APEC: The Challenges of Asia Pacific Economic Cooperation
Author(s): Martin Rudner
Source: Modern Asian Studies, Vol. 29, No. 2 (May, 1995), pp. 403-437 Published by: Cambridge University Press Stable URL: http://www.jstor.org/stable/312820 . Accessed: 14/11/2013 10:19 Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at . http://www.jstor.org/page/info/about/policies/terms.jsp . JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org. . Cambridge University Press is collaborating with JSTOR to digitize, preserve and extend access to Modern Asian Studies. http://www.jstor.org This content downloaded from 175.144.128.157 on Thu, 14 Nov 2013 10:19:13 AM All use subject to JSTOR Terms and Conditions Modern Asian Studies 29, 2 (1995), pp. 403-437. Printed in Great Britain Modern Asian Studies 29, 2 (1995), pp. 403-437. Printed in Great Britain Modern Asian Studies 29, 2 (1995), pp. 403-437. Printed in Great Britain APEC: The Challenges of Asia Pacific Economic Cooperation MARTIN RUDNER Norman Paterson School of International Affairs Carleton University, Ottawa International trade figures prominently in the economic growth strat- egies of East and Southeast Asian countries. Despite the economic recession experienced across much of the world since the early I99oS, the pace of economic growth was sustained virtually unabated in the countries of East and Southeast Asia.' During the entire decade of the g98os the East and Southeast Asian economies grew more than twice as rapidly as the rest of the world economy. Along with this growth performance, international trade in the East and Southeast Asian region increased at about twice the rate of Europe and North America. Merchandise exports in East and Southeast Asia increased at an annual average rate of Io% per annum between 1965 and I989. In 1990 and 1991 aggregate merchandise exports from Asia's Newly Industrializing Economies (South Korea, Singapore, Taiwan and Hong Kong) grew by 9.o% and 1.4%, while the four ASEAN (Association of Southeast Asian Nations) developing countries (Indonesia, Malaysia, the Philippines, Singapore and Thailand) recorded average increases of 12.9% and I4.3%, respectively.2 Expanding merchandise exports were accompanied by surging capital inflows and rising investment rates, culminating in accelerated The countries of the East and Southeast Asia, for purposes of this paper, include Japan, the Republic of (South) Korea, China, Taiwan (Republic of China), Hong Kong and the six members of the Association of Southeast Asian Nations (ASEAN): Brunei, Indonesia, Malaysia, the Philippines, Singapore, and Thailand. 2 World Bank, The Challenge of Development, World Development Report Igg9, published for the World Bank by Oxford University Press, I99 , Table 14; Asian Development Outlook iggi, Table AI 3. ASEAN consists of the four developing countries, Indonesia, Malaysia, the Philippines and Thailand, together with oil-rich Brunei and Singapore, classed among the Asian NIEs. The grouping of data is this study sometimes addresses ASEAN as a whole, or it may differentiate between ASEAN countries at various levels of development, as is relevant and appropriate. oo26-749X/95/$5.oo +.oo ? I995 Cambridge University Press 403 APEC: The Challenges of Asia Pacific Economic Cooperation MARTIN RUDNER Norman Paterson School of International Affairs Carleton University, Ottawa International trade figures prominently in the economic growth strat- egies of East and Southeast Asian countries. Despite the economic recession experienced across much of the world since the early I99oS, the pace of economic growth was sustained virtually unabated in the countries of East and Southeast Asia.' During the entire decade of the g98os the East and Southeast Asian economies grew more than twice as rapidly as the rest of the world economy. Along with this growth performance, international trade in the East and Southeast Asian region increased at about twice the rate of Europe and North America. Merchandise exports in East and Southeast Asia increased at an annual average rate of Io% per annum between 1965 and I989. In 1990 and 1991 aggregate merchandise exports from Asia's Newly Industrializing Economies (South Korea, Singapore, Taiwan and Hong Kong) grew by 9.o% and 1.4%, while the four ASEAN (Association of Southeast Asian Nations) developing countries (Indonesia, Malaysia, the Philippines, Singapore and Thailand) recorded average increases of 12.9% and I4.3%, respectively.2 Expanding merchandise exports were accompanied by surging capital inflows and rising investment rates, culminating in accelerated The countries of the East and Southeast Asia, for purposes of this paper, include Japan, the Republic of (South) Korea, China, Taiwan (Republic of China), Hong Kong and the six members of the Association of Southeast Asian Nations (ASEAN): Brunei, Indonesia, Malaysia, the Philippines, Singapore, and Thailand. 2 World Bank, The Challenge of Development, World Development Report Igg9, published for the World Bank by Oxford University Press, I99 , Table 14; Asian Development Outlook iggi, Table AI 3. ASEAN consists of the four developing countries, Indonesia, Malaysia, the Philippines and Thailand, together with oil-rich Brunei and Singapore, classed among the Asian NIEs. The grouping of data is this study sometimes addresses ASEAN as a whole, or it may differentiate between ASEAN countries at various levels of development, as is relevant and appropriate. oo26-749X/95/$5.oo +.oo ? I995 Cambridge University Press 403 APEC: The Challenges of Asia Pacific Economic Cooperation MARTIN RUDNER Norman Paterson School of International Affairs Carleton University, Ottawa International trade figures prominently in the economic growth strat- egies of East and Southeast Asian countries. Despite the economic recession experienced across much of the world since the early I99oS, the pace of economic growth was sustained virtually unabated in the countries of East and Southeast Asia.' During the entire decade of the g98os the East and Southeast Asian economies grew more than twice as rapidly as the rest of the world economy. Along with this growth performance, international trade in the East and Southeast Asian region increased at about twice the rate of Europe and North America. Merchandise exports in East and Southeast Asia increased at an annual average rate of Io% per annum between 1965 and I989. In 1990 and 1991 aggregate merchandise exports from Asia's Newly Industrializing Economies (South Korea, Singapore, Taiwan and Hong Kong) grew by 9.o% and 1.4%, while the four ASEAN (Association of Southeast Asian Nations) developing countries (Indonesia, Malaysia, the Philippines, Singapore and Thailand) recorded average increases of 12.9% and I4.3%, respectively.2 Expanding merchandise exports were accompanied by surging capital inflows and rising investment rates, culminating in accelerated The countries of the East and Southeast Asia, for purposes of this paper, include Japan, the Republic of (South) Korea, China, Taiwan (Republic of China), Hong Kong and the six members of the Association of Southeast Asian Nations (ASEAN): Brunei, Indonesia, Malaysia, the Philippines, Singapore, and Thailand. 2 World Bank, The Challenge of Development, World Development Report Igg9, published for the World Bank by Oxford University Press, I99 , Table 14; Asian Development Outlook iggi, Table AI 3. ASEAN consists of the four developing countries, Indonesia, Malaysia, the Philippines and Thailand, together with oil-rich Brunei and Singapore, classed among the Asian NIEs. The grouping of data is this study sometimes addresses ASEAN as a whole, or it may differentiate between ASEAN countries at various levels of development, as is relevant and appropriate. oo26-749X/95/$5.oo +.oo ? I995 Cambridge University Press 403 This content downloaded from 175.144.128.157 on Thu, 14 Nov 2013 10:19:13 AM All use subject to JSTOR Terms and Conditions growth of Gross Domestic Product (GDP) along with a significant reduction in the incidence of poverty.3 A striking feature of East and Southeast Asia's dynamic growth economy is the synergy that has been achieved between countries at various levels of economic development. The region includes one advanced industrial country, Japan; a low-income, large population country, China; four Newly Industrializing Economies, Hong Kong, South Korea, Singapore and Taiwan; an oil-rich micro-state, Brunei; and four developing countries of differing economic capabilities and growth records.4 Of these, Malaysia and Thailand rank among the rapidly industrializing, high-growth, middle-income developing eco- nomies. Indonesia, a large and populous low-income country, has achieved accelerated economic development over the past quarter cen- tury. By way of contrast, the Philippines has experienced laggard growth and deepening impoverishment. In China, the Communist gov- ernment has implemented economic reforms that engendered a dynamic expansion of agriculture, industry and exports in this low- income country, most notably in its so-called Special Economic Zones. Economic Relations in the Asia Pacific Region Beginning in 1986 a profound and far-reaching shift occurred in the geographic pattern of trade in Asia. From that point on, intra-Asian 3 Cf. Geoffrey Lamb and Rachel Weaving (eds) Managing Policy Reform in the Real World: Asian Experiences, EDI Seminar Series, Washington: World Bank, i992; and Rachain Chintayarangsan, Nattapong Thongpakdee and Pruttipohn Nakornchai, 'ASEAN Economies. Macro-Economic Perspective,' ASEAN Economic Bulletin, vol. 8, no. 3 (I992). For case studies of Southeast Asian development performance, see, eg., George Abonyi and Bunyaraks Ninsananda, Thailand: Development Planning in Turbu- lent Times, Asia Paper no. 3, University of Toronto-York University Joint Centre for Asia Pacific Studies, 1989; Mohamed Ariff, The Malaysian Economy: Pacific Connections, Singapore: Oxford University Press, I99I; Daniel Lacson, The Philippines Yesterday, Today and Tomorrow: Political and Socio-Economic Developments, Singapore: Times Aca- demic Press for the Institute of Policy Studies, 1991; K.H. Lee and Shyamala Nagaraj (eds), The Malaysian Economy Beyond iggo: International and Domestic Perspectives, Kuala Lumpur: Persatuan Ekonomi Malaysia, I991; Martin Rudner, 'Repelita-V and the Indonesian Economy,' Review of Indonesian and Malaysian Affairs vol. 25, no. 2 (1991); R. Thillainathan, 'Malaysian Economy in the i990s: The Issues, Lessons, Challenges and Outlook,' Malaysian Journal of Economic Studies, vol. 27 (1990). 4 Though they are part of this same geographic region, the Indochina states of Vietnam, Cambodia and Laos pursued ideologically and politically-determined pol- icies that effectively isolated themselves from the emergent Asian trading system, so that they remained among the poorest, most deprived countries in all Asia. Following the Vietnamese withdrawal from Cambodia and the collapse of the Soviet Commun- ism, consideration is currently being given to ways and means of re-integrating the growth of Gross Domestic Product (GDP) along with a significant reduction in the incidence of poverty.3 A striking feature of East and Southeast Asia's dynamic growth economy is the synergy that has been achieved between countries at various levels of economic development. The region includes one advanced industrial country, Japan; a low-income, large population country, China; four Newly Industrializing Economies, Hong Kong, South Korea, Singapore and Taiwan; an oil-rich micro-state, Brunei; and four developing countries of differing economic capabilities and growth records.4 Of these, Malaysia and Thailand rank among the rapidly industrializing, high-growth, middle-income developing eco- nomies. Indonesia, a large and populous low-income country, has achieved accelerated economic development over the past quarter cen- tury. By way of contrast, the Philippines has experienced laggard growth and deepening impoverishment. In China, the Communist gov- ernment has implemented economic reforms that engendered a dynamic expansion of agriculture, industry and exports in this low- income country, most notably in its so-called Special Economic Zones. Economic Relations in the Asia Pacific Region Beginning in 1986 a profound and far-reaching shift occurred in the geographic pattern of trade in Asia. From that point on, intra-Asian 3 Cf. Geoffrey Lamb and Rachel Weaving (eds) Managing Policy Reform in the Real World: Asian Experiences, EDI Seminar Series, Washington: World Bank, i992; and Rachain Chintayarangsan, Nattapong Thongpakdee and Pruttipohn Nakornchai, 'ASEAN Economies. Macro-Economic Perspective,' ASEAN Economic Bulletin, vol. 8, no. 3 (I992). For case studies of Southeast Asian development performance, see, eg., George Abonyi and Bunyaraks Ninsananda, Thailand: Development Planning in Turbu- lent Times, Asia Paper no. 3, University of Toronto-York University Joint Centre for Asia Pacific Studies, 1989; Mohamed Ariff, The Malaysian Economy: Pacific Connections, Singapore: Oxford University Press, I99I; Daniel Lacson, The Philippines Yesterday, Today and Tomorrow: Political and Socio-Economic Developments, Singapore: Times Aca- demic Press for the Institute of Policy Studies, 1991; K.H. Lee and Shyamala Nagaraj (eds), The Malaysian Economy Beyond iggo: International and Domestic Perspectives, Kuala Lumpur: Persatuan Ekonomi Malaysia, I991; Martin Rudner, 'Repelita-V and the Indonesian Economy,' Review of Indonesian and Malaysian Affairs vol. 25, no. 2 (1991); R. Thillainathan, 'Malaysian Economy in the i990s: The Issues, Lessons, Challenges and Outlook,' Malaysian Journal of Economic Studies, vol. 27 (1990). 4 Though they are part of this same geographic region, the Indochina states of Vietnam, Cambodia and Laos pursued ideologically and politically-determined pol- icies that effectively isolated themselves from the emergent Asian trading system, so that they remained among the poorest, most deprived countries in all Asia. Following the Vietnamese withdrawal from Cambodia and the collapse of the Soviet Commun- ism, consideration is currently being given to ways and means of re-integrating the growth of Gross Domestic Product (GDP) along with a significant reduction in the incidence of poverty.3 A striking feature of East and Southeast Asia's dynamic growth economy is the synergy that has been achieved between countries at various levels of economic development. The region includes one advanced industrial country, Japan; a low-income, large population country, China; four Newly Industrializing Economies, Hong Kong, South Korea, Singapore and Taiwan; an oil-rich micro-state, Brunei; and four developing countries of differing economic capabilities and growth records.4 Of these, Malaysia and Thailand rank among the rapidly industrializing, high-growth, middle-income developing eco- nomies. Indonesia, a large and populous low-income country, has achieved accelerated economic development over the past quarter cen- tury. By way of contrast, the Philippines has experienced laggard growth and deepening impoverishment. In China, the Communist gov- ernment has implemented economic reforms that engendered a dynamic expansion of agriculture, industry and exports in this low- income country, most notably in its so-called Special Economic Zones. Economic Relations in the Asia Pacific Region Beginning in 1986 a profound and far-reaching shift occurred in the geographic pattern of trade in Asia. From that point on, intra-Asian 3 Cf. Geoffrey Lamb and Rachel Weaving (eds) Managing Policy Reform in the Real World: Asian Experiences, EDI Seminar Series, Washington: World Bank, i992; and Rachain Chintayarangsan, Nattapong Thongpakdee and Pruttipohn Nakornchai, 'ASEAN Economies. Macro-Economic Perspective,' ASEAN Economic Bulletin, vol. 8, no. 3 (I992). For case studies of Southeast Asian development performance, see, eg., George Abonyi and Bunyaraks Ninsananda, Thailand: Development Planning in Turbu- lent Times, Asia Paper no. 3, University of Toronto-York University Joint Centre for Asia Pacific Studies, 1989; Mohamed Ariff, The Malaysian Economy: Pacific Connections, Singapore: Oxford University Press, I99I; Daniel Lacson, The Philippines Yesterday, Today and Tomorrow: Political and Socio-Economic Developments, Singapore: Times Aca- demic Press for the Institute of Policy Studies, 1991; K.H. Lee and Shyamala Nagaraj (eds), The Malaysian Economy Beyond iggo: International and Domestic Perspectives, Kuala Lumpur: Persatuan Ekonomi Malaysia, I991; Martin Rudner, 'Repelita-V and the Indonesian Economy,' Review of Indonesian and Malaysian Affairs vol. 25, no. 2 (1991); R. Thillainathan, 'Malaysian Economy in the i990s: The Issues, Lessons, Challenges and Outlook,' Malaysian Journal of Economic Studies, vol. 27 (1990). 