APEC's Dilemmas Institution-Building Around the Pacific Rim

8/12/2019 APEC's Dilemmas Institution-Building Around the Pacific Rim

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APEC's Dilemmas: Institution-Building Around the Pacific RimAuthor(s): Nicole Gallant and Richard StubbsSource: Pacific Affairs, Vol. 70, No. 2 (Summer, 1997), pp. 203-218Published by: Pacific Affairs, University of British ColumbiaStable URL: http://www.jstor.org/stable/2760772.

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APEC's Dilemmas:Institution-Building round thePacificRim

Nicole Gallant and Richard Stubbs'THE ASIA PACIFIC ECONOMIC COOPERATION (APEC) forumhas made con-siderable progress since itwas formed at a ministerialmeeting inCanberra,Australia,n 1989. ndeed, ithaschalkedup more successes n itsfirst ewyears haneven tsfounders nd most rdentproponentshad antic-ipated. For example,APEC combines n one organization diversegroupof economies ncluding he biggest, nd some of the mostdynamic,n theworld; tbrings ogether,t ts nnual summitmeetings,n impressiverrayof theworld's eaders; nd ithas established heambitious,fdistant, oal ofopen economies for ll itsdevelopedmembersby 2010 and itsdevelopingmembers y2020. As a result heAPEC processhas garnered good deal ofpublicattention nd engendered momentum or stablishing reater co-nomiccooperation round thePacificRim.Yet the more successfulAPEC has become and themoreprogress tmakes nmoving heregiondownthe road towards reater conomic iber-alization and cooperation, the more dilemmas it seems to face. Thesedilemmas re essentially aused by differentnd often ompeting oncep-tionsofregionalism nd regionalization round the PacificRimand arerooted n the differentultures, istoricalxperiences nd forms fcapital-ism of thevariousAPEC member conomies. At one time tappeared as ifthesecompetingviewsofeconomic regionalizationwererepresentedbyAPEC on the one hand and by Malaysian Prime Minister MahathirMohamad's proposal foran East Asian Economic Caucus (EAEC) on theother.2 owever,t snow ncreasinglypparent hat he competing oncep-tions ftheregion ndhow regional elations hould evolve re to be found

I Nicole Gallant would like to thankthe Canada-ASEAN Centre and the Asia Pacific Foundationof Canada for an Academic Travel Grant Award which allowed her to undertake research inSoutheast Asia. Richard Stubbs would like to thank the Social Science Research Council of Canadafor a research grant which allowed him to undertake research in East and Southeast Asia. Theauthors would also like to thank the many officials f various governments and intergovernmentalagencies who granted them interviews, nd Paul Irwin, Peggy Meyer and Larry Woods for com-ments on an earlierversion of thispaper. It is important o note thatthe views xpressed in thispaperare solely those of the authors and not of any nstitutionswithwhich they re associated.

2 See Linda Low, The East Asian Economic Grouping, The PacificReview, ol. 4, no. 4 (1991);and RichardHiggott and RichardStubbs, Competing Conceptions of Economic Regionalism: APECVersus EAEC in theAsia Pacific, Review f nternational olitical conomy, ol. 2 (Summer 1995), pp.522-26.

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Pacific ffairswithin PEC, and thatEAEC's future s dependent on APEC's success orfailure.

This analysiswillbeginbyoutlining he origins f thedifferentoncep-tions fthePacificRim ndhow ts conomicrelationshoulddevelop. t willthengo on toexplorethedilemmasposed bythesecompeting onceptionsforAPEC's future.Mostparticularly,eyssueswill e discussed uchas whichnew members hould be admitted o APEC and underwhat onditions heyshouldbe allowed n,how toachieve hegoal ofopen economiesby2010 and2020thathave been setforAPEC's members, he extent f the nstitutional-ization of APEC and itsbureaucracy, nd the topics that houldbe put onAPEC's agenda fordiscussion. s WilliamBodde,Jr., hefirstxecutive irec-torofAPEC hasnoted,thevaryingeactions f theAPEC members o ssuesraised t ministerial eetings reveal nderlying ifferenceshatwillhave tobe worked out if APEC is to become a true Asia-Pacificeconomiccommunity. ' nd,whileworkingutthese ssues sclearly ot mpossible,twillneed patience, magination nd an understandingfopposingviews fthey renotto derailAPEC inthe future.NEO-LIBERALISM VERSUS THE AsLN VIEW

The competing onceptions fregionalism hich re to be foundwithinAPEC arise ngood partoutoftwodistinct rends hat urrentlyreoccupydifferentets fmember overnments.eo-liberalism,hichhasbeenwidelypropagated byWestern-trainedeo-classical conomists,has heavilynflu-enced the rhetoric and thinking, f not alwaysthe practice, of thegovernmentsfthe UnitedStates,Australia, ew Zealand and Canada. Onthe otherhand,whatmaybe called the Asianview 4smoreamorphous,butnonetheless f ncreasing ignificance,nd has had an impact nmany ftheAsianmembergovernmentsfAPEC.Neo-liberalismmphasizes hemaximizationf ndividual conomicwel-fare nd the need formarkets o operatewithout ndue interference romgovernments. overnments,r morebroadly tates, reexpectedto restrictthemselves omesticallyoproviding he public goods of aw and order,

3William Bodde, Jr., Viewfrom the 19thFloor:Reflections f theFirstAPEC ExecutiveDirector(Singapore: InstituteofSoutheast Asian Studies, 1994), p. 38. See also Heather Dawker, Blueprintfor the Future, FarEasternEconomicReview,November 21, 1996, pp. 43-48.4This term s adapted fromSeiji Finch Naya and Pearl Imada Iboshi, APost-Uruguay RoundAgenda for APEC: Promoting Convergence of the North American and the Asian View, in YueChia Siow, ed., APEC: Challenges nd OpportunitiesSingapore: Institute of Southeast Asian Studies,1994).

