Articles

APEC Japan 2010: In Search of a New Vision


March 15, 2010

SPEAKERS:
Shigeru Nakamura
, APEC 2010 SOM Chair; Ambassador for International Economic Affairs, Ministry of Foreign Affairs of Japan
Kurt Tong, Economic Coordinator and U.S. Senior Official for APEC, Bureau of East Asian and Pacific Affairs

MODERATOR:
Monica Whaley
, President, National Center for Asia-Pacific Economic Cooperation

Shigeru Nakamura of Japan's Ministry of Foreign Affairs and Kurt Tong of the U.S. Department of State, APEC senior officials for their respective countries, came together to speak about APEC's vision and the upcoming November 2010 meeting in Yokohama.

The Asia-Pacific Economic Cooperation forum was founded in 1989, the year that saw the end of the Cold War, Ambassador Nakamura noted. At the start, APEC had 12 member economies; there are 21 now, with another 10 hoping to join in the future. The forum, which is the largest economic group in the world, accounts for 40 percent of the world's population and 54 percent of global GDP.

Under the 1994 Bogor Goals, 2010 is the deadline for APEC's industrialized nations to issue a report on their progress in liberalizing trade and facilitating investment, Ambassador Nakamura said. In 2020, it will be the developing economies' turn to publish an evaluation of their own progress. Of the 21 APEC members, six developed nations and six developing nations are currently engaged in this assessment process.

Meeting in Osaka in 1995, APEC members agreed on a set of objectives covering 15 specific areas, including tariffs, non-tariff measures, services, investment, customs procedures, intellectual property rights and competition policy, he said. For the 2010 meeting, Japan has chosen the theme of "Change and Action." Bearing in mind this theme, APEC has developed a vision that embraces three elements: fostering regional economic integration, devising a new growth strategy and enhancing human security.

To promote regional economic integration, APEC members have been exploring pathways towards a free trade area of Asia-Pacific, or FTAAP, Ambassador Nakamura observed. Discussions are still on the conceptual level, and given APEC's non-binding and consensus-based format, "we cannot really produce such a legally binding agreement or treaties." However, he said, relationships such as ASEAN+3, ASEAN+6 and the Trans-Pacific Partnership movement could form the basis for creating an FTAAP, and APEC members are eager to track the unfolding of these possibilities.

To craft a balanced, inclusive, sustainable and knowledge-based growth strategy, APEC plans to focus on domestic policies, he explained. The forum's program for inclusive growth, for example, is based on "expanding access to opportunities, supporting the most vulnerable members of society such as younger and elderly workers, and enhancing gender equality." Often, programs designed with one particular goal in mind serve to promote others as well. Innovation is the main goal of programs to foster knowledge-based growth, "but of course innovation can be applied to sustainable growth in terms of energy conservation or alternative energy issues," and to balanced growth in the context of programs to support small and medium enterprises.

APEC has been working on counterterrorism, emergency preparedness, prevention of infectious disease epidemics and other human security issues for many years, especially since 9/11, Ambassador Nakamura continued. Each of these threatens to disrupt business and trade. This year, Japan's focus is on food security. "Two or three years back, we witnessed hikes in prices for food, and we would like to see more sustainable agricultural development as well as the facilitation of agricultural investment and trade."

To promote economic and technical cooperation, APEC has created a program called Ecotech, whose steering committee is chaired by Mr. Tong, concluded Ambassador Nakamura. "Japan and the U.S. have been working very hard last year and this year to come up with more streamlined Ecotech programs." Such programs, together with the APEC business community councils, "continue to strengthen the networks of government, business and economy," as does APEC's coordination with the G20, which will meet in Seoul in November just before the APEC summit in Yokohama.

The global economic crisis and accompanying recessions in many of the APEC countries have "had a big impact on how we have approached issues within APEC," said Ambassador Tong. "Many of the economies in the region are recovering smartly," Korea and China among them. The U.S. "is showing some signs of coming around," as is Japan. Yet "the fundamental conclusion that has been reached by the leaders and by many of the APEC economies is that growth as usual cannot be sustained, that there needs to be a new look at how economic growth takes place in the Asia-Pacific region."

As the U.S. prepares to participate in the 2010 Yokohama summit and to host the 2011 summit, the themes of balanced, inclusive, sustainable, knowledge-based growth that Mr. Nakamura described "are permeating the discussions within APEC," Ambassador Tong continued. The Asia-Pacific region accounts for 60 percent of U.S. exports, so "it's really a critical part of our growth strategy as a nation to be more tightly linked" to the region. Notwithstanding APEC's small budget, consensus-based nature and limited infrastructure, the forum can indeed act as a "locomotive" both for trade agreements and for individual initiatives by member countries. "This is I think why our private sector engages with APEC so much, is that the issues and ideas that are discussed within the APEC context are brought back to each economy and implemented domestically."