4 Though they are part of this same geographic region, the Indochina states of Vietnam, Cambodia and Laos pursued ideologically and politically-determined pol- icies that effectively isolated themselves from the emergent Asian trading system, so that they remained among the poorest, most deprived countries in all Asia. Following the Vietnamese withdrawal from Cambodia and the collapse of the Soviet Commun- ism, consideration is currently being given to ways and means of re-integrating the 404 404 404 MARTIN RUDNER MARTIN RUDNER MARTIN RUDNER This content downloaded from 175.144.128.157 on Thu, 14 Nov 2013 10:19:13 AM All use subject to JSTOR Terms and Conditions ASIA PACIFIC ECONOMIC COOPERATION ASIA PACIFIC ECONOMIC COOPERATION ASIA PACIFIC ECONOMIC COOPERATION TABLE I Matrix of Intra-Asian Trade, ig99 Exports to: ASEANa Asian NIEsb Japan China $b. % changec $b. % change' $b. % change' $b. % changec Exports from: ASEANb 4.5 11.7 22.6 22.4 22.8 9.6 2.3 30.3 Asian NIEs' 24.8 I7.7 41.7 25.8 6.4 32.0 20.o 9.8 China 2.1 15.9 36.3 22.6 10.2 11.5 - - Japan 25.6 13.9 66.9 17.8 - - 8.6 40.0 a Excludes Singapore b Includes Hong Kong, Republic of Korea, Taiwan and Singapore cPercent change over previous year Source: Asian Development Bank, Asian Development Outlook i993, (Oxford University Press, 1993). trade and investment emerged as the most important and most rapidly expanding dimension of Asia's international economic rela- tions.5 These trade-based developments also generated more intensive economic linkages across the Pacific, with East and Southeast Asia becoming the most important regional trading partner for the US. Two-way trade flows between the East and Southeast Asia and the United States accounted for 32.5% of total US trade in 1990, surpass- ing US trade with Canada/Mexico (25.9%) and the European Com- munity (21.3%). Of the total flow of trade between Asia and the US, Japan accounted for 15.6%, while the NIEs and ASEAN countries accounted for 16.9%. Patterns of Trade and Investment in East and Southeast Asia The regional trading system that emerged in East and Southeast Asia was predicated on a continuous restructuring and relocation of industrial production across the region, as it responded to ongoing, dynamic shifts in comparative international advantage.6 A cascading flow of industrial investment, from Japan to the NIEs, and then onwards to China and the ASEAN developing countries, provided much of the stimulus for intra-Asian trade development (Table i). Indochina countries into the regional economic framework for East and Southeast Asia. Vide Mya Than, 'ASEAN, Indo-China and Myanmar: Towards Economic Co-operation?' ASEAN Economic Bulletin (Nov 199 ). 5 Asia Development Outlook i99i, Manila: Asian Development Bank, 1991, p. 43. 6 F. A. Alburo, C. C. Bautista and M. S. H. Gochoco, 'Pacific Direct Investment Flows into ASEAN,' ASEAN Economic Bulletin, vol. 8, no. 3 (1992). TABLE I Matrix of Intra-Asian Trade, ig99 Exports to: ASEANa Asian NIEsb Japan China $b. % changec $b. % change' $b. % change' $b. % changec Exports from: ASEANb 4.5 11.7 22.6 22.4 22.8 9.6 2.3 30.3 Asian NIEs' 24.8 I7.7 41.7 25.8 6.4 32.0 20.o 9.8 China 2.1 15.9 36.3 22.6 10.2 11.5 - - Japan 25.6 13.9 66.9 17.8 - - 8.6 40.0 a Excludes Singapore b Includes Hong Kong, Republic of Korea, Taiwan and Singapore cPercent change over previous year Source: Asian Development Bank, Asian Development Outlook i993, (Oxford University Press, 1993). trade and investment emerged as the most important and most rapidly expanding dimension of Asia's international economic rela- tions.5 These trade-based developments also generated more intensive economic linkages across the Pacific, with East and Southeast Asia becoming the most important regional trading partner for the US. Two-way trade flows between the East and Southeast Asia and the United States accounted for 32.5% of total US trade in 1990, surpass- ing US trade with Canada/Mexico (25.9%) and the European Com- munity (21.3%). Of the total flow of trade between Asia and the US, Japan accounted for 15.6%, while the NIEs and ASEAN countries accounted for 16.9%. Patterns of Trade and Investment in East and Southeast Asia The regional trading system that emerged in East and Southeast Asia was predicated on a continuous restructuring and relocation of industrial production across the region, as it responded to ongoing, dynamic shifts in comparative international advantage.6 A cascading flow of industrial investment, from Japan to the NIEs, and then onwards to China and the ASEAN developing countries, provided much of the stimulus for intra-Asian trade development (Table i). Indochina countries into the regional economic framework for East and Southeast Asia. Vide Mya Than, 'ASEAN, Indo-China and Myanmar: Towards Economic Co-operation?' ASEAN Economic Bulletin (Nov 199 ). 5 Asia Development Outlook i99i, Manila: Asian Development Bank, 1991, p. 43. 6 F. A. Alburo, C. C. Bautista and M. S. H. Gochoco, 'Pacific Direct Investment Flows into ASEAN,' ASEAN Economic Bulletin, vol. 8, no. 3 (1992). TABLE I Matrix of Intra-Asian Trade, ig99 Exports to: ASEANa Asian NIEsb Japan China $b. % changec $b. % change' $b. % change' $b. % changec Exports from: ASEANb 4.5 11.7 22.6 22.4 22.8 9.6 2.3 30.3 Asian NIEs' 24.8 I7.7 41.7 25.8 6.4 32.0 20.o 9.8 China 2.1 15.9 36.3 22.6 10.2 11.5 - - Japan 25.6 13.9 66.9 17.8 - - 8.6 40.0 a Excludes Singapore b Includes Hong Kong, Republic of Korea, Taiwan and Singapore cPercent change over previous year Source: Asian Development Bank, Asian Development Outlook i993, (Oxford University Press, 1993). trade and investment emerged as the most important and most rapidly expanding dimension of Asia's international economic rela- tions.5 These trade-based developments also generated more intensive economic linkages across the Pacific, with East and Southeast Asia becoming the most important regional trading partner for the US. Two-way trade flows between the East and Southeast Asia and the United States accounted for 32.5% of total US trade in 1990, surpass- ing US trade with Canada/Mexico (25.9%) and the European Com- munity (21.3%). Of the total flow of trade between Asia and the US, Japan accounted for 15.6%, while the NIEs and ASEAN countries accounted for 16.9%. Patterns of Trade and Investment in East and Southeast Asia The regional trading system that emerged in East and Southeast Asia was predicated on a continuous restructuring and relocation of industrial production across the region, as it responded to ongoing, dynamic shifts in comparative international advantage.6 A cascading flow of industrial investment, from Japan to the NIEs, and then onwards to China and the ASEAN developing countries, provided much of the stimulus for intra-Asian trade development (Table i). Indochina countries into the regional economic framework for East and Southeast Asia. Vide Mya Than, 'ASEAN, Indo-China and Myanmar: Towards Economic Co-operation?' ASEAN Economic Bulletin (Nov 199 ). 5 Asia Development Outlook i99i, Manila: Asian Development Bank, 1991, p. 43. 6 F. A. Alburo, C. C. Bautista and M. S. H. Gochoco, 'Pacific Direct Investment Flows into ASEAN,' ASEAN Economic Bulletin, vol. 8, no. 3 (1992). 405 405 405 This content downloaded from 175.144.128.157 on Thu, 14 Nov 2013 10:19:13 AM All use subject to JSTOR Terms and Conditions 406 MARTIN RUDNER Originally most of the direct foreign investment in the region eman- ated from Japan, and was concentrated in labour-intensive manufac- turing in the Asian region. More recently, the NIEs have become important investors in export-oriented labour-intensive manufactur- ing in the ASEAN developing countries. By the early I99os, the Asian NIEs accounted for nearly 30% of direct foreign investment in the four ASEAN developing economies, with Taiwan itself contributing over 15.4%, and Japan 15.2%.7 The process of foreign investment-inspired export-oriented indus- trialization in the NIEs, and now in China and the ASEAN countries, has contributed to the creation of greater complementarity across the economies of East and Southeast Asia. Trade and investment flows tended to reflect the dynamic comparative advantages of countries at different levels of industrial and economic development. The pattern of regional trade has become more specialized, with the NIEs, China and ASEAN countries concentrating on labour and resource-intensive exports in exchange for Japanese technology-intensive products and more skill-intensive goods and services from the Asian NIEs.8 By relocating production in which they were no longer efficient to neigh- bouring countries offering locational and competitive advantages, investment from Japan and the NIEs generated greatly increased exports from transplanted industries in Asian developing countries, along with a rapidly accelerating intra-industry trade among the regional partners.9 Today Japan and the NIEs account for the preponderant share of intra-Asian trade, about 70% of the total, although ASEAN trade with Japan and with the NIEs is expanding rapidly. Trade among the ASEAN countries themselves remains small by comparison, even though the ASEAN countries are the only ones offering each other some measure of trade preference. Except for this ASEAN preferential arrangement, which remains of minor consequence, there are no other regional institutional arrangements affecting trade and investment flows among the East and Southeast Asian countries, other than the policies pursued individually by the governments concerned. 7 Data from Jardine, Flemming, cited in The Economist (8 May i993), pp. 70-I. 8 Mohammed Ariff and Tan Eu Chye, 'ASEAN-Pacific Trade Relations,' ASEAN Economic Bulletin, vol. 8, no. 3 (1992), 9 Ippei Yamazawa, et al., 'Trade and Industrial Adjustment in the Pacific Asian Countries', The Developing Economies (i983); Young Sun Lee, 'Intra-Industry Trade in the Pacific Basin,' International EconomicJournal (Spring I987); 'Intra-Asian Trade,' and 'Intra-Asian Investment' Asian Development Outlook g99i, pp. 43-9. 406 MARTIN RUDNER Originally most of the direct foreign investment in the region eman- ated from Japan, and was concentrated in labour-intensive manufac- turing in the Asian region. More recently, the NIEs have become important investors in export-oriented labour-intensive manufactur- ing in the ASEAN developing countries. By the early I99os, the Asian NIEs accounted for nearly 30% of direct foreign investment in the four ASEAN developing economies, with Taiwan itself contributing over 15.4%, and Japan 15.2%.7 The process of foreign investment-inspired export-oriented indus- trialization in the NIEs, and now in China and the ASEAN countries, has contributed to the creation of greater complementarity across the economies of East and Southeast Asia. Trade and investment flows tended to reflect the dynamic comparative advantages of countries at different levels of industrial and economic development. The pattern of regional trade has become more specialized, with the NIEs, China and ASEAN countries concentrating on labour and resource-intensive exports in exchange for Japanese technology-intensive products and more skill-intensive goods and services from the Asian NIEs.8 By relocating production in which they were no longer efficient to neigh- bouring countries offering locational and competitive advantages, investment from Japan and the NIEs generated greatly increased exports from transplanted industries in Asian developing countries, along with a rapidly accelerating intra-industry trade among the regional partners.9 Today Japan and the NIEs account for the preponderant share of intra-Asian trade, about 70% of the total, although ASEAN trade with Japan and with the NIEs is expanding rapidly. Trade among the ASEAN countries themselves remains small by comparison, even though the ASEAN countries are the only ones offering each other some measure of trade preference. Except for this ASEAN preferential arrangement, which remains of minor consequence, there are no other regional institutional arrangements affecting trade and investment flows among the East and Southeast Asian countries, other than the policies pursued individually by the governments concerned. 7 Data from Jardine, Flemming, cited in The Economist (8 May i993), pp. 70-I. 8 Mohammed Ariff and Tan Eu Chye, 'ASEAN-Pacific Trade Relations,' ASEAN Economic Bulletin, vol. 8, no. 3 (1992), 9 Ippei Yamazawa, et al., 'Trade and Industrial Adjustment in the Pacific Asian Countries', The Developing Economies (i983); Young Sun Lee, 'Intra-Industry Trade in the Pacific Basin,' International EconomicJournal (Spring I987); 'Intra-Asian Trade,' and 'Intra-Asian Investment' Asian Development Outlook g99i, pp. 43-9. 406 MARTIN RUDNER Originally most of the direct foreign investment in the region eman- ated from Japan, and was concentrated in labour-intensive manufac- turing in the Asian region. More recently, the NIEs have become important investors in export-oriented labour-intensive manufactur- ing in the ASEAN developing countries. By the early I99os, the Asian NIEs accounted for nearly 30% of direct foreign investment in the four ASEAN developing economies, with Taiwan itself contributing over 15.4%, and Japan 15.2%.7 The process of foreign investment-inspired export-oriented indus- trialization in the NIEs, and now in China and the ASEAN countries, has contributed to the creation of greater complementarity across the economies of East and Southeast Asia. Trade and investment flows tended to reflect the dynamic comparative advantages of countries at different levels of industrial and economic development. The pattern of regional trade has become more specialized, with the NIEs, China and ASEAN countries concentrating on labour and resource-intensive exports in exchange for Japanese technology-intensive products and more skill-intensive goods and services from the Asian NIEs.8 By relocating production in which they were no longer efficient to neigh- bouring countries offering locational and competitive advantages, investment from Japan and the NIEs generated greatly increased exports from transplanted industries in Asian developing countries, along with a rapidly accelerating intra-industry trade among the regional partners.9 Today Japan and the NIEs account for the preponderant share of intra-Asian trade, about 70% of the total, although ASEAN trade with Japan and with the NIEs is expanding rapidly. Trade among the ASEAN countries themselves remains small by comparison, even though the ASEAN countries are the only ones offering each other some measure of trade preference. Except for this ASEAN preferential arrangement, which remains of minor consequence, there are no other regional institutional arrangements affecting trade and investment flows among the East and Southeast Asian countries, other than the policies pursued individually by the governments concerned. 7 Data from Jardine, Flemming, cited in The Economist (8 May i993), pp. 70-I. 8 Mohammed Ariff and Tan Eu Chye, 'ASEAN-Pacific Trade Relations,' ASEAN Economic Bulletin, vol. 8, no. 3 (1992), 9 Ippei Yamazawa, et al., 'Trade and Industrial Adjustment in the Pacific Asian Countries', The Developing Economies (i983); Young Sun Lee, 'Intra-Industry Trade in the Pacific Basin,' International EconomicJournal (Spring I987); 'Intra-Asian Trade,' and 'Intra-Asian Investment' Asian Development Outlook g99i, pp. 43-9. This content downloaded from 175.144.128.157 on Thu, 14 Nov 2013 10:19:13 AM All use subject to JSTOR Terms and Conditions ASIA PACIFIC ECONOMIC COOPERATION ASIA PACIFIC ECONOMIC COOPERATION ASIA PACIFIC ECONOMIC COOPERATION TABLE 2 Asia Pacific Trade: Shares of Total Export and Imports (Percentages, 9ggI) EXPORTS IMPORTS Japan USA Japan USA ASIAN NIEs Hong Kong 5.4 22.7 i6.i 8.i South Korea 20.9 31.7 29.1 24.0 Taiwan 12.8 36.0 27.9 20.9 ASEAN Indonesia 42.5 13.1 24.9 11.5 Malaysia 15.3 17.0 24. 