Indonesia --- the Netherlands

– Vietnam - Laos - Cambodia --- France

– HK, Malaysia, Singapore --- Britain

– Philippines, Korea, Japan --- US

– China, Russia --- autarky

Asia - security

• Security: issues– No unifying external threat (Russia . . . India?)– Internal rivalries and flashpoints– US ambivalence to playing a role: unrealible?

• Old organizations failed– SEATO ended with US exit from Vietnam– ANZUS ended with New Zealand pacifism– US presence in Philippines ended with Marcos

Global economic framework

• The GATT and WTO– MFN as foundation– Reciprocity as process– More awkward as membership expanded– Enforcement? - WTO provides adjudication . . .

• UN– Global goals, but limited enforcement tools– Difficulty in acting

• IMF - few resources

The EU• European Union

– Political goals– Economic means

• Lowering of internal trade and capital / labor restrictions

• In turn, setting of common external trade rules

• Does the ROW benefit?

Trade diversion & creation

• EU enhances trade within Europe– Specialization increases, and incomes with it

– Higher incomes create expanded trade opportunities with the ROW

• EU diverts trade to within Europe– Fewer barriers leads to shift from trade partners outside

the EU to trade within the EU

– Higher external barriers accentuate - would they choose the politically easy route of imposing the highest existing member barrier to the whole EU?

EU and APEC

• Fears of trade diversion from a "Fortress Europe"

• APEC founded in part as a not-so-subtle counter to any untoward European behavior

• In the end, those fears were not realized

• So what then is APEC?– Is the Pacific Basin a natural unit? - data and

details follow!

APEC (Asia-Pacific Economic Cooperation)

APEC (Asia-Pacific Economic Cooperation)

Basic Facts

• Established in 1989.

• As of today, there are 21 countries in the organization.

• Combined GDP of $16 trillion US dollars.

• Accounts for 42% of global trade.

• Meet annually to discuss business.

GDP Growth 1989-1998

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

China 356 370 399 452 599 547 711 834 918 902

Hong Kong 69 72 75 79 116 131 139 154 172 163.8

USA 5478 5522 5458 5637 6553 6936 7265 7636 8080 7783

APEC’s share of global trade

Annual Meetings

• First five conferences produced a lot of talk but no action– Main issues revolved around membership

– Three China compromise ==> China, Taiwan and HK!

• 1994-Bogor, Indonesia– set definite goals for the future

• 1995-Osaka, Japan– Osaka Action Agenda

– TILF Account opened

Annual Meetings (II)

• 1996-Manila, Philippines– MAPA

• 1997-Vancouver, Canada– Customs Modernization– WTO participation

Annual Meetings (III)

• 1998-Kuala Lumpur, Malaysia– Cooperative growth strategy to end crisis– Programs to facilitate skills upgrading/

improvement

• 1999-Auckland, New Zealand– APEC Food System– Banking standards developed– Reaffirmed Bogor goals, prioritized trade

APEC Fora

• Committee on Trade and Investment• Economic Committee• ECOTECH Sub-committee• Budget and Management Committee• Policy Level Group on Small and Medium

Enterprises• Fisheries Working Group• Human Resources Development Working Group

APEC Fora (cont..)

• Industrial Science and Technology Working Group

• Marine Resource Conservation Working Group• Telecommunications Working Group• Tourism Working Group• Trade Promotion Working Group• Transportation Working Group• Agricultural Technical Cooperation Experts Group

APEC and trade

• Hope that smaller membership makes achieving liberalization easier

• Focus on trade facilitation and on "public goods" issues separate from tariffs and NTBs (non-tariff barriers)

• Results?– Not much– But low expectations

APEC and security

• Never a formal topic at APEC

• However, always a behind-the-scenes issue

• ARF as developing security forum– Southeast Asia focus but includes as observers:

• China - distrusted and weak

• Japan - pacifist and narrow interests as "follower" within US-Japan security treaty

• US - disinterested but strong

APEC: Links &c.

• APEC Secretariat in Singapore– US site for APEC (Dept of State)– Columbia University site

• PECC (Pacific Economic Cooperation Council)

• PBEC (Pacific Basin Economic Council)• ASEAN and ASEAN Regional Forum

Glossary...

• ASEAN - Association of Southeast Asian Nations (a trade / political organization)

• ARF - ASEAN Regional Forum (in'tl security forum, including the US, China and Japan as observers)

• ANZUS - Australia - New Zealand - US, a defunct security pact

• CBM - confidence building measure

Glossary, cont

• SEATO - Southeast Asia Treaty Organization, a defunct counterpart to NATO (North Atlantic Treaty Organization)

• ESCC, EEC - European Coal & Steel Community, European Economic Community: predecessors to the EU

• EU - European Union

Glossary, cont.

• FTA - US - Canada Free Trade Agreement• NAFTA - North American Free Trade

Agreement, successor to the FTA to include Mexico

• GATT - General Agreement on Trade and Tariffs. Included the Kennedy Round, the Tokyo Round and a final Uruguay Round

• WTO - World Trade Organization, successor to the GATT