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Institution-Buildinground he acific imeconomic nfrastructure,ound money, airmarket,nd nationaldefence.5nthe nternationalrena,governmentshould ctivelyosterree radeby lim-inating nybarriers othe nternational ovementfgoods and capitalwhileencouraging ther tates odo thesame.This sdone by, or xample,nego-tiating indingand enforceable nternational ules and regulationsthatsystematicallyeduce tariffsnd non-tariffarriers o international rade.Generally, he argument s that market-based rivate ector,notgovern-ments r nternationaluthorities,houlddecide howresources re allocatedin thepromotion f economicgrowth.All fourWesterngovernments ave tended to advocate a neo-liberalapproach in the formulation f APEC's goals. Indeed, one of thekeyrea-sons whyAPEC was formed n 1989 was thateach of the twelve riginalmembers ad fears bout whatwasseen as a rise nprotectionistendencies.The Canada-U.S.Free TradeAgreement adbeen signed, NorthAmericanFree Trade AgreementNAFTA) and a more ntegratedurope wereon thehorizon nd therewerefears hat he negotiations vertheUruguayRoundoftheGeneralAgreementn Tariffsnd Trade (GATT)would collapse.TheWestern ountrieswantedtouseAPEC tolobbyforgreateriberalization ftheGATTprovision,while theAsianmembershoped APEC wouldpresstokeep thevitalNorthAmerican nd Europeanmarkets pen to their xports.As a consequence the nitialministerialmeetings fAPEC emphasized theinclusive, rans-Pacificatureoftheorganizationnd the mportance f theseemingly autological otionof open regionalism. 6The idea of an Asianview sbased on theargument hatwhile therearemanydifferencesmongtheAsianmembers fAPEC, there re also anumberof mportantimilarities hichhaveproducedan increasinglyig-orous Asian consciousnessand identity. 7s a result, distinctive sianperspectivenregional nd internationalssueshas emerged. he similaritiesto be foundamongtheAsian stateshave roots n the fact hatJapan, outhKorea, Taiwanand theoriginal membersof theAssociation of SoutheastAsian Nations ASEAN) - Indonesia,thePhilippines,Malaysia, ingaporeand Thailand havetherecent ommon historical xperiences fdirectlyconfrontingAsian communism while at the same time successfully

5See Stephen Gill, Knowledge,Politics,and Neo-Liberal Political Economy, in Richard Stubbsand GeoffreyR. D. Underhill, PoliticalEconomy nd theChangingGlobal Order Toronto: McClellandand Stewart,1994), pp. 78-80; and Iyanatul slam, Between the State and the Market:The Case forEclectic Neoclassical Political Economy, in Andrew MacIntyre, ed., Business and GovernmentnIndustrialisingAsia Ithaca: Cornell University ress, 1994), p. 95.6 Higgottand Stubbs, Competing Conceptions ofEconomic Regionalism, pp. 518-22.7 Yoichi Funabashi, The Asianization ofAsia, ForeignAffairs, ol. 72 (November/December1993), p. 75. Some in Japan have referred o thisphenomenon as neo-Asianism. See NikkeiWeekly,January 17, 1994.

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Pacific ffairsengineeringrapid economic growth.8n addition some have argued thatthere are aspects of the diverse cultures of the region that are held incommon.9 he Asianview, hen, mphasizes hat hegroupor thecommunityisthemost mportant nit n a society ith he ndividual'snterestseing ub-ordinated to the interests of the wider society. Moreover, althoughauthoritarian overnments re generally ccepted and loyalty o leadersencouraged, here s also an obligation n the partofgovernmentsobuilda consensus n supportoftheirpolicies. 0 he economicdimensionof theAsianviewhighlightshe stronginks etween overnmentnd business ndtherole ofgovernmentnshaping conomicdevelopment.talsoemphasizesthe distinctive ast and SoutheastAsianapproachtodoing business,whichrevolves round nformal lexible network-basedconomiesrooted nsocialrelations s opposed tothe firm-basedconomiesrooted nlaws nd bind-ing contracts hich recharacteristicf theWest. 1Althoughneo-liberalism ended tobe thedominant approach at thefirst ewmeetings fAPEC, particularlys members ontinuedtoprod theGAIT negotiations owards successful onclusion n December1993,by hetimetheAPEC summitwas held inOsaka in November 995theAsianviewwas an increasinglynfluential actor.Certainly,heJapaneseminister finternationalrade nd industry,ashimotoRyutaro,ndJapaneseofficialsemphasized hatdecisions t the Osakameetinghad been reachedusing heAsianway, hich tressed onsensus, nd that heflexibilityobe found ntheAPEC approachtoachievingtsgoalswas n line with hethinkingf theAsian majority ithin PEC.12 Moreover,heAsianview ontinued o be sig-nificant t the 1996Summit tSubicBay, hePhilippines.Asa consequenceof theemergenceof thetwo pproachestodealingwith he seriesof ssuesfacingAPEC members,neo-liberalism nd the Asianview, he forum tselfmust onfront number fdilemmas.