16.9 Singapore 8.8 31.2 20.1 16.1 Thailand 17.4 22.7 30.6 10.7 Philippines 19.9 38.0 18.4 19.5 CHINA 14.1 o.6 13.4 10.7 Source: IMF, Direction of Trade Statistics Yearbook, i991 Trans-Pacific Economic Linkages The dynamic changes in trade relations among East and Southeast Asian countries also fostered a shift in the pattern of trade and invest- ment flows between Asia and the North American economies (Table 2). During the late I98os, a so-called 'triangular pattern of trade' emerged between Japan, the United States and the NIEs and ASEAN developing countries.'? The large-scale relocation of Japanese labour-intensive, export-oriented manufacturing to NIEs and ASEAN countries represented, in effect, a 'diversion' of Japan's con- siderable bilateral trade surpluses with the US through these Asian developing economies. Most of the output of these relocated industries was exported, with the US being the major destination. These indus- tries typically rely on imported technologies, equipment components from Japan, which are then assembled or otherwise processed for re-export to the US. The triangular trading pattern that ensued was characterized by Japanese trade surpluses with the US and with Asian NIEs and ASEAN countries, and by concomitant Asian NIE and ASEAN trade surpluses with the US. 10 Cf. Linda Y. C. Lim, 'The US, Japan and Other East Asian Economies: The Emergence of a Pacific Economic Triangle', Journal of Southeast Asian Business (Fall 1991), pp. 27 et passim. TABLE 2 Asia Pacific Trade: Shares of Total Export and Imports (Percentages, 9ggI) EXPORTS IMPORTS Japan USA Japan USA ASIAN NIEs Hong Kong 5.4 22.7 i6.i 8.i South Korea 20.9 31.7 29.1 24.0 Taiwan 12.8 36.0 27.9 20.9 ASEAN Indonesia 42.5 13.1 24.9 11.5 Malaysia 15.3 17.0 24. 16.9 Singapore 8.8 31.2 20.1 16.1 Thailand 17.4 22.7 30.6 10.7 Philippines 19.9 38.0 18.4 19.5 CHINA 14.1 o.6 13.4 10.7 Source: IMF, Direction of Trade Statistics Yearbook, i991 Trans-Pacific Economic Linkages The dynamic changes in trade relations among East and Southeast Asian countries also fostered a shift in the pattern of trade and invest- ment flows between Asia and the North American economies (Table 2). During the late I98os, a so-called 'triangular pattern of trade' emerged between Japan, the United States and the NIEs and ASEAN developing countries.'? The large-scale relocation of Japanese labour-intensive, export-oriented manufacturing to NIEs and ASEAN countries represented, in effect, a 'diversion' of Japan's con- siderable bilateral trade surpluses with the US through these Asian developing economies. Most of the output of these relocated industries was exported, with the US being the major destination. These indus- tries typically rely on imported technologies, equipment components from Japan, which are then assembled or otherwise processed for re-export to the US. The triangular trading pattern that ensued was characterized by Japanese trade surpluses with the US and with Asian NIEs and ASEAN countries, and by concomitant Asian NIE and ASEAN trade surpluses with the US. 10 Cf. Linda Y. C. Lim, 'The US, Japan and Other East Asian Economies: The Emergence of a Pacific Economic Triangle', Journal of Southeast Asian Business (Fall 1991), pp. 27 et passim. TABLE 2 Asia Pacific Trade: Shares of Total Export and Imports (Percentages, 9ggI) EXPORTS IMPORTS Japan USA Japan USA ASIAN NIEs Hong Kong 5.4 22.7 i6.i 8.i South Korea 20.9 31.7 29.1 24.0 Taiwan 12.8 36.0 27.9 20.9 ASEAN Indonesia 42.5 13.1 24.9 11.5 Malaysia 15.3 17.0 24. 16.9 Singapore 8.8 31.2 20.1 16.1 Thailand 17.4 22.7 30.6 10.7 Philippines 19.9 38.0 18.4 19.5 CHINA 14.1 o.6 13.4 10.7 Source: IMF, Direction of Trade Statistics Yearbook, i991 Trans-Pacific Economic Linkages The dynamic changes in trade relations among East and Southeast Asian countries also fostered a shift in the pattern of trade and invest- ment flows between Asia and the North American economies (Table 2). During the late I98os, a so-called 'triangular pattern of trade' emerged between Japan, the United States and the NIEs and ASEAN developing countries.'? The large-scale relocation of Japanese labour-intensive, export-oriented manufacturing to NIEs and ASEAN countries represented, in effect, a 'diversion' of Japan's con- siderable bilateral trade surpluses with the US through these Asian developing economies. Most of the output of these relocated industries was exported, with the US being the major destination. These indus- tries typically rely on imported technologies, equipment components from Japan, which are then assembled or otherwise processed for re-export to the US. The triangular trading pattern that ensued was characterized by Japanese trade surpluses with the US and with Asian NIEs and ASEAN countries, and by concomitant Asian NIE and ASEAN trade surpluses with the US. 10 Cf. Linda Y. C. Lim, 'The US, Japan and Other East Asian Economies: The Emergence of a Pacific Economic Triangle', Journal of Southeast Asian Business (Fall 1991), pp. 27 et passim. 407 407 407 This content downloaded from 175.144.128.157 on Thu, 14 Nov 2013 10:19:13 AM All use subject to JSTOR Terms and Conditions MARTIN RUDNER MARTIN RUDNER MARTIN RUDNER To be sure, the Asian NIEs generated significant surpluses on their own in their trade with the US. Most exports from Hong Kong, South Korea and Taiwan originate with local firms rather than subsidiaries of Japanese multinationals.1' It is noteworthy as well that much of the export trade from Southeast Asia to the US actually emanated from local subsidiaries of US - not Japanese - multinationals. ASEAN's leading exports to North America consist of electronics products and telecommunications equipment pro- duced by offshore manufacturing facilities of US and Canadian companies. The second largest category of exports includes gar- ments, textiles and footwear, mostly produced by Asian NIE-owned subsidiaries seeking to by-pass their domestic quotas under the Multi-Fibre Arrangement, and by local subcontractors to US importers. The third largest export category destined to the US covers various processed resource-based products, mainly frozen seafood and other agricultural items, which are characteristically produced by local Southeast Asian producers. Prescriptions for a Regional Framework for Economic Integration In contrast with the trade pactomania engulfing Europe and the Americas, the countries of East and Southeast Asia have been generally more outward-oriented and multilateral in their approaches to regional economic activity.'2 Yet this predilection for 'open regionalism'3 has come under pressure from an increasingly threatening international economic environment. There were mounting concerns that the stalemated Uruguay Round of Multilat- " Ibid., p. 28. 12 Vide S. Fujisaki, et al., 'Three Decades of Development in the Pacific Basin: An Overview,' and Heinz Arndt, 'The Gatt System, Free Trade Areas and Regional Cooperation,' both in Takao Fukuchi and Mitsuhiro Kagami (eds), Perspectives on the Pacific Basin Economy: A Comparison of Asia and Latin America, Tokyo: Institute of Devel- oping Economies, 1990; H. E. English and Murray Smith, 'The Role of Multilat- eralism and Regionalism: A Pacific Perspective' in Mohamed Ariff (ed), The Pacific Economy: Growth and External Stability, Sydney: Allen and Unwin, I99I. 13 Peter Drysdale, 'Japan in the Asia-Pacific and the World Economy,' in Japan and the World, vol. i, Canberra: Japanese Studies Association of Australia, i99i. See also Peter Drysdale and Ross Garnaut, 'The Pacific: An Application of a General Theory of Economic Integration,' in C. Fred Bergsten and Marcus Noland (eds), Pacific Dynamism and the International Economic System, Washington, DC: Institute for International Economics, in association with the Pacific Trade and Development Conference Secretariat, The Australian National University, I993. To be sure, the Asian NIEs generated significant surpluses on their own in their trade with the US. Most exports from Hong Kong, South Korea and Taiwan originate with local firms rather than subsidiaries of Japanese multinationals.1' It is noteworthy as well that much of the export trade from Southeast Asia to the US actually emanated from local subsidiaries of US - not Japanese - multinationals. ASEAN's leading exports to North America consist of electronics products and telecommunications equipment pro- duced by offshore manufacturing facilities of US and Canadian companies. The second largest category of exports includes gar- ments, textiles and footwear, mostly produced by Asian NIE-owned subsidiaries seeking to by-pass their domestic quotas under the Multi-Fibre Arrangement, and by local subcontractors to US importers. The third largest export category destined to the US covers various processed resource-based products, mainly frozen seafood and other agricultural items, which are characteristically produced by local Southeast Asian producers. Prescriptions for a Regional Framework for Economic Integration In contrast with the trade pactomania engulfing Europe and the Americas, the countries of East and Southeast Asia have been generally more outward-oriented and multilateral in their approaches to regional economic activity.'2 Yet this predilection for 'open regionalism'3 has come under pressure from an increasingly threatening international economic environment. There were mounting concerns that the stalemated Uruguay Round of Multilat- " Ibid., p. 28. 12 Vide S. Fujisaki, et al., 'Three Decades of Development in the Pacific Basin: An Overview,' and Heinz Arndt, 'The Gatt System, Free Trade Areas and Regional Cooperation,' both in Takao Fukuchi and Mitsuhiro Kagami (eds), Perspectives on the Pacific Basin Economy: A Comparison of Asia and Latin America, Tokyo: Institute of Devel- oping Economies, 1990; H. E. English and Murray Smith, 'The Role of Multilat- eralism and Regionalism: A Pacific Perspective' in Mohamed Ariff (ed), The Pacific Economy: Growth and External Stability, Sydney: Allen and Unwin, I99I. 13 Peter Drysdale, 'Japan in the Asia-Pacific and the World Economy,' in Japan and the World, vol. i, Canberra: Japanese Studies Association of Australia, i99i. See also Peter Drysdale and Ross Garnaut, 'The Pacific: An Application of a General Theory of Economic Integration,' in C. Fred Bergsten and Marcus Noland (eds), Pacific Dynamism and the International Economic System, Washington, DC: Institute for International Economics, in association with the Pacific Trade and Development Conference Secretariat, The Australian National University, I993. To be sure, the Asian NIEs generated significant surpluses on their own in their trade with the US. Most exports from Hong Kong, South Korea and Taiwan originate with local firms rather than subsidiaries of Japanese multinationals.1' It is noteworthy as well that much of the export trade from Southeast Asia to the US actually emanated from local subsidiaries of US - not Japanese - multinationals. ASEAN's leading exports to North America consist of electronics products and telecommunications equipment pro- duced by offshore manufacturing facilities of US and Canadian companies. The second largest category of exports includes gar- ments, textiles and footwear, mostly produced by Asian NIE-owned subsidiaries seeking to by-pass their domestic quotas under the Multi-Fibre Arrangement, and by local subcontractors to US importers. The third largest export category destined to the US covers various processed resource-based products, mainly frozen seafood and other agricultural items, which are characteristically produced by local Southeast Asian producers. Prescriptions for a Regional Framework for Economic Integration In contrast with the trade pactomania engulfing Europe and the Americas, the countries of East and Southeast Asia have been generally more outward-oriented and multilateral in their approaches to regional economic activity.'2 Yet this predilection for 'open regionalism'3 has come under pressure from an increasingly threatening international economic environment. There were mounting concerns that the stalemated Uruguay Round of Multilat- " Ibid., p. 28. 12 Vide S. Fujisaki, et al., 'Three Decades of Development in the Pacific Basin: An Overview,' and Heinz Arndt, 'The Gatt System, Free Trade Areas and Regional Cooperation,' both in Takao Fukuchi and Mitsuhiro Kagami (eds), Perspectives on the Pacific Basin Economy: A Comparison of Asia and Latin America, Tokyo: Institute of Devel- oping Economies, 1990; H. E. English and Murray Smith, 'The Role of Multilat- eralism and Regionalism: A Pacific Perspective' in Mohamed Ariff (ed), The Pacific Economy: Growth and External Stability, Sydney: Allen and Unwin, I99I. 13 Peter Drysdale, 'Japan in the Asia-Pacific and the World Economy,' in Japan and the World, vol. i, Canberra: Japanese Studies Association of Australia, i99i. See also Peter Drysdale and Ross Garnaut, 'The Pacific: An Application of a General Theory of Economic Integration,' in C. Fred Bergsten and Marcus Noland (eds), Pacific Dynamism and the International Economic System, Washington, DC: Institute for International Economics, in association with the Pacific Trade and Development Conference Secretariat, The Australian National University, I993. 408 408 408 This content downloaded from 175.144.128.157 on Thu, 14 Nov 2013 10:19:13 AM All use subject to JSTOR Terms and Conditions ASIA PACIFIC ECONOMIC COOPERATION ASIA PACIFIC ECONOMIC COOPERATION ASIA PACIFIC ECONOMIC COOPERATION eral Trade Negotiations might precipitate the formation of protec- tionist regional trade blocs in Europe and the Americas. Along with the growth of exports from East and Southeast Asia to the US and European Community have come heightened tensions over trade issues. The NIEs and ASEAN developing countries feel particularly vulnerable to protectionist threats to their trade- focussed development strategies. So far, the governments of East and Southeast Asia remain favour- ably predisposed towards the open and outward-oriented regionalism that has served their economies well, at least until now. The delibera- tions and consultations that take place within the newly established framework of Asia Pacific Economic Cooperation (APEC), involving East and Southeast Asian countries along with Canada and the United States, reflect this predilection.l4 By the early I99os the APEC economies accounted for some 40% of world trade, and 50% of aggregate global GDP. Nevertheless, Asia's sense of its own vulnerab- ility is prompting some governments at least to contemplate defensive strategic alternatives for regional trade. Thus Malaysia proposed the formation of an East Asian Economic Group (EAEG),'5 afterwards amended to an East Asian Economic Caucus (EAEC), as a sort of countervailing mechanism against regional protectionism elsewhere. As another expression of strategic trade policy, though focussed in particular on developing country requirements, ASEAN has agreed to create a free trade area among its members at the Southeast Asian sub-regional level. Also at a sub-regional level, some neighbouring countries have established so-called 'trade triangles,' initially invol- ving Malaysia (Johor), Singapore and Indonesia (Riau), as repres- enting subsidized investment-area counterparts to domestic duty-free enclaves.'6 As for Japan, China and the NIEs, they seem to exhibit somewhat more caution and deliberation, and indeed more introspec- tion in considering their strategic options for the future of economic cooperation in Asia. 14 Martin Rudner, 'ASEAN, Asia Pacific Economic Cooperation, and Hemi- spheric Free Trade for the Americas,' World Competition (December i992); Helen Hughes, 'Does APEC Make Sense?' ASEAN Economic Bulletin (November I991). '1 On the East Asian Economic Group (EAEG) and East Asian Economic Caucus (EAEC) proposals, see Tan Kong Yam, Toh Mun Heng and Linda Low, 'ASEAN and Pacific Economic Co-operation,' ASEAN Economic Bulletin, vol. 8, no. 3 (1992), pp. 325-8. 