Fri, Oct 31, 2003 page8

• Profiting from the essence of APEC

  • By David Huang 黃偉峰
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  Last week's informal APEC leaders' summit, held in Bangkok following a ministerial meeting, saw opinions being widely exchanged among member economies, but the extent to which real action can be taken is questionable. That's why APEC is often regarded as a forum rather than a tightly-regulated international organization.

  APEC may have neither enforcement powers nor an adjudication system like the EU, but it is unfair to say that it has absolutely no binding power over its members. For example, its tradition of seating arrangements being determined by alphabetical order remained unchanged this year in Thailand. Moreover, the ban preventing the president of Taiwan from attending the leaders' summit is still in place. These examples show that APEC members are in fact limited by rules of protocol, custom and precedent.

  This year's proposal by South Korea and Australia to reform APEC's structure has therefore led to unease in Taiwan. Taiwanese are concerned that APEC may succumb to Chinese pressure and discriminate against Taiwan in its institutional rules and procedures.

  As a matter of fact, the institutionalization of APEC started long ago. Member economies are often mistakenly thought to enjoy complete autonomy in view of APEC's proclaimed "open regionalism," which highlights the principles of equal rights, consensus-building, mutual benefit, incremental progress, voluntary commitment, openness and transparency.

  In practice, agreements reached in previous APEC meetings and other activities are likely to restrict the freedom of the host and member economies. The system exhibits a pattern of "path dependency." For example, when Australia and South Korea propose that APEC should establish a new institution to forge common ground in such areas as diplomacy, anti-terrorism and trade, that institution is more likely to be founded on APEC's traditional consensual approach, and hence unlikely to exclude certain member economies.

  This phenomenon of path dependency results from the fact that any change to the existing institutional path would result in tremendous costs. Forming a new institution incurs costs relating to negotiation, sovereignty transfer, and uncertainty. Therefore, South Korea and Australia's proposal is most likely to be left to a working group to study its feasibility and then be passed on to senior officials or ministers to negotiate and come to a decision. The likelihood of APEC turning into an EU-style regime is very low since such a proposal would totally alter the existing institutional path, thus incurring enormous follow-up costs.

  Given that the objective of facilitating trade and investment is unlikely to be achieved in the short term under a current framework that values consensus and voluntary commitment, some member economies have turned to bilateral free trade agreements (BFTA). Singapore was the first APEC member to initiate this project. As of the middle of last year, APEC members proposed and negotiated 33 BFTAs. ASEAN's project with China to develop a free-trade zone by 2010 is also part of this trend.

  Some maintain that APEC's functions will become redundant and "hollowed out" with the rise of BFTAs. Such an observation ignores the fact that APEC is institutionally linked to and nested in other regimes, some with overlapping objectives and complementary functions, such as the WTO, the North American Free Trade Agreement and ASEAN.

  APEC members may be constrained by the rules of these highly regulated regimes in which they participate. However, as long as the objectives of APEC and these regimes are compatible, participation in these regimes will not hollow-out APEC. Rather, it may reinforce some of APEC's practices. Similarly, though APEC members may seek to establish BFTAs, as long as these BFTAs do not contravene the mission of APEC, APEC is unlikely to be hollowed out.

  What, then, is the essence of APEC?

  In fact, APEC is an ongoing game, not a series of one-off competitions. Thus, a diplomatic triumph at one annual meeting does not constitute a permanent victory. Rather, reputation-building and agenda-setting are far more important than short-term gain. To establish its reputation, Taiwan first must develop long-term strategies focusing on areas of particular expertise. To set the agenda, we need to know who has agenda-setting power. According to APEC's structure, this agenda-setting power is vested in working groups, committees and leaders' summits.

  APEC has 11 working groups, four committees and Senior Official Meeting task forces. From 1993 to May of this year, 851 projects were carried out by these committees and working groups. During this period, Taiwan executed 59 relevant projects, mainly focusing on the Industrial Science and Technology Working Group. Our performance is good, but China also executed 54 projects, mostly connected to the Committee on Trade and Investment (CTI). Obviously, Taiwan and China have different priorities and strategies in building their reputations. It will take further research to find out whether China's efforts on the CTI has helped its dealings with ASEAN in establishing a free-trade agreement.

  In the past, our government wanted to exploit APEC to make diplomatic breakthroughs. It thought that the more highly-ranked the representative, the more hope there would be to achieve diplomatic headway. But it tended to regard the process as a one-off competition.

  The joint declaration affects not only the next meeting's agenda but also APEC's work over the coming year. Therefore, if Taiwan can again send a similarly well-renowned representative whose authority derives not from politics but from knowledge, then this superior intellectual background and seniority will assist Taiwan in forging an agenda of its own choice, while at the same time precluding unwanted agendas. In choosing the current representative, it seems that the government has grasped the essence of the ongoing game of APEC.

  David Huang is an associate research fellow at the Institute of European and American Studies, Academia Sinica.

  Translated by Jennie Shih
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