8See Richard Stubbs, The Political Economy of the Asia-PacificRegion, in Richard Stubbs andGeoffreyR. D. Underhill, eds., Political conomynd theChangingGlobal Order Toronto: McClellandand Stewart,1994), pp. 366-77.9See Kishore Mahbubani, The Pacific Way, ForeignAffairs, ol. 74, no. 1 (1995), pp. 100-11;Mahathir Mohamad, A Prime Minister Speaks, ASEAN-ISIS Monitor,vol. 6 (April 1993), andMahathir Mohamad and Shintaro Ishihara, The Voice fAsia: Two LeadersDiscuss theComingCentury(Tokyo: Kodansha, 1995), pp. 71-115.10Noordin Sopiee, Asian Approach Best Way to Build Enduring APEC, The Straits Times,September 1, 1994.11 See Stephen Bell, The Collective Capitalism ofNortheast Asia and the Limits of OrthodoxEconomics, Australian ournal f olitical cience, ol. 30 (July 995), pp. 264-87; and Richard Stubbs,Asia-PacificRegionalization and the Global Economy: A Third Form of Capitalism? Asian Survey,vol. 35 (September 1995), pp. 787-96. See also James Fallows, Looking t the un: The Rise of heNewEastAsianEconomic nd Political ystemNew York: Pantheon Books, 1994), pp. 207-40.12 See Changing of the Guard: AfterOsaka, APEC Begins to March to an Asian Beat, Asiaweek,December 8, 1995, pp. 21-24; and David Hulme, Asia Takes Charge of the APEC Train, AsianBusiness January 996), pp. 32-35.

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MEMBERSHIPThe membership issue is fundamental to the futureofAPEC. Withfew

rules and regulations at presentgoverningAPEC it s themembership which,collectively,will decide on thewayAPEC will evlove. Any change in the mem-bership is, therefore, rucial. Certainly, he question ofwhich countries wereto be invited to the inaugural meeting in Canberra proved to be contentious.The initial Australian proposal did not include the United States or Canada.However, theJapanese insisted that the North American countries wereincluded so as not to eopardize trans-Pacifictrading relations. The twelvecountries that met in Canberra in 1989 were, then, Australia, Canada,Japan,New Zealand, South Korea, the United States and the members of ASEAN- Brunei, Indonesia, Malaysia,the Philippines, Singapore and Thailand. In1991 at themeeting in Seoul, China, Hong Kong and Taiwan were admittedas fullmembers,with thepolitically ontentious issue ofsovereignty eing cir-cumvented by referring o APEC members as economies, not states. Mexicoand Papua New Guinea were admitted at the Seattle meeting in 1993 andChile atJakarta n 1994. At the meeting in Seattle members recognized thatAPEC needed to develop a more systematicmeans of addressing the issueofnew members 3 nd imposed a moratorium on futuremembershipwhilesenior officialswere asked to conduct a studyofmembership policy and pro-vide recommendations to the ministerson the criteriafor the admittance offuturemembers.But it will not be easy to agree on the recommendations that should bemade to the ministers. ndeed, at the 1995 Osaka summit officialsdeclaredtheir ntentions to continue workingon the issue, even though their recom-mendation was supposed to have been ready forthe Osaka meeting. At themeetingsin thePhilippines in 1996, theprocess was again delayed. However,officialsdid agree to announce the criteriaformembership at the VancouverSummit in 1997, the decision as to which economies should be admitted atthe Malaysia Summit in 1998, and the actual admission ofnew members attheNew Zealand Summit n 1999. The membership issue forcesAPEC to con-front a clear dilemma. On the one hand from its inception APEC hasemphasized its nclusive,trans-Pacific, ondiscriminatorycharacter. ndeed,its adherence to increased economic liberalization and the opening ofborders to greater trade and investment are key principles of APEC. Thiswould strongly uggestthatthe more economies that can be made membersand can thus be committed to the liberalizing goals of APEC the better. Onthe other hand APEC operates byconsensus. IfAPEC is to expand to include

13 Asia-Pacific Economic Cooperation, Ministerial Meeting, Joint Statement, Seattle, 17-19November 1993, Section 36.

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Pacific ffairsan even morediverse etofmembers han t has at present, hen reachingconsensus n the forum's oals and thebestpath to thesegoals willbecomeincreasinglyifficult.In practical terms t seems highly ikely hatAPEC, at the MalaysianSummit n 1998,willgrantmembershipoVietnam,which oined ASEAN n1995, and Peru. Beyondthat, owever,t willnot be easyto pick and chooseamongthe onglistofeconomiesknocking n APEC's door. These includesuch diverse conomies as Russia,which has a strong laimbecause of ts18,000-km acific oastline, ndia, SriLanka, Pakistan, cuador, Mongolia,Panama and Colombia. Some clear criteria ave to be laid down formem-bershipso thatthere s a wayofselectingfrom mong the approximatelyfiftyountries ocatedin a broadlydefinedAsia Pacific egion. 4 utreach-ing consensus will be difficult.Malaysia,forexample, is most ikely o becontentwith hevery oose criteria greed to at the1991meetingn Seoul15as it would allowfora greaternumber of memberswhichtogether ouldcounter he nfluence ftheeconomically owerful nitedStates.Moreover,itwould ikely imitAPEC's capacity orfuture ctionbringingt n line withhow Malaysiawould ike to see theforum volve.Othermemberswantmuchstricterriteria o as to let prospectivemembersknowof therequirementsand responsibilitiesfmembership nd to allowAPEC todeepen existingrelations eforebringing n board moreparticipants. 6stablishingriteriafor tsmembership olicy, hichhavebeenagreedtoby llcurrentmembers,willbe a test fAPEC's capacity o moveforward.REACHING APEC's GoALs