16 Chia Siow Yue and Lee Tsao Yuan, 'Subregional Economic Zones: A New Motive Force in Asia-Pacific Development,' in Bergsten and Noland (eds), Pacific Dynamism and the International Economic System, pp. 225-69. eral Trade Negotiations might precipitate the formation of protec- tionist regional trade blocs in Europe and the Americas. Along with the growth of exports from East and Southeast Asia to the US and European Community have come heightened tensions over trade issues. The NIEs and ASEAN developing countries feel particularly vulnerable to protectionist threats to their trade- focussed development strategies. So far, the governments of East and Southeast Asia remain favour- ably predisposed towards the open and outward-oriented regionalism that has served their economies well, at least until now. The delibera- tions and consultations that take place within the newly established framework of Asia Pacific Economic Cooperation (APEC), involving East and Southeast Asian countries along with Canada and the United States, reflect this predilection.l4 By the early I99os the APEC economies accounted for some 40% of world trade, and 50% of aggregate global GDP. Nevertheless, Asia's sense of its own vulnerab- ility is prompting some governments at least to contemplate defensive strategic alternatives for regional trade. Thus Malaysia proposed the formation of an East Asian Economic Group (EAEG),'5 afterwards amended to an East Asian Economic Caucus (EAEC), as a sort of countervailing mechanism against regional protectionism elsewhere. As another expression of strategic trade policy, though focussed in particular on developing country requirements, ASEAN has agreed to create a free trade area among its members at the Southeast Asian sub-regional level. Also at a sub-regional level, some neighbouring countries have established so-called 'trade triangles,' initially invol- ving Malaysia (Johor), Singapore and Indonesia (Riau), as repres- enting subsidized investment-area counterparts to domestic duty-free enclaves.'6 As for Japan, China and the NIEs, they seem to exhibit somewhat more caution and deliberation, and indeed more introspec- tion in considering their strategic options for the future of economic cooperation in Asia. 14 Martin Rudner, 'ASEAN, Asia Pacific Economic Cooperation, and Hemi- spheric Free Trade for the Americas,' World Competition (December i992); Helen Hughes, 'Does APEC Make Sense?' ASEAN Economic Bulletin (November I991). '1 On the East Asian Economic Group (EAEG) and East Asian Economic Caucus (EAEC) proposals, see Tan Kong Yam, Toh Mun Heng and Linda Low, 'ASEAN and Pacific Economic Co-operation,' ASEAN Economic Bulletin, vol. 8, no. 3 (1992), pp. 325-8. 16 Chia Siow Yue and Lee Tsao Yuan, 'Subregional Economic Zones: A New Motive Force in Asia-Pacific Development,' in Bergsten and Noland (eds), Pacific Dynamism and the International Economic System, pp. 225-69. eral Trade Negotiations might precipitate the formation of protec- tionist regional trade blocs in Europe and the Americas. Along with the growth of exports from East and Southeast Asia to the US and European Community have come heightened tensions over trade issues. The NIEs and ASEAN developing countries feel particularly vulnerable to protectionist threats to their trade- focussed development strategies. So far, the governments of East and Southeast Asia remain favour- ably predisposed towards the open and outward-oriented regionalism that has served their economies well, at least until now. The delibera- tions and consultations that take place within the newly established framework of Asia Pacific Economic Cooperation (APEC), involving East and Southeast Asian countries along with Canada and the United States, reflect this predilection.l4 By the early I99os the APEC economies accounted for some 40% of world trade, and 50% of aggregate global GDP. Nevertheless, Asia's sense of its own vulnerab- ility is prompting some governments at least to contemplate defensive strategic alternatives for regional trade. Thus Malaysia proposed the formation of an East Asian Economic Group (EAEG),'5 afterwards amended to an East Asian Economic Caucus (EAEC), as a sort of countervailing mechanism against regional protectionism elsewhere. As another expression of strategic trade policy, though focussed in particular on developing country requirements, ASEAN has agreed to create a free trade area among its members at the Southeast Asian sub-regional level. Also at a sub-regional level, some neighbouring countries have established so-called 'trade triangles,' initially invol- ving Malaysia (Johor), Singapore and Indonesia (Riau), as repres- enting subsidized investment-area counterparts to domestic duty-free enclaves.'6 As for Japan, China and the NIEs, they seem to exhibit somewhat more caution and deliberation, and indeed more introspec- tion in considering their strategic options for the future of economic cooperation in Asia. 14 Martin Rudner, 'ASEAN, Asia Pacific Economic Cooperation, and Hemi- spheric Free Trade for the Americas,' World Competition (December i992); Helen Hughes, 'Does APEC Make Sense?' ASEAN Economic Bulletin (November I991). '1 On the East Asian Economic Group (EAEG) and East Asian Economic Caucus (EAEC) proposals, see Tan Kong Yam, Toh Mun Heng and Linda Low, 'ASEAN and Pacific Economic Co-operation,' ASEAN Economic Bulletin, vol. 8, no. 3 (1992), pp. 325-8. 16 Chia Siow Yue and Lee Tsao Yuan, 'Subregional Economic Zones: A New Motive Force in Asia-Pacific Development,' in Bergsten and Noland (eds), Pacific Dynamism and the International Economic System, pp. 225-69. 409 409 409 This content downloaded from 175.144.128.157 on Thu, 14 Nov 2013 10:19:13 AM All use subject to JSTOR Terms and Conditions MARTIN RUDNER MARTIN RUDNER MARTIN RUDNER Asia Pacific Economic Cooperation: The Path to Open Regionalism The inter-governmental forum known as 'Asia Pacific Economic Cooperation' (APEC) had its origins in a 1989 proposal by Aus- tralian Prime Minister RJ. Hawke. Although considerable thought had previously been directed at refining a concept of Pacific Com- munity, primarily by Australian and Japanese scholars and offi- cials,17 the proposal that was put forward entailed a studiously vague statement of intent coupled with an invitation for ministerial- level discussions in Canberra. Vagueness at this point was probably considered to be strategically constructive, since it allowed sufficient flexibility of purpose to overcome suspicion, reluctance, or scepti- cism. There was little inclination merely to recreate a regional 'talk-shop' akin to the Organization for Economic Cooperation and Development (OECD), a notion that was dismissed early on,18 but no other role model suggested itself a priori for emulation. As a consensus built up around the core idea of an Asia Pacific economic cooperation effort, APEC began to take shape without any perman- ent institutional structure, unfettered by any specific policy agenda or operational role. Even its geographic scope and membership criteria remained indeterminate. In the event, the APEC concept unfolded incrementally, manifesting deliberate prudence in its form- ative phase of identifying needs and opportunities. It was only at the fourth APEC ministerial meeting in Bangkok in 1992 that the decision was taken to establish a modest secretariat based in Singapore. The indeterminacy which affected APEC from its birth spilled over even onto its nomenclature, which lacks a descriptive noun. 'Asia Pacific Economic Cooperation . . .' relates to what type of forum, or organization? It is characteristic of the ambiguity surrounding APEC that its definitive term is still undecided. 17 Vide 'Japan, Australia Pioneer Regional Forum,' North South Institute Briefing (B35, I993); see also Peter Drysdale, 'The Pacific Trade and Development Confer- ence: A Brief History,' Pacific Economic Papers (1984), and H. Edward English & Yoshitaka Okada, 'Japan - Rising Sun or Western Star,' in Fen Osler Hampson and Christopher J. Maule (eds), Canada Among Nations iggo-9g. After the Cold War, Ottawa: Carleton University Press, I991. 18 Hughes, 'Does APEC Make Sense?', p. 126. Asia Pacific Economic Cooperation: The Path to Open Regionalism The inter-governmental forum known as 'Asia Pacific Economic Cooperation' (APEC) had its origins in a 1989 proposal by Aus- tralian Prime Minister RJ. Hawke. Although considerable thought had previously been directed at refining a concept of Pacific Com- munity, primarily by Australian and Japanese scholars and offi- cials,17 the proposal that was put forward entailed a studiously vague statement of intent coupled with an invitation for ministerial- level discussions in Canberra. Vagueness at this point was probably considered to be strategically constructive, since it allowed sufficient flexibility of purpose to overcome suspicion, reluctance, or scepti- cism. There was little inclination merely to recreate a regional 'talk-shop' akin to the Organization for Economic Cooperation and Development (OECD), a notion that was dismissed early on,18 but no other role model suggested itself a priori for emulation. As a consensus built up around the core idea of an Asia Pacific economic cooperation effort, APEC began to take shape without any perman- ent institutional structure, unfettered by any specific policy agenda or operational role. Even its geographic scope and membership criteria remained indeterminate. In the event, the APEC concept unfolded incrementally, manifesting deliberate prudence in its form- ative phase of identifying needs and opportunities. It was only at the fourth APEC ministerial meeting in Bangkok in 1992 that the decision was taken to establish a modest secretariat based in Singapore. The indeterminacy which affected APEC from its birth spilled over even onto its nomenclature, which lacks a descriptive noun. 'Asia Pacific Economic Cooperation . . .' relates to what type of forum, or organization? It is characteristic of the ambiguity surrounding APEC that its definitive term is still undecided. 17 Vide 'Japan, Australia Pioneer Regional Forum,' North South Institute Briefing (B35, I993); see also Peter Drysdale, 'The Pacific Trade and Development Confer- ence: A Brief History,' Pacific Economic Papers (1984), and H. Edward English & Yoshitaka Okada, 'Japan - Rising Sun or Western Star,' in Fen Osler Hampson and Christopher J. Maule (eds), Canada Among Nations iggo-9g. After the Cold War, Ottawa: Carleton University Press, I991. 18 Hughes, 'Does APEC Make Sense?', p. 126. Asia Pacific Economic Cooperation: The Path to Open Regionalism The inter-governmental forum known as 'Asia Pacific Economic Cooperation' (APEC) had its origins in a 1989 proposal by Aus- tralian Prime Minister RJ. Hawke. Although considerable thought had previously been directed at refining a concept of Pacific Com- munity, primarily by Australian and Japanese scholars and offi- cials,17 the proposal that was put forward entailed a studiously vague statement of intent coupled with an invitation for ministerial- level discussions in Canberra. Vagueness at this point was probably considered to be strategically constructive, since it allowed sufficient flexibility of purpose to overcome suspicion, reluctance, or scepti- cism. There was little inclination merely to recreate a regional 'talk-shop' akin to the Organization for Economic Cooperation and Development (OECD), a notion that was dismissed early on,18 but no other role model suggested itself a priori for emulation. As a consensus built up around the core idea of an Asia Pacific economic cooperation effort, APEC began to take shape without any perman- ent institutional structure, unfettered by any specific policy agenda or operational role. Even its geographic scope and membership criteria remained indeterminate. In the event, the APEC concept unfolded incrementally, manifesting deliberate prudence in its form- ative phase of identifying needs and opportunities. It was only at the fourth APEC ministerial meeting in Bangkok in 1992 that the decision was taken to establish a modest secretariat based in Singapore. The indeterminacy which affected APEC from its birth spilled over even onto its nomenclature, which lacks a descriptive noun. 'Asia Pacific Economic Cooperation . . .' relates to what type of forum, or organization? It is characteristic of the ambiguity surrounding APEC that its definitive term is still undecided. 17 Vide 'Japan, Australia Pioneer Regional Forum,' North South Institute Briefing (B35, I993); see also Peter Drysdale, 'The Pacific Trade and Development Confer- ence: A Brief History,' Pacific Economic Papers (1984), and H. Edward English & Yoshitaka Okada, 'Japan - Rising Sun or Western Star,' in Fen Osler Hampson and Christopher J. Maule (eds), Canada Among Nations iggo-9g. After the Cold War, Ottawa: Carleton University Press, I991. 18 Hughes, 'Does APEC Make Sense?', p. 126. 4IO 4IO 4IO This content downloaded from 175.144.128.157 on Thu, 14 Nov 2013 10:19:13 AM All use subject to JSTOR Terms and Conditions ASIA PACIFIC ECONOMIC COOPERATION ASIA PACIFIC ECONOMIC COOPERATION ASIA PACIFIC ECONOMIC COOPERATION The Quest for a Regional Framework for International Trade and Investment From the outset, APEC has concentrated on facilitating inter- governmental consultations on ways and means of enhancing eco- nomic cooperation, as defined, among countries of the Asia Pacific region. However, it became clear from the deliberations that have since taken place that the initial ambiguities associated with the APEC concept and role reflected a deeper divergence of standpoints among the countries concerned. The formative phase of APEC - which has lasted until today - denotes in essence a search for the basic elements of community among the grouping, which consists of countries with different size economies and varying levels of develop- ment, and subscribing to dissimilar perspectives on economic management. Initially, at least, Japan and the United States, the countries with the largest economies in the Asia Pacific region, held quite disparate views of the prospective role of APEC. Japan sought the creation of a regional architecture for international economic cooperation across the Pacific basin, whereas the US wanted a more loosely-structured consultative forum on trade-related issues. Japan and the Asian NIEs, for their part, were more inclined to emphasize the implementation of projects designed to promote regional economic inter-dependence. They were sceptical that mere exchanges of views on policy coordina- tion could genuinely foster policy harmonization and institutional benefits for the region as a whole. The election of President Clinton heralded a momentous shift in the American approach to APEC. The Clinton administration designated APEC as the cornerstone of its regional trade strategy towards Asia.19 Upon taking on the annual chairmanship of APEC in September I992, the US undertook to promote 'a practical, results-oriented' 19 For a broad overview of the Clinton administration's approach to APEC and regional institution-building in the Asia Pacific area, see the statement of Assistant Secretary of State for East Asian and Pacific Affairs Winston Lord to his confirmation hearings before the United States Senate Foreign Affairs Committee, as reported in 'Group Therapy', Far Eastern Economic Review (15 April I993), pp. io-Ii. As well, the Clinton administration furthermore indicated its intention to pursue the creation of an Asia Pacific regional security architecture. During his July, 1993 visit to Korea, President Clinton enunciated four priorities for an Asia Pacific security framework, including a continued American military commitment to the region, stronger efforts aimed at curbing the proliferation of weapons of mass destruction, new regional dialogues on 'common security challenges,' and support for democracy and 'more open societies' throughout the region (vide New York Times, I I July 1993). The Quest for a Regional Framework for International Trade and Investment From the outset, APEC has concentrated on facilitating inter- governmental consultations on ways and means of enhancing eco- nomic cooperation, as defined, among countries of the Asia Pacific region. However, it became clear from the deliberations that have since taken place that the initial ambiguities associated with the APEC concept and role reflected a deeper divergence of standpoints among the countries concerned. The formative phase of APEC - which has lasted until today - denotes in essence a search for the basic elements of community among the grouping, which consists of countries with different size economies and varying levels of develop- ment, and subscribing to dissimilar perspectives on economic management. Initially, at least, Japan and the United States, the countries with the largest economies in the Asia Pacific region, held quite disparate views of the prospective role of APEC. Japan sought the creation of a regional architecture for international economic cooperation across the Pacific basin, whereas the US wanted a more loosely-structured consultative forum on trade-related issues. Japan and the Asian NIEs, for their part, were more inclined to emphasize the implementation of projects designed to promote regional economic