Wednesday, August 15, 2007

Apec free trade as the second best option

The case for trade is not just monetary, but moral. Economic freedom creates habits of liberty. And habits of liberty create expectations of democracy.US President George W. Bush in a speech on November 19, 1999

THE other day, senior ministers of the Asia-Pacific Economic Cooperation (Apec) agreed to review the proposed free-trade area as envisioned by the Bogor declaration in 1994.

This is certainly a laudable move on the part of the senior ministers, given two major developments lately—the collapse of the Doha Round of trade negotiations, and the acceleration of free-trade agreements between and among members of Apec itself.

We believe that a continuing global engagement to achieve a breakthrough under the World Trade Organization is the best thing that could ever happen to both developed and developing countries. But given the current mood in the developed world, especially the weakening commitment toward multilateral trade initiatives among politicians in the United States, as well as the increasing political backlash against offshoring in that country, it’s not likely that we could ever see the revival of interest in the Doha development agenda soon.

More so in Europe, where its leaders seem to have made a virtue out of bashing globalization in a time when such a phenomenon has started to metamorphose as a geopolitical shift of power and influence toward the Asia-Pacific region, especially India and China.

Given the importance of American leadership in global trade talks, we are only going to see a clear signal on the prospects for multilateral engagements on trade matters among the Americans and Europeans probably after the US 2008 presidential elections, when a new American president is elected.

The Asia-Pacific region, specifically the Philippines, could probably not wait for that signal for us to discern our own future. If we couldn’t have the best option, therefore, we might have to settle for the second best—Apec. Our active participation in this effort to review the direction of Apec is crucial.

Apec counts 21-member economies: Australia, Brunei, Canada, Chile, China, Hong Kong, Indonesia, Japan, South Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, Philippines, Russia, Singapore, Taiwan, Thailand, the United States and Vietnam.

These economies account for more than half of global trade, and the US, Japan, China, Hong Kong, Singapore, Malaysia, Taiwan and South Korea account for 73 percent of exports. Practically the same economies, plus Thailand, account for 66 percent of Philippine imports.

These numbers suggest that revving up investment and trade among Apec members is generally favorable for the Philippines, since most of its trading partners are already within the organization. Besides, China and India, the world’s fastest-growing economies, are part of Apec. Hitching on their growth bandwagon would surely be in the interest of the region and the Philippines.

Now that the senior ministers are going to review how Apec does its business, they might as well do a serious soul-searching on its core principles.

Since its founding in 1989, Apec has been operating on the basis of “nonbinding commitments and open dialogues.” Decisions are based on “consensus” and commitments are undertaken as voluntary efforts. This approach sounds virtuous, but it also means that Apec could probably never create meaningful strides toward achieving goals of the Bogor Declaration for a “free and open trade and investment in the Asia-Pacific by 2010 for industrialized economies, and 2020 for developing economies” if it relies on nonbinding commitments.

Perhaps it’s high time for Apec members to think about converting the economic group from a mere “forum for facilitating economic growth, cooperation, trade and investments” and costume photo-ops for politicians into a mean-business negotiating body.

Who knows, the Europeans might yet again notice and buckle down to reform dirigiste policies and rejoin the global community for a fairer and more liberalized trading system. If not, economic interaction within a dynamic group of fast-growing economies is really not such a bad idea.

Related posts
Doha round’s demise: implications for the Philippines
Doha round as dead thing walking
Demystifying the World Trade Organization

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