APEC'smajorachievement asbeen the commitmentf tsmembers oinitiatemovestowards ree nd open trade nd investmentnd tocompletetheprocessby2010fordevelopedeconomymembers nd 2020fordevelop-ing economymembers. he settingftarget atesfor hecompletion ftheliberalizationprocess was an attempt o demonstrate o the widerglobalcommunity hatAPEC wasmore than an informal xercise n promotingfriendlyelations n theregion.Withboth theEuropean Union (EU) andNAFTAhaving stablished learmilestones n themarchtowards he iber-alization ftheir espective egional conomies,APECfelt ressure o followsuit.Moreover, twasargued that once governments redibly ommit oachieve free trade among theireconomies, the private/business ectors

4 Irene Ngoo, Need toWorkOut CriteriaforFull Membership, TheStraits imes,November 13,1994; and The Star Malaysia), November 26, 1996.15 Seoul APEC Declaration, Seoul, November 14, 1991, Section 7.16 See, for example, Bodde,Jr., Viewfromhe 9th loor, . 54.

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immediately begin to plan and investfor the world that will eventuate at theculmination of the process. '17The dilemma forAPEC lies in howbest to reach the ambitious economicgoals it has set for tself.On the one hand the Americans and the Australianswant to establish comprehensive, binding targetsfor the near and mediumterm. They have argued fora fixedtimetable n order to ensure that all mem-bers,without exception, maintain a firm commitment to liberalization bythe 2010 and 2020 deadlines. As the U.S. secretary of state, WarrenChristopher, stated at the Osaka summit, when one member protects evenone sector, many members suffer ost economic opportunities. 1 The U.S.and other developed economies are particularlyworriedabout the free-rider

problem. They are concerned thathavingfulfilled heir commitment to fullyliberalize their economies by the 2010 deadline the developing economiesmight renege on theircommitmentsto the later, 2020, deadline. The problem with this approach, however, is that decisions in APEC are made byconsensus, and compliance with any commitment is, as the Malaysians arequick topoint out, voluntary.Hence, establishingconcrete binding objectivesfor all member economies isvirtuallympossible.On the other hand a number of Asian members of APEC led byJapanhave argued for a concerted unilateral approach to reaching APEC's liber-alization goals. This would get everyone to the final destination but wouldallowforflexibilityo that each member economy could move at itsown pace.Liberalization, it is argued, should come about fundamentally through theunilateral best endeavour and action ofeverymember economy, acting with-out intimidation. 19 Certainly, many of the developing countries wish toensure thatthey re not forced to liberalize before theyare fully eady to doso. For example, China has a huge arrayof daunting barriers; the WorldBank reckons the average to be around 30%. Worse, the customs regimevaries fromone Chinese port to the next. 20 It would seem, then, that theChinese governmentwillneed a good deal offlexibilityn terms ofdeliveringon its liberalization commitments. In addition other Asian membereconomies have experienced rapid rates of growth by employing policieswhich subsidize export industriesand protect infant and import-substitu-tion industries.They are not likely o want toradicallychange these successfulpolicies in the short or medium term.Hence, the concern with the concerted

1 Achievingthe APEC Vision: Free and Open Trade in theAsia-Pacific, econd Report of theEminentPersons Group to APEC Ministers, ugust1994, p. 38.18 Three 'C's Keyto SuccessfulAPEC Action Agenda, U.S. Statement byU.S. Secretaryof StateWarren Christopher at the 7th APEC MinisterialMeeting, November 16, 1995, Osaka,Japan.19Noordin Sopiee, Asian Approach Best Way to Build Enduring APEC, The Straits Times,September 1, 1994.20 The Opening of Asia, TheEconomist, ovember 12, 1994.

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Pacific ffairsunilateral pproach s that n impatient nitedStatesmay eelthat heAsiancountries are not opening theireconomies to trade and investment astenoughandthat, herefore,.S. interestsre notbeingfully erved.As a con-sequence theU.S. could withdraw romAPEC. This wouldseverely eakentheforum nd eopardize itsfuture.The major area of contentionbetween the comprehensivebindingapproachfavoured ytheAnglo-Saxonmembers fAPEC and theunilateralflexible pproachfavoured ymostAsianmembers s the ssue ofdomesticsectoralprotectionism. he U.S. ambassadorto APEC, SandraKristoff,aspointedout that formanyofus,toprovidefor ectoral xclusionbecauseof domestic ensitivities ould be to turnBogor [the agreement ignedatthe 1994APEC summit nBogor, ndonesia thattargets 010 and 2020 asthedatesforfull iberalization] n itshead and tocall into serious uestionthecontinued nterest fmany fus toparticipate. 21Yet t hasto be noted that ll APEC membergovernments illface diffi-cultchoicesas the deadlineforfull iberalization raws loser.AttheOsakasummit n 1995 itwasJapan,China,Taiwan and South Koreawhich oughtspecial treatmentortheir griculturalndustries,muchto thedispleasureofagriculturalxporting conomies such as theU.S., Canada,AustraliandNew Zealand. However, venthedeveloped countrieshave sectorswhichdomestic nterestswillfight o theend to safeguard gainstunrestrainedimports. xamplesmightncludeCanada'shealthcare nd cultural ndustriesandAustralia's uto ndustry. oreover,heactions ftheU.S. innegotiatingNAFTA nd its ubsequent ctions n attemptingo block ncreased mportsofsuch diverse roducts s steelrails, ork, oftwoodumber nd men's suitssuggest hatwhile headministration ay ewillingocommit hecountryothefull iberalizationy2010, Congress nd significantarts fthe businesscommunity ight otbe so enthusiastic hen tcomes tospecific roducts.22