inter-dependence. They were sceptical that mere exchanges of views on policy coordina- tion could genuinely foster policy harmonization and institutional benefits for the region as a whole. The election of President Clinton heralded a momentous shift in the American approach to APEC. The Clinton administration designated APEC as the cornerstone of its regional trade strategy towards Asia.19 Upon taking on the annual chairmanship of APEC in September I992, the US undertook to promote 'a practical, results-oriented' 19 For a broad overview of the Clinton administration's approach to APEC and regional institution-building in the Asia Pacific area, see the statement of Assistant Secretary of State for East Asian and Pacific Affairs Winston Lord to his confirmation hearings before the United States Senate Foreign Affairs Committee, as reported in 'Group Therapy', Far Eastern Economic Review (15 April I993), pp. io-Ii. As well, the Clinton administration furthermore indicated its intention to pursue the creation of an Asia Pacific regional security architecture. During his July, 1993 visit to Korea, President Clinton enunciated four priorities for an Asia Pacific security framework, including a continued American military commitment to the region, stronger efforts aimed at curbing the proliferation of weapons of mass destruction, new regional dialogues on 'common security challenges,' and support for democracy and 'more open societies' throughout the region (vide New York Times, I I July 1993). The Quest for a Regional Framework for International Trade and Investment From the outset, APEC has concentrated on facilitating inter- governmental consultations on ways and means of enhancing eco- nomic cooperation, as defined, among countries of the Asia Pacific region. However, it became clear from the deliberations that have since taken place that the initial ambiguities associated with the APEC concept and role reflected a deeper divergence of standpoints among the countries concerned. The formative phase of APEC - which has lasted until today - denotes in essence a search for the basic elements of community among the grouping, which consists of countries with different size economies and varying levels of develop- ment, and subscribing to dissimilar perspectives on economic management. Initially, at least, Japan and the United States, the countries with the largest economies in the Asia Pacific region, held quite disparate views of the prospective role of APEC. Japan sought the creation of a regional architecture for international economic cooperation across the Pacific basin, whereas the US wanted a more loosely-structured consultative forum on trade-related issues. Japan and the Asian NIEs, for their part, were more inclined to emphasize the implementation of projects designed to promote regional economic inter-dependence. They were sceptical that mere exchanges of views on policy coordina- tion could genuinely foster policy harmonization and institutional benefits for the region as a whole. The election of President Clinton heralded a momentous shift in the American approach to APEC. The Clinton administration designated APEC as the cornerstone of its regional trade strategy towards Asia.19 Upon taking on the annual chairmanship of APEC in September I992, the US undertook to promote 'a practical, results-oriented' 19 For a broad overview of the Clinton administration's approach to APEC and regional institution-building in the Asia Pacific area, see the statement of Assistant Secretary of State for East Asian and Pacific Affairs Winston Lord to his confirmation hearings before the United States Senate Foreign Affairs Committee, as reported in 'Group Therapy', Far Eastern Economic Review (15 April I993), pp. io-Ii. As well, the Clinton administration furthermore indicated its intention to pursue the creation of an Asia Pacific regional security architecture. During his July, 1993 visit to Korea, President Clinton enunciated four priorities for an Asia Pacific security framework, including a continued American military commitment to the region, stronger efforts aimed at curbing the proliferation of weapons of mass destruction, new regional dialogues on 'common security challenges,' and support for democracy and 'more open societies' throughout the region (vide New York Times, I I July 1993). 4II 4II 4II This content downloaded from 175.144.128.157 on Thu, 14 Nov 2013 10:19:13 AM All use subject to JSTOR Terms and Conditions MARTIN RUDNER MARTIN RUDNER MARTIN RUDNER work program and bolster up the budding organization's institutional capacity to deal with regional economic issues. A proposed 'trade and investment framework' represented the centrepiece of this regional capacity building effort for regional economic cooperation. By autumn of I993, the Americans were warning that if European coun- tries failed to achieve progress on the GATT, then the US might even seek an alternative regional trading arrangement with its Asia Pacific partners. APEC had become, for the US, a shield and a foil in the stalled Multilateral Trade Negotiations. Other APEC countries responded cautiously to this American lead. Some were suspicious that the US was pushing its own trade agenda, using APEC as a lever for American ambitions. Moreover, among ASEAN countries there was a definite unwillingness to see APEC transformed into a supranational regime governing trade and invest- ment policy, or even into an arena for formal trade negotiations. As we shall see, the ASEAN countries, led in this respect by Malaysia, were acutely sensitive to any proposals regarding APEC that might have the consequence of compromising their sovereign equality or distinctive group status within the larger regional forum, or otherwise overriding their interests as developing economies. The 1993 ASEAN ministers meeting insisted that an APEC framework agreement on trade and investment must be consistent with the GATT, to counter US managed trade objectives, and that APEC itself should remain a loose consultative body. Early on, some of the more industrialized Asian participants were prepared to countenance an aid role for APEC, as a multilateral channel for development assistance. Japan, South Korea and Taiwan were predisposed to channel aid resources to APEC-sponsored pro- jects in order to support Southeast Asian involvement in activities that accentuate regional integration (and to project their influence therein). Other aid donors, and especially the US and Canada, were opposed to APEC acquiring an aid role which they might not be able to afford. ASEAN participants would have perhaps welcomed an APEC aid channel if it implied additional resource transfers, but were against any diversion of bilateral assistance to regional programs. The ASEAN countries, as a group, greeted the original APEC initi- ative with grave reservations.20 On the one hand, Malaysia and 20 Tan, Toh and Low, 'ASEAN and Pacific Economic Co-operation,' p. 324 et passim. work program and bolster up the budding organization's institutional capacity to deal with regional economic issues. A proposed 'trade and investment framework' represented the centrepiece of this regional capacity building effort for regional economic cooperation. By autumn of I993, the Americans were warning that if European coun- tries failed to achieve progress on the GATT, then the US might even seek an alternative regional trading arrangement with its Asia Pacific partners. APEC had become, for the US, a shield and a foil in the stalled Multilateral Trade Negotiations. Other APEC countries responded cautiously to this American lead. Some were suspicious that the US was pushing its own trade agenda, using APEC as a lever for American ambitions. Moreover, among ASEAN countries there was a definite unwillingness to see APEC transformed into a supranational regime governing trade and invest- ment policy, or even into an arena for formal trade negotiations. As we shall see, the ASEAN countries, led in this respect by Malaysia, were acutely sensitive to any proposals regarding APEC that might have the consequence of compromising their sovereign equality or distinctive group status within the larger regional forum, or otherwise overriding their interests as developing economies. The 1993 ASEAN ministers meeting insisted that an APEC framework agreement on trade and investment must be consistent with the GATT, to counter US managed trade objectives, and that APEC itself should remain a loose consultative body. Early on, some of the more industrialized Asian participants were prepared to countenance an aid role for APEC, as a multilateral channel for development assistance. Japan, South Korea and Taiwan were predisposed to channel aid resources to APEC-sponsored pro- jects in order to support Southeast Asian involvement in activities that accentuate regional integration (and to project their influence therein). Other aid donors, and especially the US and Canada, were opposed to APEC acquiring an aid role which they might not be able to afford. ASEAN participants would have perhaps welcomed an APEC aid channel if it implied additional resource transfers, but were against any diversion of bilateral assistance to regional programs. The ASEAN countries, as a group, greeted the original APEC initi- ative with grave reservations.20 On the one hand, Malaysia and 20 Tan, Toh and Low, 'ASEAN and Pacific Economic Co-operation,' p. 324 et passim. work program and bolster up the budding organization's institutional capacity to deal with regional economic issues. A proposed 'trade and investment framework' represented the centrepiece of this regional capacity building effort for regional economic cooperation. By autumn of I993, the Americans were warning that if European coun- tries failed to achieve progress on the GATT, then the US might even seek an alternative regional trading arrangement with its Asia Pacific partners. APEC had become, for the US, a shield and a foil in the stalled Multilateral Trade Negotiations. Other APEC countries responded cautiously to this American lead. Some were suspicious that the US was pushing its own trade agenda, using APEC as a lever for American ambitions. Moreover, among ASEAN countries there was a definite unwillingness to see APEC transformed into a supranational regime governing trade and invest- ment policy, or even into an arena for formal trade negotiations. As we shall see, the ASEAN countries, led in this respect by Malaysia, were acutely sensitive to any proposals regarding APEC that might have the consequence of compromising their sovereign equality or distinctive group status within the larger regional forum, or otherwise overriding their interests as developing economies. The 1993 ASEAN ministers meeting insisted that an APEC framework agreement on trade and investment must be consistent with the GATT, to counter US managed trade objectives, and that APEC itself should remain a loose consultative body. Early on, some of the more industrialized Asian participants were prepared to countenance an aid role for APEC, as a multilateral channel for development assistance. Japan, South Korea and Taiwan were predisposed to channel aid resources to APEC-sponsored pro- jects in order to support Southeast Asian involvement in activities that accentuate regional integration (and to project their influence therein). Other aid donors, and especially the US and Canada, were opposed to APEC acquiring an aid role which they might not be able to afford. ASEAN participants would have perhaps welcomed an APEC aid channel if it implied additional resource transfers, but were against any diversion of bilateral assistance to regional programs. The ASEAN countries, as a group, greeted the original APEC initi- ative with grave reservations.20 On the one hand, Malaysia and 20 Tan, Toh and Low, 'ASEAN and Pacific Economic Co-operation,' p. 324 et passim. 4I 2 4I 2 4I 2 This content downloaded from 175.144.128.157 on Thu, 14 Nov 2013 10:19:13 AM All use subject to JSTOR Terms and Conditions ASIA PACIFIC ECONOMIC COOPERATION ASIA PACIFIC ECONOMIC COOPERATION ASIA PACIFIC ECONOMIC COOPERATION Indonesia were suspicious of a wider regional organization that might dilute ASEAN's role within Southeast Asia and subordinate ASEAN internationally. On the other, Singapore and the Philippines, in par- ticular, were eager to envisage a more extensive regional trading arrangement taking shape through APEC. In the event, the ASEAN countries agreed to participate in APEC subject to their so-called 'three noes': that APEC have no legally binding authority, that it have no negotiating right, and that it pursue no regional agreements beyond those reached in the GATT. Having concurred in a loosely-structured APEC, the ASEAN gov- ernments are generally uneasy about efforts to strengthen its institu- tional format and enhance its policy functions. As the most vulnerable economies in the region, the ASEAN countries are wary of APEC assuming a strong leadership role in policy coordination, lest this lead to domination by their more powerful trading partners. Malaysia, in particular, has been aggrieved at what it perceives to be the failings and flaws of APEC in not upholding the international economic inter- ests of developing countries in face of heightened protectionism in North America and Europe. Indeed, Malaysia warned it would quit APEC if it threatens to become a neo-hegemonic institution dominat- ing Asia. So far as the ASEAN governments are concerned, APEC would best confine itself to consultative and information-sharing activities, possibly complemented by aid support aimed at strengthening the developing country participants' capacity for eco- nomic analysis and policy formulation. It remains to be seen whether APEC will manage to sustain the confidence of the ASEAN countries, or whether they will be con- strained to turn in frustration to alternative managed trade mechan- isms to promote and defend their economic development interests through sub-regional preferential trading arrangements. In the event, the role of APEC has evolved over the course of successive annual ministerial meetings, interspersed with meetings of senior officials. The inaugural ministerial meeting in Canberra, APEC-I, adopted a 'functional co-operation' work program to be managed by 'shepherds,' senior officials from designated member countries (see below). APEC-II, which met in Singapore in i990, endorsed the initial work program, and called for an evaluation of certain additional project proposals. There was agreement that no new organizational structure would be established for the time being. It was only in I991, in Seoul, after three years of consensus-building, that the APEC-III ministerial meeting was able to issue the Seoul Indonesia were suspicious of a wider regional organization that might dilute ASEAN's role within Southeast Asia and subordinate ASEAN internationally. On the other, Singapore and the Philippines, in par- ticular, were eager to envisage a more extensive regional trading arrangement taking shape through APEC. In the event, the ASEAN countries agreed to participate in APEC subject to their so-called 'three noes': that APEC have no legally binding authority, that it have no negotiating right, and that it pursue no regional agreements beyond those reached in the GATT. Having concurred in a loosely-structured APEC, the ASEAN gov- ernments are generally uneasy about efforts to strengthen its institu- tional format and enhance its policy functions. As the most vulnerable economies in the region, the ASEAN countries are wary of APEC assuming a strong leadership role in policy coordination, lest this lead to domination by their more powerful trading partners. Malaysia, in particular, has been aggrieved at what it perceives to be the failings and flaws of APEC in not upholding the international economic inter- ests of developing countries in face of heightened protectionism in North America and Europe. Indeed, Malaysia warned it would quit APEC if it threatens to become a neo-hegemonic institution dominat- ing Asia. So far as the ASEAN governments are concerned, APEC would best confine itself to consultative and information-sharing activities, possibly complemented by aid support aimed at strengthening the developing country participants' capacity for eco- nomic analysis and policy formulation. It remains to be seen whether APEC will manage to sustain the confidence of the ASEAN countries, or whether they will be con- strained to