Apec countries gearing up to promote freer trade and investment in region
THE Asia Pacific Economic Co-operation (Apec) forum is taking its first concrete steps towards creating a more liberal trade and investment climate in the region.
The impetus has been provided by the draft of a trade and investment framework agreement prepared by the United States. This has been circulated to Apec members for consideration at a ministerial-level meeting in Seattle in November.
An agreement, if reached, would formalise the approach towards greater integration among the Apec economies, namely Asean, the US, Canada, Australia, New Zealand, South Korea, Japan, China, Hongkong and Taiwan.
On the cards are measures to liberalise trade and investment rules to reduce protectionism and lower other kinds of trade impediments.
The promotion of a freer trading environment has been Apec’s raison d’etre since its formation in 1989.
The aim is to identify and reduce obstacles to trade and investment.
But this has to be done in a manner consistent with the multilateral framework of the General Agreement on Tariffs and Trade (Gatt).
Said then Prime Minister Lee Kuan Yew at Apec’s second ministerial meeting in Singapore in July 1990:
“Apec countries should set themselves up as examples of good Gatt-abiding citizens of the world. In that way, we will contribute to world economic growth.”
A more structured approach to trade and investment liberalisation, Apec supporters believe, will enable higher growth in the region’s economies.
But the move from a freer trading climate to a free-trade area is easier said than done.
Said economist Andrew Elek of the Australian National University:
“A formal agreement among countries to reduce tariff and non-tariff barriers is far too complex and complicated and potentially quite divisive because the economies are too diverse.
“There is no way we can fit countries like China and Japan into such a framework.”
Nonetheless, Australia is keen to push the idea of an integrated market and a common framework agreement for trade and investment among Apec members.
The US, having assumed chairmanship of the organisation this year, seems keen on the Australian proposal.
An American official said a successful Apec would strengthen the argument that the US ought to stay engaged in Asia.
“Apec plays back on America’s domestic politics. By increased trade and integration of markets, it is then easier to explain to American citizens why the US needs to be part of the region,” he said.
Various issues on trade liberalisation have been identified and discussed in the working groups.
In fact, more than two-thirds of the Apec budget of US$2 million (S$3.2 million) is devoted to the collation of trade and investment data, human resource development, marine resource conservation, tourism, telecommunications, transportation and fisheries.
At the recent Apec senior officials’ meeting in Williamsburg in the US, good progress was made in the areas of Customs rules, tariff data base and investment surveys, said an Apec official.
Two investment surveys are now in the works.
The first requires each Apec member to detail its investment policies and the country’s attractiveness for investments. Apec aims to publish the survey results in time for the Seattle meeting.
The second will be on views of businessmen on the region’s investment policies.
A “bible” of telecommunications regimes has also been published. The survey makes clear the costs and benefits in liberalising the telecommunications industry.
Apec’s Eminent Persons Group has been tasked to articulate a long-term vision on further trade and investment liberalisation among member-countries.
On the agenda now are discussions to synthesise the potentially different agendas of the developing and developed Apec members.
The Apec Secretariat’s executive director, Mr William Bodde, felt steps towards a freer trading area should be taken gradually.
He said: “There is enough momentum to keep the bicycle of trade liberalisation in the region from falling over. But there is a feeling among Apec economies that we have to go a step at a time.
“We should not push the process. There is plenty Apec can do in reducing trade impediments and barriers without talking about the grey visionary ‘integrated market’ in the future.”
APEC: BRIEF FACTS
* FORMED: Nov 5, 1989.
* OBJECTIVE: To identify and remove obstacles to trade and investment among member-countries in line with the multilateral framework of the General Agreement on Tariffs and Trade (Gatt).
* MEMBERS: The Asean countries, United States, Canada, Australia, New Zealand, South Korea and Japan. China, Hongkong and Taiwan joined the grouping in 1991. Prospective members are Papua New Guinea and Mexico. * SECRETARIAT: Set up in Singaporein January this year at Alexandra Point along Alexandra Road. Its role is to co-ordinate programmes and activities, provide technical and analytical support and manage Apec’s finances.
* WORKING GROUPS: Trade and investment data, trade promotion, investment and technology transfer, human-resources development, regional energy co-operation, marine-resource conservation, telecommunications, transportation, tourism and fisheries. The regional trade liberalisation, and economics trend and issues are ad hoc groups. * MEETINGS: Senior officials meet every four months to prepare for the annual ministerial meeting.