Thisraises he alliedproblemofhowAPEC's open regionalism illbereconciledwith he closedregionalism fNAFTA, heASEAN FreeTradeAgreement nd theAustralia-New ealand Closer EconomicRelationship.Open regionalismsusually hought fas a processofregional ooperationwhose outcome s notonly he reduction f ntraregionalconomic barriersbut also thereduction of externalbarriers o trade and investmentwith

21 Deep FractureMay DestroyAPEC, SaysU.S. Official, The Sunday Times,November 5, 1995.22 Thomas M. Boddez and Michael J. Trebilcock, Unfinished usiness:Reforming rade RemedyLaws inNorth merica, olicy StudyNo. 17 (Toronto: C.D. Howe Institute, 993), pp. 109-56; MichealB. Percy and Christian Yoder, The Softwood umberDispute nd Canada-U.S. Trade n Natural Resources(Ottawa: Institutefor Research on Public Policy, 1987), ch. 5; Grace Skogstad, The Application ofCanadian and U.S. Trade RemedyLaws: Irreconcilable Expectations? Canadian PublicAdministration,vol. 31 (Winter 1988); and Drew Fagan, U.S. RevivesWool SuitDispute, The Globe ndMail,June 24,1996.

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economies which are not part of the regional organization. The assumptionwould seem to be that APEC's open regionalism will either supersede theclosed regionalism of the established trading agreements or at least put con-siderable pressure on them to reduce their trade barriers withthe outsideworld.This assumption may prove to be questionable for two reasons. First, agreat deal of political capital has already been invested in creating theseclosed agreements, especially NAFTA, and thepolitical support that has beengenerated forthemmaywell trump any attempts omobilize thepolitical sup-port necessary to pass the enabling legislation so as to comply withtheAPECgoal of full liberalization bythe targetdates. Second, itmay be politicallyvery difficultn some countries to sell the idea ofopening up their domesticmarket to economies - in say, orexample, theEU - whichhave not signedany reciprocating agreement. This prospect evokes the spectre of the free-rider problem that so exercises the U.S.Atpresentthe concerted unilateral approach developed by theJapanesein the period leading up to the Osaka summit has gained the support ofmost of the Asian members of APEC. Certainly,Asian officials re much morecomfortable with the rathervague and loose language thatcame out of theOsaka and Subic Bay meetings than with a uniform fixed timetableor across-the-board binding targetsforall members thatWestern governmentswereproposing. At the same timeagreement was reached at Osaka foreach APECmember to commitvoluntarilyto take initialmarket-opening steps, termeddown-payments. twas agreed that each member's plans for iberalizationincluding specificconcrete details and time frames would be presented atthe Subic Bay summitin 1996. However, at the 1996 summitthe individualaction plans (LAPs) of each member economy were met bya variety freac-tions,none of them enthusiastic.The failure of many LAPs to be little morethan vague declarations of intent led APEC officialsto rationalize that theyare flexible guidelines, or frameworks, or iberalization which can be revis-ited and revised on a continuing basis by each member economy.23Obviously,then,there is a need for maginative ways of balancing the different erspec-tivesto be found withinAPEC in dealing with the tensions that surround theissue of how to realize APEC's overall goals of economic liberalization andhow to assess each member's progress towards the 2010 and 2020 deadlines.

23 'The Osaka ActionAgenda: Implementation of the Bogor Declaration, November 19, 1995,Osaka, Japan, Section B; and Manila Action Plan forAPEC (MAPA), Volume 1 (Singapore: APECSecretariat,November 1996).

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Pacific ffairsINSTITUTIONALIZATION

The first PEC meeting n 1989 concluded that twas prematuret thisstageto decide upon anyparticular tructure or Ministerial-levelorum ritsnecessary upportmechanism nd that ooperation hould be based onnon-formal consulatative exchanges of views among Asia-Pacificeconomies. 24 espitetherapidexpansion fAPEC in terms fmembers ndmeetings,his iewhas continued opredominate, nd APEC's institutional-ization has, therefore, een gradual and incremental.At the Bangkokministerial eetingn 1992 twasagreedto establish secretariat hichwaseventuallyased inSingapore.However,tremains mall nd itsresponsibili-ties imited. he largest tructuralhangehasbeen in terms fthenumber fcommitteesndworking roups hathave been setup at theministerialndvariousbureaucratic evels.But the coordinationof thesecommitteesndgroups s limited nd tied to the capacity f the government hat s hostingthe summitmeeting n anygivenyear. n essence,then, omparedto otherregional organizationsAPEC remainsrelatively nstructured.25 hile thislack of structurelearly asadvantages,t alsocreates number f dilemmasforAPEC.There are those who would like tosee a greater nstitutionalizationfAPEC. For example, henowdefunct minent ersonsGroup EPG) arguedfor heneed toupgradeAPEC's operational fficiencynd to reducepossi-ble institutionalmpediments otheAPEC process. 26 mongthe membereconomies of APEC it is Australia, he United States,South Korea,NewZealand andCanadawhich avourtrengtheninghe nstitutionaltructurefAPEC. Like the EPG theywerequicktopointout how the status estowedon APEC bymajorworldgovernmentsnd otherregional nd internationalorganizationsmprovedmarkedlynce theBangkokDeclarationwas doptedand the secretariat stablished.27 here is, clearly, sense thatgreater