turn in frustration to alternative managed trade mechan- isms to promote and defend their economic development interests through sub-regional preferential trading arrangements. In the event, the role of APEC has evolved over the course of successive annual ministerial meetings, interspersed with meetings of senior officials. The inaugural ministerial meeting in Canberra, APEC-I, adopted a 'functional co-operation' work program to be managed by 'shepherds,' senior officials from designated member countries (see below). APEC-II, which met in Singapore in i990, endorsed the initial work program, and called for an evaluation of certain additional project proposals. There was agreement that no new organizational structure would be established for the time being. It was only in I991, in Seoul, after three years of consensus-building, that the APEC-III ministerial meeting was able to issue the Seoul Indonesia were suspicious of a wider regional organization that might dilute ASEAN's role within Southeast Asia and subordinate ASEAN internationally. On the other, Singapore and the Philippines, in par- ticular, were eager to envisage a more extensive regional trading arrangement taking shape through APEC. In the event, the ASEAN countries agreed to participate in APEC subject to their so-called 'three noes': that APEC have no legally binding authority, that it have no negotiating right, and that it pursue no regional agreements beyond those reached in the GATT. Having concurred in a loosely-structured APEC, the ASEAN gov- ernments are generally uneasy about efforts to strengthen its institu- tional format and enhance its policy functions. As the most vulnerable economies in the region, the ASEAN countries are wary of APEC assuming a strong leadership role in policy coordination, lest this lead to domination by their more powerful trading partners. Malaysia, in particular, has been aggrieved at what it perceives to be the failings and flaws of APEC in not upholding the international economic inter- ests of developing countries in face of heightened protectionism in North America and Europe. Indeed, Malaysia warned it would quit APEC if it threatens to become a neo-hegemonic institution dominat- ing Asia. So far as the ASEAN governments are concerned, APEC would best confine itself to consultative and information-sharing activities, possibly complemented by aid support aimed at strengthening the developing country participants' capacity for eco- nomic analysis and policy formulation. It remains to be seen whether APEC will manage to sustain the confidence of the ASEAN countries, or whether they will be con- strained to turn in frustration to alternative managed trade mechan- isms to promote and defend their economic development interests through sub-regional preferential trading arrangements. In the event, the role of APEC has evolved over the course of successive annual ministerial meetings, interspersed with meetings of senior officials. The inaugural ministerial meeting in Canberra, APEC-I, adopted a 'functional co-operation' work program to be managed by 'shepherds,' senior officials from designated member countries (see below). APEC-II, which met in Singapore in i990, endorsed the initial work program, and called for an evaluation of certain additional project proposals. There was agreement that no new organizational structure would be established for the time being. It was only in I991, in Seoul, after three years of consensus-building, that the APEC-III ministerial meeting was able to issue the Seoul 413 413 413 This content downloaded from 175.144.128.157 on Thu, 14 Nov 2013 10:19:13 AM All use subject to JSTOR Terms and Conditions MARTIN RUDNER MARTIN RUDNER MARTIN RUDNER Declaration on Asia Pacific Economic Cooperation, setting out the formally agreed objectives of APEC: * To sustain the growth and development of the Asia Pacific region * To enhance the positive gains accruing from increasing economic inter-dependence * To develop and strengthen the open multilateral trading system * To reduce barriers to trade in goods and services and investment among participants, in a manner consistent with the principles of the General Agreement on Tariffs and Trade (GATT) APEC finally received institutional form in I992, when the APEC- IV ministerial meeting in Bangkok approved the establishment of a small permanent Secretariat seated in Singapore, along with an APEC Fund to regularize the funding for programs and activities. The APEC Secretariat was assigned responsibility for the provision of logistical and technical services, and financial management for APEC sponsored activities. Staffing is to include professional as well as support personnel, under an Executive Director. The APEC Fund is fairly modest in financial magnitude, with an initial appropriation of just US$i million from contributions by member governments. A funding formula based on proportional burden sharing based on relat- ive Gross National Product was accepted, with a ceiling of i8% (Japan, USA) and a floor of 2.5% (Brunei, Indonesia, Malaysia, Philippines, Thailand).21 In response to an Australian proposal, APEC-IV also decided to appoint a so-called Eminent Persons Group (EPG) charged with for- mulating a vision for economic interaction across the Asia Pacific region to the year 2000. The mandate of the EPG, discussed below, is indicative of the issues arising as part of the search for community of consensus on enhanced regional collaboration on economic and trade issues. Participating governments nominated twelve distingu- ished individuals from government, business and academia, for this exercise.22 The EPG reported in October I993, on the eve of the 21 The APEC Formula for Assessed Contributions is provided as Attachment i to the 'Future Steps of APEC, Consolidated Report of the APEC Senior Officials in the 4th APEC Ministerial Meeting,' in Record of the Fourth Ministerial Meeting of Asia- Pacific Economic Cooperation (APEC), p. i6o. 22 The original Japanese appointee to the EPG, Dr Saburo Okita, one of the early architects of Asia Pacific economic cooperation, passed away in February I993, and so did not participate in work leading up to the landmark report. Declaration on Asia Pacific Economic Cooperation, setting out the formally agreed objectives of APEC: * To sustain the growth and development of the Asia Pacific region * To enhance the positive gains accruing from increasing economic inter-dependence * To develop and strengthen the open multilateral trading system * To reduce barriers to trade in goods and services and investment among participants, in a manner consistent with the principles of the General Agreement on Tariffs and Trade (GATT) APEC finally received institutional form in I992, when the APEC- IV ministerial meeting in Bangkok approved the establishment of a small permanent Secretariat seated in Singapore, along with an APEC Fund to regularize the funding for programs and activities. The APEC Secretariat was assigned responsibility for the provision of logistical and technical services, and financial management for APEC sponsored activities. Staffing is to include professional as well as support personnel, under an Executive Director. The APEC Fund is fairly modest in financial magnitude, with an initial appropriation of just US$i million from contributions by member governments. A funding formula based on proportional burden sharing based on relat- ive Gross National Product was accepted, with a ceiling of i8% (Japan, USA) and a floor of 2.5% (Brunei, Indonesia, Malaysia, Philippines, Thailand).21 In response to an Australian proposal, APEC-IV also decided to appoint a so-called Eminent Persons Group (EPG) charged with for- mulating a vision for economic interaction across the Asia Pacific region to the year 2000. The mandate of the EPG, discussed below, is indicative of the issues arising as part of the search for community of consensus on enhanced regional collaboration on economic and trade issues. Participating governments nominated twelve distingu- ished individuals from government, business and academia, for this exercise.22 The EPG reported in October I993, on the eve of the 21 The APEC Formula for Assessed Contributions is provided as Attachment i to the 'Future Steps of APEC, Consolidated Report of the APEC Senior Officials in the 4th APEC Ministerial Meeting,' in Record of the Fourth Ministerial Meeting of Asia- Pacific Economic Cooperation (APEC), p. i6o. 22 The original Japanese appointee to the EPG, Dr Saburo Okita, one of the early architects of Asia Pacific economic cooperation, passed away in February I993, and so did not participate in work leading up to the landmark report. Declaration on Asia Pacific Economic Cooperation, setting out the formally agreed objectives of APEC: * To sustain the growth and development of the Asia Pacific region * To enhance the positive gains accruing from increasing economic inter-dependence * To develop and strengthen the open multilateral trading system * To reduce barriers to trade in goods and services and investment among participants, in a manner consistent with the principles of the General Agreement on Tariffs and Trade (GATT) APEC finally received institutional form in I992, when the APEC- IV ministerial meeting in Bangkok approved the establishment of a small permanent Secretariat seated in Singapore, along with an APEC Fund to regularize the funding for programs and activities. The APEC Secretariat was assigned responsibility for the provision of logistical and technical services, and financial management for APEC sponsored activities. Staffing is to include professional as well as support personnel, under an Executive Director. The APEC Fund is fairly modest in financial magnitude, with an initial appropriation of just US$i million from contributions by member governments. A funding formula based on proportional burden sharing based on relat- ive Gross National Product was accepted, with a ceiling of i8% (Japan, USA) and a floor of 2.5% (Brunei, Indonesia, Malaysia, Philippines, Thailand).21 In response to an Australian proposal, APEC-IV also decided to appoint a so-called Eminent Persons Group (EPG) charged with for- mulating a vision for economic interaction across the Asia Pacific region to the year 2000. The mandate of the EPG, discussed below, is indicative of the issues arising as part of the search for community of consensus on enhanced regional collaboration on economic and trade issues. Participating governments nominated twelve distingu- ished individuals from government, business and academia, for this exercise.22 The EPG reported in October I993, on the eve of the 21 The APEC Formula for Assessed Contributions is provided as Attachment i to the 'Future Steps of APEC, Consolidated Report of the APEC Senior Officials in the 4th APEC Ministerial Meeting,' in Record of the Fourth Ministerial Meeting of Asia- Pacific Economic Cooperation (APEC), p. i6o. 22 The original Japanese appointee to the EPG, Dr Saburo Okita, one of the early architects of Asia Pacific economic cooperation, passed away in February I993, and so did not participate in work leading up to the landmark report. 4I4 4I4 4I4 This content downloaded from 175.144.128.157 on Thu, 14 Nov 2013 10:19:13 AM All use subject to JSTOR Terms and Conditions ASIA PACIFIC ECONOMIC COOPERATION ASIA PACIFIC ECONOMIC COOPERATION ASIA PACIFIC ECONOMIC COOPERATION APEC-V ministerial and Summit, with A Vision for APEC. Towards An Asia Pacific Economic Community, with far-reaching recommendations aimed at creating a free trade in the Asia Pacific region, with a target date. The goal was the creation of 'a true Asia Pacific Economic Community.'23 The I993 APEC-V ministerial meeting was hosted by the United States in Seattle, in Novembert 1993. Following an American initiat- ive, APEC ministers approved a Trade and Investment Framework expressing their intention to reduce barriers to trade and investment in a manner consistent with GATT principles. An APEC Trade and Investment Committee was established, in place of the earlier ad hoc Informal Group on Regional Trade Liberalization, and was given a broad mandate to explore avenues for improving the flow of goods, services, investment and technology across the region. For the first time, a Business Forum was organized with corporate executives from all the APEC economies, to discuss APEC's relationship with the private sector directly with participating ministers. In a bid to raise the political profile of APEC, President Clinton convened a 'leadership conference' of APEC heads of government immediately after the APEC-V ministerial session. This first-ever Asia Pacific summit was intended to symbolize a resumption of Amer- ican presidential leadership in the Asia Pacific arena, while focussing high-level attention onto the priority issues of economic development and trade liberalization. Inevitably, the political nuances of interna- tional summitry plunged APEC into some unaccustomed diplomatic turbulence. APEC summitry posed a challenge to the China representation. The People's Republic insisted that it alone could rightfully be repres- ented by a head of government. Diplomatic considerations dictated that Taiwan and Hong Kong had to be satisfied with representation by senior officials. ASEAN countries, for their part, were greatly divided over the summit. Singapore, the Philippines and Thailand were keen, however Indonesia was uneasy about American congres- sional criticism of its human rights record and labour relations. Prime Minister Mahathir of Malaysia flatly declined to attend.24 23 A Vision for APEC. Towards an Asia Pacific Economic Community, Report of the Eminent Persons Group to APEC Ministers (C. Fred Bergsten, Chairman), APEC # 93-EP-oI, October i993, p. 21. 24 Prime Minister Mahathir's refusal was symptomatic of the posturing and fric- tions afflicting bilateral relations between Malaysia and the United States over recent years. These irritants in the relationship reflect political contentions more than eco- APEC-V ministerial and Summit, with A Vision for APEC. Towards An Asia Pacific Economic Community, with far-reaching recommendations aimed at creating a free trade in the Asia Pacific region, with a target date. The goal was the creation of 'a true Asia Pacific Economic Community.'23 The I993 APEC-V ministerial meeting was hosted by the United States in Seattle, in Novembert 1993. Following an American initiat- ive, APEC ministers approved a Trade and Investment Framework expressing their intention to reduce barriers to trade and investment in a manner consistent with GATT principles. An APEC Trade and Investment Committee was established, in place of the earlier ad hoc Informal Group on Regional Trade Liberalization, and was given a broad mandate to explore avenues for improving the flow of goods, services, investment and technology across the region. For the first time, a Business Forum was organized with corporate executives from all the APEC economies, to discuss APEC's relationship with the private sector directly with participating ministers. In a bid to raise the political profile of APEC, President Clinton convened a 'leadership conference' of APEC heads of government immediately after the APEC-V ministerial session. This first-ever Asia Pacific summit was intended to symbolize a resumption of Amer- ican presidential leadership in the Asia Pacific arena, while focussing high-level attention onto the priority issues of economic development and trade liberalization. Inevitably, the political nuances of interna- tional summitry plunged APEC into some unaccustomed diplomatic turbulence. APEC summitry posed a challenge to the China representation. The People's Republic insisted that it alone could rightfully be repres- ented by a head of government. Diplomatic considerations dictated that Taiwan and Hong Kong had to be satisfied with representation by senior officials. ASEAN countries, for their part, were greatly divided over the summit. Singapore, the Philippines and Thailand were keen, however Indonesia was uneasy about American congres- sional criticism of its human rights record and labour relations. Prime Minister Mahathir of Malaysia flatly declined to attend.24 23 A Vision for APEC. Towards an Asia Pacific Economic Community, Report of the Eminent Persons Group to APEC Ministers (C. Fred Bergsten, Chairman), APEC # 93-EP-oI, October i993, p. 21. 