Vinod K Aggarwal and Peter Volberding
Japan Spotlight, 2010
The Asia-Pacific Economic Cooperation (APEC) forum’s role in the Asia-Pacific has reflected the widespread trend toward efforts to institutionalize economic and other relationships in the region. In its 20 years of existence, APEC has nearly doubled in size – from 12 members to 21 – with another dozen or so seeking membership. APEC’s issue scope has similarly broadened to include social and environmental matters, and it has acquired a somewhat higher degree of institutionalization via a stronger secretariat in Singapore. But consistently central to APEC’s mission of liberalization has been the pursuit of trade liberalization, most recently promulgated through the envisioned Free Trade Agreement of the Asia-Pacific (FTAAP). An FTAAP is also consistent with APEC’s 1994 Bogor Goals of free trade and investment among its members.
Yet APEC’s ability to remain a relevant actor in the Asia-Pacific is uncertain. First, the proliferation of competing economic and political fora, principally the World Trade Organization (WTO), the Association of Southeast Asian Nations (ASEAN) and numerous bilateral free trade agreements (FTAs) between members, threatens to overshadow the efficacy of APEC. Recent proposals for the Trans-Pacific Partnership (TPP), an East Asian Community (EAC) and an Asia-Pacific Community (APC) have only further muddied the water. Second, the diverse nature of APEC’s members complicates the negotiation process. Differing interests and priorities, especially among the major Pacific economies of China, Japan and the United States, have led to competing visions of APEC’s role. Third, many have criticized APEC’s slow implementation of the Bogor Goals. With the 2010 deadline of free trade and investment between the advanced economies of APEC likely to pass unfulfilled, progress toward a member-wide trade liberalization agreement by 2020 is similarly stymied, and is unlikely to advance in the near future. Finally, the global economic recession has dampened interest in free trade, forcing APEC to spend time combating protectionism rather than promoting liberalization.
Under these challenging circumstances, will APEC be unable to meet its goals and relegated to the sidelines of trade fora in the Asia-Pacific? If not, what should APEC’s role be and what actions should the institution take to reassert its influence? In order to adequately answer these questions, this article examines two key components of APEC’s function in the Asia-Pacific. The first section analyzes the relationship between APEC and the various alternative trade liberalization fora, namely the WTO, ASEAN and the TPP. It also considers the contending visions for APEC by member nations. The second section proffers recommendations to strengthen APEC through a revised policy scope and a broader engagement with the business, academic and nonprofit communities.