24Asia-Pacific conomic Cooperation, MinisterialMeeting,Joint tatement,Canberra, November6-7, 1989.25 See the discussion of this point in Charles E. Morrison, The Future ofAPEC: Institutionaland Structural Issues, Analysis, vol. 6, no. 1 (1994), p. 81; and Martin Rudner, APEC: TheChallenges ofAsia-PacificCooperation, ModernAsian Studies, o. 2 (1995), p. 410.26 A Vision for APEC: Towards an Asia-PacificEconomic Community, Report of the EminentPersons Group to APEC Ministers Singapore: APEC Secretariat,October, 1993), p. 55. See also theargument n Donald C. Hellmann, APEC and the Political Economy oftheAsia-Pacific:New Myths,Old Realities, Analysis, ol. 6, no. 1 (1994), p. 36.27 Hellmann, APEC and the Political Economy oftheAsia-Pacific, . 36.

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Institution-Buildinground he acific iminstitutionalizationsnecessaryn order topressforward owards hegoalsofgreater rade nd investmentacilitationnd increased rade iberalization.

Butgreaternstitutionalizationouldundoubtedlylienate number fAsianmembers fAPEC. AsMilesKahlerhasnoted,manyAPEC members,particularlyhe Asianmembers, find he ncremental pproach to institu-tional evolutionmore congenial thanwhattheyperceive as a 'Western'emphasison constitution-making. 28siandevelopingcountries re con-cerned that furthertrengtheningfAPEC as an institution ouldresultin an increasinglyegalized ontract-basedrganizationapableofenforcingcompliance.29ndeed,manyAsianmembers fAPECview heforum smoreofa process hanan institutionnd would iketosee itstay hatway.30For thetimebeing,then,APEC's institutionalrrangements likely oremain ied tothe annualsummitmeetings. hismeans that hedesignatedAPEC hostfor particular ear's ummit akeson thebulk of theresponsi-bilities or heagenda and coordinatinghevarious atelliteworkshopsndmeetings fministersnd officials. his hostsystem as slowlyvolved.Forexample, twasagreed at the nauguralmeetingnCanberra hat nASEANmemberwould host the annualministerialmeeting very econdyear inotherwords neven-numberedears. hiswasdone toassuagethefears ftheASEAN members hat heir ssociationwouldbe overtakenyAPEC. In 1991the Seoul APEC Declaration of 1991 guaranteed that all members whowanted ohold a summitmeetingwouldhavetheopportunityo do so.3 Andin 1993 the United States turned the annual ministerialmeeting nto asummit fgovernmenteaders.Whilemostmembers fAPEC,especially heAsianmembers, regener-ally atisfiedwith his rrangementtdoes have its imitations. irst, hosegovernments osting heAPEC annualmeetingsn thefirst ewyearswereAPEC boosters ndwanted o seeAPEC realize tsopen regionalism oals.32As a result PECmovedforward ta surprisinglyapidrate. n 1998Malaysia,themostnotableAPEC skeptic,will ct as host, nd a fewyears aterChina,another eluctant PECmember, illdrive heprocess or year. t s possible

28 Miles Kahler, InstitutionBuilding in the Pacific, n Andrew Mack andJohn Ravenhill, eds.,PacificCooperation:uildingEconomic nd Security egimes n theAsia-Pacific egion St. Leonards, NewSouth Wales: Allen and Unwin, 1994), p. 34. Similar comments are made by David Rapkin,Leadership and Cooperative Institutions n theAsia-Pacific, n Mack and Ravenhill, eds., PacificCooperation,. 118.29 See thediscussion of thisproblem in Sopiee, AsianApproach ; and David Rapkin, Leadershipand Cooperative Institutions n theAsia-Pacific, n Mack and Ravenhill, eds., PacificCooperation,p.118-21.30 SeeJoceline Tan, PuttingAPEC Back on Track, The NewStraits imes, anuary5, 1994.31 Seoul APEC Declaration, Seoul, November 14, 1991, Section 11.32 The first ivegovernmentsto hostAPEC's annual meetingwere Australia,Singapore, SouthKorea, Thailand - under the interimgovernmentofAnand Panyarachun,which was dominated byWestern-trained echnocrats - and the United States.Allwere strongsupportersof liberalization.The next three hosts, ndonesia, Japan and the Philippines, wereAPEC moderates.