24 Prime Minister Mahathir's refusal was symptomatic of the posturing and fric- tions afflicting bilateral relations between Malaysia and the United States over recent years. These irritants in the relationship reflect political contentions more than eco- APEC-V ministerial and Summit, with A Vision for APEC. Towards An Asia Pacific Economic Community, with far-reaching recommendations aimed at creating a free trade in the Asia Pacific region, with a target date. The goal was the creation of 'a true Asia Pacific Economic Community.'23 The I993 APEC-V ministerial meeting was hosted by the United States in Seattle, in Novembert 1993. Following an American initiat- ive, APEC ministers approved a Trade and Investment Framework expressing their intention to reduce barriers to trade and investment in a manner consistent with GATT principles. An APEC Trade and Investment Committee was established, in place of the earlier ad hoc Informal Group on Regional Trade Liberalization, and was given a broad mandate to explore avenues for improving the flow of goods, services, investment and technology across the region. For the first time, a Business Forum was organized with corporate executives from all the APEC economies, to discuss APEC's relationship with the private sector directly with participating ministers. In a bid to raise the political profile of APEC, President Clinton convened a 'leadership conference' of APEC heads of government immediately after the APEC-V ministerial session. This first-ever Asia Pacific summit was intended to symbolize a resumption of Amer- ican presidential leadership in the Asia Pacific arena, while focussing high-level attention onto the priority issues of economic development and trade liberalization. Inevitably, the political nuances of interna- tional summitry plunged APEC into some unaccustomed diplomatic turbulence. APEC summitry posed a challenge to the China representation. The People's Republic insisted that it alone could rightfully be repres- ented by a head of government. Diplomatic considerations dictated that Taiwan and Hong Kong had to be satisfied with representation by senior officials. ASEAN countries, for their part, were greatly divided over the summit. Singapore, the Philippines and Thailand were keen, however Indonesia was uneasy about American congres- sional criticism of its human rights record and labour relations. Prime Minister Mahathir of Malaysia flatly declined to attend.24 23 A Vision for APEC. Towards an Asia Pacific Economic Community, Report of the Eminent Persons Group to APEC Ministers (C. Fred Bergsten, Chairman), APEC # 93-EP-oI, October i993, p. 21. 24 Prime Minister Mahathir's refusal was symptomatic of the posturing and fric- tions afflicting bilateral relations between Malaysia and the United States over recent years. These irritants in the relationship reflect political contentions more than eco- 415 415 415 This content downloaded from 175.144.128.157 on Thu, 14 Nov 2013 10:19:13 AM All use subject to JSTOR Terms and Conditions MARTIN RUDNER MARTIN RUDNER MARTIN RUDNER This first Asia Pacific summit gave political momentum to the APEC concept of open regionalism, but also accentuated the areas of strategic congruence and divergence between its various country groupings. There was broad agreement on the need to display Asia Pacific solidarity and unity of purpose in favour of a common approach to trade liberalization at the regional and multilateral levels. Thus, the leaders endorsed a reduction or elimination of tariffs on a number of industrial and agricultural products as a signal - and a propellent - to the stalled GATT negotiations. That being said, no consensus was reached at the summit on the future goals of APEC itself. The grandiose vision of an APEC eco- nomic community propounded by the EPG was not - as yet - shared by ASEAN developing countries and other Asian members wary of US ambitions in the region. Instead, the Asia Pacific leaders came out with what was styled as a 'Vision Statement,' an ecumenical agenda that focussed more on procedures and processes for regional consensus-building than on future aims. There was agreement on means, not of ends, with these means being treated almost as an end in themselves, summarized by Japanese foreign minister Tsutomo Hata as 'incremental gradualism by consensus.' However, the polit- nomic or trade disputes. Certain of these may be attributed to Dr Mahathir's vaunted 'Look East' policy, others stem from mutual antagonism over Middle Eastern and Islamic issues. These political irritants were exacerbated by trade-related environ- mental and health controversies over palm oil, tropical timbers and latex gloves, regarded by many Malaysians as a conspiracy on the part of the West, led by the United States, to undermine their export markets: Vide 'Another Slight. Malaysians Angered by US Move on Latex Imports,' Far Eastern Economic Review (i July I993). Goaded by these grievances, the Malaysian government became obsessed with con- founding and provoking the United States in an Asian regional context. This was expressed in the idiom of Malaysia's antipathy towards American assertiveness in Asian economic affairs, notably its championing an EAEG and EAEC that would exclude the US, and refusing to participate in the US-sponsored APEC summit. Another expression of this pique may be seen in Malaysia's first-ever purchase of Russian-made MIG-29 fighters for its air force, along with a far smaller number of American-made aircraft, marking a politically daring - albeit militarily icono- clastic - departure in arms procurement (Aviation Week and Space Technology, 5 July I993). Sometimes these provocations became grotesque, as when Malaysia refused to allow the New York Philharmonic to perform the work Schelomo ('Solomon') by the late Jewish composer, Ernest Bloch, causing cancellation of that orchestra's scheduled visit. American exasperation peaked into anger over Malaysia's sympath- etic tilt towards Iraq during the 1990 Kuwait crisis and Gulf War. Latterly Malaysia decided to embark on joint economic ventures with virulently anti-Western Iran. Sally Morphet of the British Foreign and Commonwealth Office has written that Malaysia 'seems to have taken over the role of the non-aligned gadfly . . .': 'The Non-Aligned in "The New World Order": The Jakarta Summit, September, I992,' International Relations, vol. II, no. 4 (April I993) pp. 36I, 368. This first Asia Pacific summit gave political momentum to the APEC concept of open regionalism, but also accentuated the areas of strategic congruence and divergence between its various country groupings. There was broad agreement on the need to display Asia Pacific solidarity and unity of purpose in favour of a common approach to trade liberalization at the regional and multilateral levels. Thus, the leaders endorsed a reduction or elimination of tariffs on a number of industrial and agricultural products as a signal - and a propellent - to the stalled GATT negotiations. That being said, no consensus was reached at the summit on the future goals of APEC itself. The grandiose vision of an APEC eco- nomic community propounded by the EPG was not - as yet - shared by ASEAN developing countries and other Asian members wary of US ambitions in the region. Instead, the Asia Pacific leaders came out with what was styled as a 'Vision Statement,' an ecumenical agenda that focussed more on procedures and processes for regional consensus-building than on future aims. There was agreement on means, not of ends, with these means being treated almost as an end in themselves, summarized by Japanese foreign minister Tsutomo Hata as 'incremental gradualism by consensus.' However, the polit- nomic or trade disputes. Certain of these may be attributed to Dr Mahathir's vaunted 'Look East' policy, others stem from mutual antagonism over Middle Eastern and Islamic issues. These political irritants were exacerbated by trade-related environ- mental and health controversies over palm oil, tropical timbers and latex gloves, regarded by many Malaysians as a conspiracy on the part of the West, led by the United States, to undermine their export markets: Vide 'Another Slight. Malaysians Angered by US Move on Latex Imports,' Far Eastern Economic Review (i July I993). Goaded by these grievances, the Malaysian government became obsessed with con- founding and provoking the United States in an Asian regional context. This was expressed in the idiom of Malaysia's antipathy towards American assertiveness in Asian economic affairs, notably its championing an EAEG and EAEC that would exclude the US, and refusing to participate in the US-sponsored APEC summit. Another expression of this pique may be seen in Malaysia's first-ever purchase of Russian-made MIG-29 fighters for its air force, along with a far smaller number of American-made aircraft, marking a politically daring - albeit militarily icono- clastic - departure in arms procurement (Aviation Week and Space Technology, 5 July I993). Sometimes these provocations became grotesque, as when Malaysia refused to allow the New York Philharmonic to perform the work Schelomo ('Solomon') by the late Jewish composer, Ernest Bloch, causing cancellation of that orchestra's scheduled visit. American exasperation peaked into anger over Malaysia's sympath- etic tilt towards Iraq during the 1990 Kuwait crisis and Gulf War. Latterly Malaysia decided to embark on joint economic ventures with virulently anti-Western Iran. Sally Morphet of the British Foreign and Commonwealth Office has written that Malaysia 'seems to have taken over the role of the non-aligned gadfly . . .': 'The Non-Aligned in "The New World Order": The Jakarta Summit, September, I992,' International Relations, vol. II, no. 4 (April I993) pp. 36I, 368. This first Asia Pacific summit gave political momentum to the APEC concept of open regionalism, but also accentuated the areas of strategic congruence and divergence between its various country groupings. There was broad agreement on the need to display Asia Pacific solidarity and unity of purpose in favour of a common approach to trade liberalization at the regional and multilateral levels. Thus, the leaders endorsed a reduction or elimination of tariffs on a number of industrial and agricultural products as a signal - and a propellent - to the stalled GATT negotiations. That being said, no consensus was reached at the summit on the future goals of APEC itself. The grandiose vision of an APEC eco- nomic community propounded by the EPG was not - as yet - shared by ASEAN developing countries and other Asian members wary of US ambitions in the region. Instead, the Asia Pacific leaders came out with what was styled as a 'Vision Statement,' an ecumenical agenda that focussed more on procedures and processes for regional consensus-building than on future aims. There was agreement on means, not of ends, with these means being treated almost as an end in themselves, summarized by Japanese foreign minister Tsutomo Hata as 'incremental gradualism by consensus.' However, the polit- nomic or trade disputes. Certain of these may be attributed to Dr Mahathir's vaunted 'Look East' policy, others stem from mutual antagonism over Middle Eastern and Islamic issues. These political irritants were exacerbated by trade-related environ- mental and health controversies over palm oil, tropical timbers and latex gloves, regarded by many Malaysians as a conspiracy on the part of the West, led by the United States, to undermine their export markets: Vide 'Another Slight. Malaysians Angered by US Move on Latex Imports,' Far Eastern Economic Review (i July I993). Goaded by these grievances, the Malaysian government became obsessed with con- founding and provoking the United States in an Asian regional context. This was expressed in the idiom of Malaysia's antipathy towards American assertiveness in Asian economic affairs, notably its championing an EAEG and EAEC that would exclude the US, and refusing to participate in the US-sponsored APEC summit. Another expression of this pique may be seen in Malaysia's first-ever purchase of Russian-made MIG-29 fighters for its air force, along with a far smaller number of American-made aircraft, marking a politically daring - albeit militarily icono- clastic - departure in arms procurement (Aviation Week and Space Technology, 5 July I993). Sometimes these provocations became grotesque, as when Malaysia refused to allow the New York Philharmonic to perform the work Schelomo ('Solomon') by the late Jewish composer, Ernest Bloch, causing cancellation of that orchestra's scheduled visit. American exasperation peaked into anger over Malaysia's sympath- etic tilt towards Iraq during the 1990 Kuwait crisis and Gulf War. Latterly Malaysia decided to embark on joint economic ventures with virulently anti-Western Iran. Sally Morphet of the British Foreign and Commonwealth Office has written that Malaysia 'seems to have taken over the role of the non-aligned gadfly . . .': 'The Non-Aligned in "The New World Order": The Jakarta Summit, September, I992,' International Relations, vol. II, no. 4 (April I993) pp. 36I, 368. 416 416 416 This content downloaded from 175.144.128.157 on Thu, 14 Nov 2013 10:19:13 AM All use subject to JSTOR Terms and Conditions ASIA PACIFIC ECONOMIC COOPERATION ASIA PACIFIC ECONOMIC COOPERATION ASIA PACIFIC ECONOMIC COOPERATION ical symbolism of the summit was not to be mistaken, since the meet- ing itself conveyed the message of 'a new voice for the Asia Pacific in world affairs.' A second Asia Pacific summit is to be held in 1994, on the occasion the APEC-VI meeting scheduled for Jakarta. The Geographic Composition of APEC Like the question of its role, the question of APEC's geographic boundaries has been subject to contention, even controversy. Aus- tralia's invitations to attend the first APEC ministerial meeting in Canberra were extended to Japan, South Korea, the ASEAN coun- tries, and New Zealand. The United States, not initially included, made known its desire to participate and was invited. Canada dis- patched its outspoken trade minister to key capitals in order to elicit an invitation. None of the small Pacific island states were included originally, though Papua New Guinea has since become a likely can- didate for membership. Arguably the most delicate diplomatic question before APEC related to the participation of China, Taiwan, and Hong Kong. Although all three ranked among the important trading economies in the Asia Pacific region, their formal affiliation with APEC had to be held up initially pending a resolution of a diplomatic imbroglio regarding two governments claiming to represent 'China', plus a Brit- ish crown colony soon to be reintegrated into the Peoples Republic of China albeit with special administrative status. This China quan- dary was resolved at APEC-III, at least as regards economic and trade matters. A formula was adopted enabling separate participation in APEC on the part of the Peoples Republic of China, 'Chinese Taipei' (i.e. the Republic of China on Taiwan) and Hong Kong.25 Nevertheless, Chinese political sensibilities were aroused by President Clinton's proposal of an APEC summit, which had unwitting effect of resurrecting the latent and still unresolved national-representational question. It is perhaps inevitable that political considerations would 25 China subsequently claimed that the agreement on Hong Kong and Chinese Taipei (Taiwan) participation in APEC excluded them from actually hosting APEC or APEC Working Group activities. This claim, first put forward at the Honolulu meeting of the Education Forum, which took place in May I993 under the auspices of the APEC Human Resource Development Working Group, was deferred to the senior officials or ministerial levels. ical symbolism of the summit was not to be mistaken, since the meet- ing itself conveyed the message of 'a new voice for the Asia Pacific in world affairs.' A second Asia Pacific summit is to be held in 1994, on the occasion the APEC-VI meeting scheduled for Jakarta. The Geographic Composition of APEC Like the question of its role, the question of APEC's geographic boundaries has been subject to contention, even controversy. Aus- tralia's invitations to attend the first APEC ministerial meeting in Canberra were extended to Japan, South Korea, the ASEAN coun- tries, and New Zealand. The United States, not initially included, made known its desire to participate and was invited. Canada dis- patched its outspoken trade minister to key capitals in order to elicit an invitation. None of the small Pacific