PACIFIC BASIN ECONOMIC COUNCIL
MAIN PAGE | SPEECHES & EDITORIALS | 1999 | PBEC'S ROLE IN APEC

PBEC's Role in APEC Helmut Sohmen PBEC Chairman Monday, November 30, 1998 The Asia-Pacific Economic Cooperation forum has just finished its latest summit meeting in Kuala Lumpur, Malaysia. It featured the traditional parade of flowery shirts and a long litany of statements as to what the APEC members feel are serious concerns. By contrast, the list of definitive measures agreed was rather short. Despite the hype and the positive political spin that surrounds the APEC process, little of real substance has been achieved in the ten years of summiteering, except for the setting of targets in the fairly distant future. One wonders which specific results can really be attributed to APEC, as a conferencing procedure of governments, that individual member countries could not have pursued at their own pace and time-frame. Some have in fact done exactly that. Even on those issues where agreement had been reached in principle, specific follow-up measures and actual implementation are frequently not proceeding as planned. National self-interest continues to be paramount. We have again seen it this time. Japan balked at early sector liberalization for certain industries. The subsequent referral of this matter to the WTO was a fig-leaf to save embarrassment all around. When the East Asian crisis started to bite last year, APEC seemed a ready forum to discuss reasons, and to search for and work together on solutions. The difficulties were certainly on the agenda of the 1997 summit meeting in Vancouver but not taken fully seriously. Several member economies of APEC drifted into serious problems after the event, and little has been done by APEC, as a multilateral panel, that could be regarded as effective counter-measures. But one should bear in mind that APEC was never really meant to be a crisis management committee or a rescue brigade. It would thus be unfair to expect it to produce panaceas to the current economic ills that afflict East Asia and also Russia. However, APEC has also not managed to deliver in a convincing fashion where it was supposed to be instrumental in progressing the agenda for which it was set up. There has been no shortage of policy suggestions, and there certainly have been enough senior official meetings, ABAC deliberations, and similar work done by various other parties in the interim, to identify what could and should be done. Some minor successes are overshadowed by the unilateral action taken in the area of tariff reductions or standardization by several APEC members: in other words, APEC has not really added synergistic value to developments. One might even argue that the creation of a negotiating forum slows down liberalization efforts, as individual economies not surprisingly get into a state of mind where reciprocity seems the smarter option and peer pressure moves into the background. There is of course no question that the stated APEC targets are welcome objectives on which governments and the business world agree. One must be careful not to throw out the baby with the bathwater. But APEC leaders might garner more public support and more admiration specifically from the business community if they were honest in admitting that certain targets have been too ambitious, or that a rapidly changing economic environment requires a re-think, and perhaps a slow-down or even a new start. The present crisis has again highlighted the differences among the various economies, as well as the need to be country-specific with solutions. APEC has no institutional framework to force the implementation of policies on its members, nor can it provide remedies strictly on a multilateral basis. Perhaps we businessmen have difficulty understanding governments, and their apparent lack of pragmatism in not seeking ways around brick walls. APEC did not favor PBEC with the responsibility of providing practical input into its deliberations, although PBEC was founded over thirty years ago already by people who had the foresight to consider the great Pacific Ocean not as a barrier to trade but as a conduit to deeper and wider commercial activity. The members of PBEC in their daily efforts to produce profits, provide jobs, create wealth, and help raise standards of living do so without waiting for great pronouncements from the summits: they just get on with their endeavors. And they are successful by and large because they know that the competitive market place leaves no room for idle chatter or for wishful thinking. PBEC as an organization has not stopped its work because APEC has exploded on the scene with great expectations and has established its own business advisory group ABAC with which we exchange views from time to time. PBEC continues to make public pronouncements and suggestions in areas we consider relevant, be it transparency in dealings between governments and the private sector, and in such specific areas as environment, food, administrative barriers to trade, foreign direct investment, or electronic commerce. PBEC deals primarily with industry-specific concerns, or with factors relevant to decision-making at individual member company level. We are certainly capable of making proposals which have practical expertise on a very broad base underpinning their formulation. Through its region-wide networking ability, PBEC has ready access to top executives and senior management personnel, many of whom are also serving in public advisory functions in their respective communities. PBEC stands for less rather than for more government while we support the opening of markets, the privatization of state-owned industries, the strengthening of financial systems, closer coordination and cooperation among national governments to eradicate illegal activities, the creation of zones of peace and stability, we would also argue for the planned reduction in governmental functions overall and an increased role for private enterprise. And we would actually like to see public funds spent on government activities that are capable of producing results, rather than being used to finance perennial talk-shops and political grand-standing. In summary, the business community represented in PBEC is not anti-APEC. But we would like to call on APEC and its leaders to be more realistic in their assessment of what is achievable. APEC should refocus itself if it wishes to be taken seriously as an instrument of constructive progress in the Pacific region. Otherwise it will be overtaken by events and will not last until 2020 or even until 2010.