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Pacific ffairsthat he Malaysian rimeminister, r. Mahathir, illhave stepped down bythenor thathe will, s he did over the Commonwealth,have a change ofheart. However, t s also possible thatMalaysia,whilewanting o put on asuccessful ummit hatmakes a unique contributiono the process,willnotpressforward owards ll ofAPEC's goals with he sameenthusiasm s otherhosts.Other APEC memberswillhave to guard against he process stallingwhile t s in thehandsofgovernmentsuchasMalaysia nd China.Second,there s the problemofwhether,s theAPEC agenda getsmorecrowdedand more complex, some of the ASEAN memberswill have thebureaucratic apacity o move theAPEC processforward uring heyearsnwhichtheyhosttheAPEC summit.This is not to suggest hatthe ASEANstateshave weak bureaucracies.Clearly, his s notthe case. Rather t needsto be noted thatwith apidly xpandingdomestic conomies, largenumberof ASEAN meetingsto hostor attend each year, nd otherregional andinternationalbligations,omeASEAN bureaucraciesre already tretchedothe imit.Hosting summit nd coordinating yearofAPEC meetingsmayproveto be almost mpossiblewhen added to theotherresponsibilitieshatare alreadynplace. Multilateralismxacts highprice n terms fbureau-cratic esources.

Third, here s the ssueofhowto treat ecent nd newmembers n termsof their lace in thecycle f hosts. hould,for xample,Papua New Guineaor Chile host an APEC summit n the near future? fnew membersarebrought ntoAPEC does thatmean thatAPEC boosters uch as AustraliandtheUnited Stateswillhave towaituntilafter he newmembershavetakentheir urn s hostsbeforethey an once again drivethe APEC process? fnewmembers o host n APEC summit eforeAustralia ets nother hanceit may mean that the 2010 deadline willgo bybefore APEC returns oCanberra. These issues and the others noted above can be resolved.Ultimately, balance will ikely e foundwhich, s one insiderhas noted,will mean that thepace of institutionalisation illnot be as fastas theAmericans r theAustralians ould ike, nd willbe fasterhansome of theAsian'swould prefer. 33owever,twill akepatience, ersistencend imagi-nation o devise strategyhat an ensure hatAPEC does notfounder n theissueof nstitutionalization.

33 Bodde,Jr., Viewwfromhe19th Floor, p. 65.

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Institution-Buildinground he acific imTHE AGENDA

From the beginning strict arametershave been set aroundAPEC'sagenda. Certainly,he activists ho havebeen pushingAPEC as a vehicleforgreater economic liberalization around the Pacific Rim have arguedconvincingly hatAPEC should concentrate solelyon economic issues.However, sAPEC has raised tsprofile nd demonstrated hat tmaybe ableto nfluence he processof regional nd even nternationalconomic iber-alization o thequestionsofwhich conomic ssues hould be givenpriorityandhowbroadly economic houldbe defined, avebeguntobe discussed.As a resultAPEC faces number f difficultecisions.

Two ways fapproaching he ssue of iberalization avecome to domi-nate APEC discussions. he first pproach s represented ythe target atesoffully pen economiesby2010for he developedeconomies ofAPEC and2020for hedeveloping conomies. The principle fadoptingtarget ateswasgiven riorityt theSeattle ummitf1993andtheBogor ummitn1994and has been actively romotedbythe U.S., Australia nd Canada amongothers.The second approach is centeredon attempts, hrough hemanyand variousworking roups, o introducemechanisms,uch as theharmo-nizationofcustomsproceduresor a disputemediationservice,thatwillfacilitatereater rade nd investmentmongAPEC's member conomies.The dilemmaforAPEC ishow tomanagethe two pproaches.Fulleco-nomic iberalization y specific argetdatesis a high-rewarduthigh-riskapproach. Achieving ully pen economiesaround theregion by 2010 and2020wouldbe a major ccomplishmentorAPEC.However,houldthepolit-ical will to implement the necessaryenabling legislation dissolve as thedeadlinesgetcloser then theresulting ecriminations ay ffect hewholeliberalization rocess nd undermine nygainsmade on thetrade nd invest-mentfacilitation ront. oncentratingn facilitatingrade and investmentwillbring essdramatic esults ut s more ikely o succeed. But theprogressthatvariousworking roupshave made in simplymaking radeand invest-ment asier sa far ry rom,nd attractsess media attentionhan, he oftyopen regionalism oals thathave preoccupiedtheAPEC boosters, nd maymeanthatkeymember conomies, uchas theUnitedStates,willbecomedis-illusioned and abandon APEC, making even the more limited tradefacilitationoalsdifficulto achieve.Moving owardwith oth approaches tthe same time san obvious ompromise. et, t s not clear that itherAPECas whole or individual host governmentswill in the future have thebureacratic capacity and political energy to pursue both approachessimultaneously.Anadditional omplications thatMalaysia, hichwillhost he ummitn1998, appears interested n shifting heeconomic emphasis n APEC awayfrom rade nd investmentiberalizationndtowards conomic ndtechnicalcooperation.This so-called ThirdPillarofAPEC was ntroduced n Osaka,