An example of this is APEC's model free trade agreement, Ambassador Tong observed. In putting FTAs in place, members haven't followed the model slavishly, but "it has a significant impact on those agreements, and on raising the general level of ambition towards economic liberalization in the Asia-Pacific region." The region is on track to meet the APEC goal of reducing trade transaction costs by an additional 5 percent by 2010. Another example is APEC's ease-of-doing business program, which sets improvement targets for member economies that are outliers in terms of the level of effort required to start a new business or to manage business contracts and trade transactions.

Two big priorities for the U.S. as it works with APEC are food security and food safety, Ambassador Tong concluded. "We are a large agricultural economy, and there are enormous opportunities here in a business sense, but also an understanding permeating the economies of the Asia-Pacific region that food security going forward is going to be one of the major challenges to human security in the Asia-Pacific region."

***

Moderator Monica Whaley of the National Center for Asia-Pacific Economic Cooperation asked:

How does APEC strike a balance between broad, fundamental issues such as food security and energy and more granular problems like starting a business? How can the private sector help to move some of these issues forward?

The APEC Business Advisory Council, or ABAC, helps member governments understand the desires of the business community, and business people also appreciate APEC's work on technical issues such as ease of doing business and customs documentation, responded Ambassador Nakamura.

"What happens is that as economies get more and more closely intertwined, the issues that remain become more and more technical, and so the communications challenge for all us is to try and bridge the technical with the thematic and have it all make sense," Ambassador Tong reflected.

What will be APEC's approach on foreign direct investment and on opening up member countries' economies to more services from foreign companies?

Given the diversity of economic levels among the 21 member countries, APEC's goal is to focus on common ground between developing and developed countries in enhancing the level of investment and services, Ambassador Nakamura said.

The audience joined in the Q&A:

How do you balance what you are trying to do from the perspective of Japan and the U.S. with what may or may not be the same situation in China?

"The tasks that need to take place to achieve more balanced growth in a macroeconomic sense across the Pacific need to take place on both sides of the Pacific. The United States is aware of that," replied Ambassador Tong. There's "a shared understanding" that "starkly imbalanced growth is unsustainable," both in macroeconomic and in political terms. "The U.S. pursues this dialogue through APEC, through the G20, and also bilaterally with our important economic partners, for example, China, through approaches such as the strategic and economic dialogue."

Ambassador Nakamura commented, "During the course of the APEC process my Chinese colleague has often mentioned that China is still a developing nation, and is taking a more cautious approach to the international modality," as are APEC member countries in Southeast Asia. At the same time, there are competing considerations as China hopes to make adjustments in its economic relations with the U.S. and Japan.

Since Secretary Clinton signed the Treaty of Amity and Cooperation, is it safe to assume that the U.S. is going to join the East Asia Summit? How does the U.S. distinguish the roles and issues of the two forums?

The U.S.'s intention is to engage more formally with the East Asian Summit, but "exactly how we'll do that is still a matter of discussion within the U.S. government," and "also between our government and the actual participants in the East Asia Summit," Ambassador Tong said.

"Our intention, as the Secretary outlined, is really to see what the Asia-Pacific region is interested in seeing the U.S. do, and to underscore our desire to be a constructive partner with the region. She outlined several principles. If you boil it down to two, it's that we want to help address the important issues of the region, and we want to have results when we do so." Rather than conceiving of these relationships as an "emerging, quote/unquote, 'architecture' of the Asia-Pacific region, "what is actually taking place in the Asia-Pacific region is much more fluid, much more like biology than physics," he added.

In a very recent Nikkei interview, the former American Ambassador to Japan, Thomas Schieffer, was asked how he saw the triangle Japan-United States-China, and his response was he did not see any triangle as being workable in any way, that really only bilateral relations between each one of these countries were a practical proposition. What is your view?

Ambassador Tong replied, "I wouldn't read too much into these mini-lateral structures as geopolitical entities, or as having great weight over the long run in shaping relationships among different countries or within different regions. I think it's the larger structures and the bilateral structures--I'm actually stating personal opinion here rather than U.S. government opinion. But the larger ones and the bilateral ones tend to be more lasting and have the most significant impact. The mini-laterals are useful really on an ad hoc basis to address specific problems."

--Katherine Hyde
Topics:  Policy

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