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APEC Makes Some Progress, But Has Lost Sight of its Larger Goals From Asia Pacific Bulletin #82 Asia Pacific Foundation of Canada OCTOBER 31, 2002 For the second year in a row, security issues appeared to push aside economic cooperation as the focus of the APEC Leaders' Meeting in Los Cabos, Mexico. Despite APEC's intended concern with the implementation of its ambitious trade liberalization and facilitation agenda, media, and therefore public, attention was largely directed at talk about recent terrorist incidents and on George W. Bush's attempt to rally support for a war on Iraq. This was less than the whole story: much of the Leaders' Declaration - effectively the communiqué worked out during months of negotiations ahead of the actual meeting -- addressed economic questions, including the balance between security and trade, more broadly facilitating exchange across borders, and enhancing administrative transparency. Still, the public perception that APEC has moved some way off course is not altogether wrong. The need to ensure that tightened security does not impede trade was the most obvious dovetail between terrorism and business. The US unveiled the "STAR Initiative" - Secure Trade in the APEC Region -- aimed at facilitating the movement of people and goods, while flagging potentially troublesome travelers and cargo for more specific attention. Advanced technology underlies the initiative, involving, for example, the use of biometric technology on travel documents, and implementing standardized electronic customs reporting of high-risk containers. The Leaders also approved the APEC Trade Facilitation Action Plan, building on a promise made last year to cut transaction costs by 5% over five years. The plan calls for the provision of capacity building assistance for developing economies. The World Bank estimates that intra-APEC exports could grow by as much as US$280 billion through such non-tariff measures as improved port logistics, standards harmonization, e-business use and administrative transparency. Transparency was also a major theme in the Leaders' Statement on Implementing APEC Standards. This document encourages APEC member economies to release information on laws and regulations, and, ultimately, procedures and administrative rulings through the Internet and official publications. As Asian economies often do not fare well in Transparency International's annual Corruption Perceptions Index, this is a welcome move. Corridor discussions focused on the issue of agricultural export subsidies, especially those of the EU and the US. While farm subsidies are of major importance to many APEC members - especially exporters like Canada, Australia and Thailand, and importers like Japan and South Korea - they are not a direct concern of APEC. The Asia Pacific group has deferred to the broader World Trade Organization on the topic, although it is seeking to apply pressure on the WTO negotiations. Still, the effort expended on farm subsidies at Los Cabos, like discussion of war on Iraq, was aimed at achieving a result beyond APEC. In fact, there was little reference to APEC's Bogor goal of free and open trade within the region by 2020 - perhaps an acknowledgement of the forum's diminishing importance as a force for trade liberalization. APEC was also sidetracked this year by issues on the domestic agenda of the Mexican hosts, but which were of lesser importance to the rest of the membership. For example, Mexico's emphasis on the attractions of investing in Mexico did little to promote APEC's investment goals. More broadly, Mexico's overall trade policy in the last year was much more oriented toward bilateral and sub-regional free-trade agreements than it was on securing "concerted unilateral liberalization" in APEC and working toward the Bogor targets. APEC's emphasis next year, with Thailand as host, is likely to be on Economic and Technical Cooperation (in effect, development assistance), which suggests a further distancing from the Bogor targets and from trade liberalization. APEC continues to make progress on specific initiatives that are of value to the business community, but it has lost its raison d'etre and does not seem to be in a hurry to restore the sense of purpose that infused the organization in the mid 1990s. While every effort has been taken to verify the accuracy of this information, the Asia Pacific Foundation of Canada cannot accept any responsibility or liability for reliance by any person or organization on the use of this information. It is provided as a service of APF Canada for members of the Asia Pacific Business Network, reproduced by PBEC with permission. From Asia Pacific Bulletin #82, © Copyright 2002 Asia Pacific Foundation of Canada.