Saturday, May 21, 2005

From APEC to Ashes
by Walden Bello with Marissa de Guzman, Sept 1, 1999

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.. But the dip. Once it was a mere venue for consultative discussions but it took a leap forwards and dabbled in trade liberalization 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.

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
Alejandro Lichauco; Struggle Within APEC; Manila Chronicle; October 14,1996
Mahathir Mohamad; Free Trade in the Real World; Manila Chronicle; July 12, 1996
Luis Teodoro; APEC Summit: For Whom?; Manila Chronicle; October 28, 1996

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 13th APEC meeting in Auckland.

"The selfish spirit of commerce knows no country, and feels no passion or principle but that of gain" - Thomas Jefferson, 1809

“Nations whose NATIONALISM is destroyed are subject to ruin.” - Colonel Muhammar Qaddafi, 1942-, Libyan Political and Military Leader

"We shall be better and braver and less helpless if we think that we ought to enquire, than we should have been if we indulged in the idle fancy that there was no knowing and no use in seeking to know what we do not know..." - SOCRATES

"Upang maitindig natin ang bantayog ng ating lipunan, kailangang radikal nating baguhin hindi lamang ang ating mga institusyon kundi maging ang ating pag-iisip at pamumuhay. Kailangan ang rebolusyon, hindi lamang sa panlabas, kundi lalo na sa panloob!" --Apolinario Mabini La Revolucion Filipina (1898)

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