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Pacific ffairsand formanyofAPEC's members, articularlyhedevelopingones,it hasmoreappeal than the free rade ssueschampionedbythe developedAPECmember economies. Certainly evelopmentassistancewas pushed at theSubicBaysummitnd will ontinue ohave a significantlace on an agendawhich sbecomingmorecrowdedwith ach summit.Whilethere s agreement hatAPEC shouldconcentrate n economicissues, here s also a sense n somequarters hat hediscussions o datehavebeen too narrow nd shouldbe broadened toencompass ll aspectsofeco-nomic iberalization. ence, for xample, thas beenargued hat, at heverytimegovernmentsremaking teasier hrough rade greementsor usinessto trade ndinvest nd buildalliances ndassociationso that hey anprofit,many fthe samegovernmentseduce,holdbackortotally iolate hefree-dom ofworkingpeople to build alliances and associationsso theycansurvive. 34lsopartoftheargumentsthatnon-governmentalrganizations(NGOs) should lsobe moredirectlynvolvedntheAPECprocess notjustin the unofficial arallelmeetings hatwereheld inOsaka and SubicBayand thatno trade greement ughtto be signedwithout clauseprotectingthosebasichumanrights ertinentoeconomic ife.35 hisargumentsalsotied n to the socialdumping rgument ftheU.S. and otherWestern ov-ernmentswhich re concerned that s liberalization akesplace businessesinAsia's developing countrieswillbe at a distinct dvantagebecause theywill nothave to meetminimum abour and environmental tandardsnorrespectWesternoncepts fhumanrights.But should theWestern conomiesattempt o raisethese ssues nAPECtheywillbe firmlyebuffed ymostoftheAsian member conomies.Asianoppositions basedon theperception hat he ssueofhumanrightssrootedinWesternonceptions fhumandignity,ndividual reedom nd ustice ndisessentially smokescreen orWesternizationndglobalization nWesternterms.36t swidely elieved nAsia thatWestern otions fhumanrightsndindividual ibertiesre ncompatiblewithAsian notions f the mportance fcommunitynd thevalues associatedwithConfucianism nd Islam.Noris itthought mongtheAsianmembers hatAPEC is theplaceto debate thesedif-

34 Ed Broadbent, Globalization the Democratic Challenge (Paper presented at the Conferenceon Globalization, Trade and Human Rights,Toronto, Ontario, Canada, February 22, 1996).35 Ibid. See also APEC: The Challenge of Human Rights, ibertas, ol. 5 (February 1996); and FarEastern conomicReview,November 14, 1996.

36 See Brian S. Turner, Human Rights:From Local Cultures to Global Systems, n DamienKingsbury nd Greg Barton,eds.,Differencesnd Tolerance: uman Rightsssues n SoutheastAsiaVictoria:Deakin University ress,1994), p. 9. See also Diane K Mauzy and R S. Milne, Human Rights n ASEANStates: A Canadian Policy Perspective, n AmitavAcharyaand Richard Stubbs, eds., NewChallengesorASEAN.EmergingPolicyssues Vancouver: Universityf BritishColumbia Press, 1995), pp. 115-29; andJames C. Hsuing, Human Rights n an East Asian Perspective, nJamesC. Hsuing, ed., HumanRightsin East Asia:A Cultural erspectiveNewYork:Paragon House, 1985), pp. 5-6.

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Institution-Buildinground he acific imferences.nterestingly,nvironmentalssueshavebeen discussed yAPEC. InMarch 1994 ministers esponsible or he environmentmet n Vancouver oreview he potential ole ofAPEC in promotingnvironmentalooperationin the Asia-Pacific. 37owever,while t s obviously eneficialfor llAPECmembers oparticipatencleaningup theenvironmentobinding ecisionshave been reached. Certainly, o environmentaltandards ave been setorenforceable actions agreed to. Indeed, if theWesternmemberswere toattempto mposesuchan approachtheywouldbe strenuouslypposed bytheAsianmembers.Finally, here s mountingpressureon APEC members o put securityissues n theagenda.The argument ere s that conomicand securityssuesare interdependent38nd, indeed, thatmanyAsian statesdefinenationalsecurityoinclude economicsecurity.39thershave suggested hatbymain-tainingAmerican nterestn theeconomic ife fEastAsia,APEC can ensurethat he U.S. willalso maintain tssecuritynvolvement.40oreover, s theG-7 ummitmeetings ave shown,when eadersgettogether hey reproneto talk boutsecurityvenwhentheyre supposed tobe discussingconomicissues.However, hile here s a general cknowledgementhat ecurityssuesare important nd pressing, here s considerable resistance o departingfromwhat s seen as APEC's originalmandate to stick trictlyoeconomicmatters.41he Asian members, n particular, re not interested n seeingAPEC move ntothe securityealmespecially ow that heASEANRegionalForumhas been created pecificallyodeal with hesekinds f ssues. t s alsofelt hatAPEC could be seriouslymperilled fChina-Taiwan rU.S.-Japansecurityelations ecamepartof theforum's iscussions.As APEC evolves, nd especiallyfnew members re admitted, he ques-tion of what should go on the agenda, and in whatorder,willgetmorecomplicated.APEC's successbringswith t a higherprofile nd the moreAPEC accomplishes hemore tsgoalsand achievements illbe questionedand challenged bythose who are putat a disadvantageby ts actions.Theincreasing pressureon APEC to expand its agenda means that careful

37 APEC Meeting of Ministers Responsible for the Environment, SummaryReport, Vancouver,March 23-25, 1994.38 See Hee Kwon Park, Multilateral ecurityCooperation, ThePacificReview, ol. 6, no. 3 (1993),p. 251.39 See David Dewitt, Common, Comprehensive, and Cooperative Security n the Asia Pacific, ThePacificReview, ol. 7, no. 1 (1994).40 This point is made by Fred Bergsten, the chair of theEPG, who also notes, somewhat ambigu-ously, that APEC does not - and should not - discuss security ssues but its security mplicationsare profound. See Fred Bergsten, The Case forAPEC: An Asian Push forWorld-WideFree Trade,TheEconomist, anuary6, 1996.41 Douglas H. Paal, APEC and Regional Security, Analysis, ol. 4, no. 4 (1993), p. 91; and FarEastern conomic eview, ecember 5, 1996.

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Documents

APEC's Dilemmas Institution-Building Around the Pacific Rim