island states were included originally, though Papua New Guinea has since become a likely can- didate for membership. Arguably the most delicate diplomatic question before APEC related to the participation of China, Taiwan, and Hong Kong. Although all three ranked among the important trading economies in the Asia Pacific region, their formal affiliation with APEC had to be held up initially pending a resolution of a diplomatic imbroglio regarding two governments claiming to represent 'China', plus a Brit- ish crown colony soon to be reintegrated into the Peoples Republic of China albeit with special administrative status. This China quan- dary was resolved at APEC-III, at least as regards economic and trade matters. A formula was adopted enabling separate participation in APEC on the part of the Peoples Republic of China, 'Chinese Taipei' (i.e. the Republic of China on Taiwan) and Hong Kong.25 Nevertheless, Chinese political sensibilities were aroused by President Clinton's proposal of an APEC summit, which had unwitting effect of resurrecting the latent and still unresolved national-representational question. It is perhaps inevitable that political considerations would 25 China subsequently claimed that the agreement on Hong Kong and Chinese Taipei (Taiwan) participation in APEC excluded them from actually hosting APEC or APEC Working Group activities. This claim, first put forward at the Honolulu meeting of the Education Forum, which took place in May I993 under the auspices of the APEC Human Resource Development Working Group, was deferred to the senior officials or ministerial levels. ical symbolism of the summit was not to be mistaken, since the meet- ing itself conveyed the message of 'a new voice for the Asia Pacific in world affairs.' A second Asia Pacific summit is to be held in 1994, on the occasion the APEC-VI meeting scheduled for Jakarta. The Geographic Composition of APEC Like the question of its role, the question of APEC's geographic boundaries has been subject to contention, even controversy. Aus- tralia's invitations to attend the first APEC ministerial meeting in Canberra were extended to Japan, South Korea, the ASEAN coun- tries, and New Zealand. The United States, not initially included, made known its desire to participate and was invited. Canada dis- patched its outspoken trade minister to key capitals in order to elicit an invitation. None of the small Pacific island states were included originally, though Papua New Guinea has since become a likely can- didate for membership. Arguably the most delicate diplomatic question before APEC related to the participation of China, Taiwan, and Hong Kong. Although all three ranked among the important trading economies in the Asia Pacific region, their formal affiliation with APEC had to be held up initially pending a resolution of a diplomatic imbroglio regarding two governments claiming to represent 'China', plus a Brit- ish crown colony soon to be reintegrated into the Peoples Republic of China albeit with special administrative status. This China quan- dary was resolved at APEC-III, at least as regards economic and trade matters. A formula was adopted enabling separate participation in APEC on the part of the Peoples Republic of China, 'Chinese Taipei' (i.e. the Republic of China on Taiwan) and Hong Kong.25 Nevertheless, Chinese political sensibilities were aroused by President Clinton's proposal of an APEC summit, which had unwitting effect of resurrecting the latent and still unresolved national-representational question. It is perhaps inevitable that political considerations would 25 China subsequently claimed that the agreement on Hong Kong and Chinese Taipei (Taiwan) participation in APEC excluded them from actually hosting APEC or APEC Working Group activities. This claim, first put forward at the Honolulu meeting of the Education Forum, which took place in May I993 under the auspices of the APEC Human Resource Development Working Group, was deferred to the senior officials or ministerial levels. 417 417 417 This content downloaded from 175.144.128.157 on Thu, 14 Nov 2013 10:19:13 AM All use subject to JSTOR Terms and Conditions MARTIN RUDNER MARTIN RUDNER MARTIN RUDNER assert themselves from time to time, injecting some of the tensions of international relations into the carefully structured architecture of APEC diplomacy. The European Community (EC), which considered itself a signi- ficant stakeholder in Asia Pacific economic affairs, was refused an invitation. The exclusion of Europe signalled APEC coming into its own as a mature and self-sustaining regional economic framework. Be that as it may, the rejection caused the EC considerable consternation.26 Some countries were deliberately excluded despite their geographic placement as part of the Asia Pacific region. The Soviet Union, North Korea, the Indochina states and Mongolia remained uninvited, pre- sumably because they had never been party to the wider regional and international trading system. A somewhat more vexatious predicament confronted the Latin American countries bordering on the Pacific littoral. Japan and Korea are inclined to include the more outward oriented Latin American economies within the APEC grouping, since this could also help offset any hemispheric tendencies towards exclusionary trading arrange- ments. Conversely, the ASEAN countries were generally reluctant to countenance a competing Latin American developing country pres- ence in APEC fora.27 Initial Latin American attempts to gain observer status at APEC- III were rebuffed. The subsequent Mexican application for member- ship was deferred by APEC-IV, notwithstanding Mexico's signing the North American Free Trade Agreement (NAFTA) with Canada and the United States, both of whom were already members of APEC. APEC-V admitted Mexico and Chile (with effect from next year), as a diplomatic quid pro quo for admitting Papua New Guinea, which Australia and the ASEAN countries sought. At the same time it was decided that APEC requires more time to consolidate before enter- taining any further additions to the group. The Structure of Asia Pacific Economic Cooperation The APEC agenda that crystallized over the formative phase of regional cooperation thus emphasized three priority issue-areas of 26 See Martin Rudner, 'European Community Development Assistance to Asia: Policies, Programs and Performance,' Modern Asian Studies (February 1992), p. 29. 27 Martin Rudner, 'ASEAN, Asia Pacific Economic Cooperation, and Hemi- spheric Free Trade for the Americas,' esp. pp. 136-40, I44. assert themselves from time to time, injecting some of the tensions of international relations into the carefully structured architecture of APEC diplomacy. The European Community (EC), which considered itself a signi- ficant stakeholder in Asia Pacific economic affairs, was refused an invitation. The exclusion of Europe signalled APEC coming into its own as a mature and self-sustaining regional economic framework. Be that as it may, the rejection caused the EC considerable consternation.26 Some countries were deliberately excluded despite their geographic placement as part of the Asia Pacific region. The Soviet Union, North Korea, the Indochina states and Mongolia remained uninvited, pre- sumably because they had never been party to the wider regional and international trading system. A somewhat more vexatious predicament confronted the Latin American countries bordering on the Pacific littoral. Japan and Korea are inclined to include the more outward oriented Latin American economies within the APEC grouping, since this could also help offset any hemispheric tendencies towards exclusionary trading arrange- ments. Conversely, the ASEAN countries were generally reluctant to countenance a competing Latin American developing country pres- ence in APEC fora.27 Initial Latin American attempts to gain observer status at APEC- III were rebuffed. The subsequent Mexican application for member- ship was deferred by APEC-IV, notwithstanding Mexico's signing the North American Free Trade Agreement (NAFTA) with Canada and the United States, both of whom were already members of APEC. APEC-V admitted Mexico and Chile (with effect from next year), as a diplomatic quid pro quo for admitting Papua New Guinea, which Australia and the ASEAN countries sought. At the same time it was decided that APEC requires more time to consolidate before enter- taining any further additions to the group. The Structure of Asia Pacific Economic Cooperation The APEC agenda that crystallized over the formative phase of regional cooperation thus emphasized three priority issue-areas of 26 See Martin Rudner, 'European Community Development Assistance to Asia: Policies, Programs and Performance,' Modern Asian Studies (February 1992), p. 29. 27 Martin Rudner, 'ASEAN, Asia Pacific Economic Cooperation, and Hemi- spheric Free Trade for the Americas,' esp. pp. 136-40, I44. assert themselves from time to time, injecting some of the tensions of international relations into the carefully structured architecture of APEC diplomacy. The European Community (EC), which considered itself a signi- ficant stakeholder in Asia Pacific economic affairs, was refused an invitation. The exclusion of Europe signalled APEC coming into its own as a mature and self-sustaining regional economic framework. Be that as it may, the rejection caused the EC considerable consternation.26 Some countries were deliberately excluded despite their geographic placement as part of the Asia Pacific region. The Soviet Union, North Korea, the Indochina states and Mongolia remained uninvited, pre- sumably because they had never been party to the wider regional and international trading system. A somewhat more vexatious predicament confronted the Latin American countries bordering on the Pacific littoral. Japan and Korea are inclined to include the more outward oriented Latin American economies within the APEC grouping, since this could also help offset any hemispheric tendencies towards exclusionary trading arrange- ments. Conversely, the ASEAN countries were generally reluctant to countenance a competing Latin American developing country pres- ence in APEC fora.27 Initial Latin American attempts to gain observer status at APEC- III were rebuffed. The subsequent Mexican application for member- ship was deferred by APEC-IV, notwithstanding Mexico's signing the North American Free Trade Agreement (NAFTA) with Canada and the United States, both of whom were already members of APEC. APEC-V admitted Mexico and Chile (with effect from next year), as a diplomatic quid pro quo for admitting Papua New Guinea, which Australia and the ASEAN countries sought. At the same time it was decided that APEC requires more time to consolidate before enter- taining any further additions to the group. The Structure of Asia Pacific Economic Cooperation The APEC agenda that crystallized over the formative phase of regional cooperation thus emphasized three priority issue-areas of 26 See Martin Rudner, 'European Community Development Assistance to Asia: Policies, Programs and Performance,' Modern Asian Studies (February 1992), p. 29. 27 Martin Rudner, 'ASEAN, Asia Pacific Economic Cooperation, and Hemi- spheric Free Trade for the Americas,' esp. pp. 136-40, I44. 4I8 4I8 4I8 This content downloaded from 175.144.128.157 on Thu, 14 Nov 2013 10:19:13 AM All use subject to JSTOR Terms and Conditions ASIA PACIFIC ECONOMIC COOPERATION ASIA PACIFIC ECONOMIC COOPERATION ASIA PACIFIC ECONOMIC COOPERATION common concern to participating governments, notably (a) the need to galvanize support for a successful completion of the Uruguay Round of Multilateral Trade Negotiations, in order to strengthen the international trading system; (b) the importance of coordinating efforts to assess the prospects for, and obstacles to, increased trade and investment flows within the Asia Pacific region; and (c) the iden- tification of practical matters that call for joint activities in the common economic interest. To give operational expression to this high-level agenda, subsequent meetings of senior officials proceeded to devise a work program involving inter-governmental collaboration on topics of common regional concern. In addition, a special meeting of senior officials from participating countries met in Vancouver in December I990, to discuss the progress of the Uruguay Round. Other ad hoc working groups of officials were subsequently set up to provide policy input on timely issues. At the first APEC ministerial meeting the more advanced industri- alized countries wanted to have the APEC work program concentrate on trade and economic policy issues; however, the ASEAN particip- ants insisted that the APEC working agenda include human resource development and technology transfer as well. Following an APEC Senior Officials Meeting in Singapore in I990, a work program com- posed of seven projects was considered and adopted by APEC-II. This work program was structured around the formation of inter- governmental Working Groups, each one dealing with a particular project: Regional Economic Trends, Trade and Investment Data, Trade Liberalization Information, Trade Promotion, Investment and Technology Transfer, Multilateral Human Resource Development, Regional Energy Conservation, Marine Resource Conservation, and Telecommunications. Ministerial discussions also raised the question of additional work projects on fisheries, transportation, and tourism, and these were referred to officials for assessment. The definitive work program approved at APEC-IV consisted of ten Working Groups (see Table 3). Each Work Project was assigned 'shepherds' from countries demonstrating a leading interest in the issue area concerned. Apart from officials, the Working Groups were also to involve representat- ives from the private sector and academia as appropriate. As well as the Working Groups established under its work program, APEC has also set up two ad hoc Working Groups charged with fur- nishing policy input on timely questions to APEC ministerial and official meetings. One ad hoc group is addressing Economic Trends and Issues, shepherded by Canada, and is currently preparing a common concern to participating governments, notably (a) the need to galvanize support for a successful completion of the Uruguay Round of Multilateral Trade Negotiations, in order to strengthen the international trading system; (b) the importance of coordinating efforts to assess the prospects for, and obstacles to, increased trade and investment flows within the Asia Pacific region; and (c) the iden- tification of practical matters that call for joint activities in the common economic interest. To give operational expression to this high-level agenda, subsequent meetings of senior officials proceeded to devise a work program involving inter-governmental collaboration on topics of common regional concern. In addition, a special meeting of senior officials from participating countries met in Vancouver in December I990, to discuss the progress of the Uruguay Round. Other ad hoc working groups of officials were subsequently set up to provide policy input on timely issues. At the first APEC ministerial meeting the more advanced industri- alized countries wanted to have the APEC work program concentrate on trade and economic policy issues; however, the ASEAN particip- ants insisted that the APEC working agenda include human resource development and technology transfer as well. Following an APEC Senior Officials Meeting in Singapore in I990, a work program com- posed of seven projects was considered and adopted by APEC-II. This work program was structured around the formation of inter- governmental Working Groups, each one dealing with a particular project: Regional Economic Trends, Trade and Investment Data, Trade Liberalization Information, Trade Promotion, Investment and Technology Transfer, Multilateral Human Resource Development, Regional Energy Conservation, Marine Resource Conservation, and Telecommunications. Ministerial discussions also raised the question of additional work projects on fisheries, transportation, and tourism, and these were referred to officials for assessment. The definitive work program approved at APEC-IV consisted of ten Working Groups (see Table 3). Each Work Project was assigned 'shepherds' from countries demonstrating a leading interest in the issue area concerned. Apart from officials, the Working Groups were also to involve representat- ives from the private sector and academia as appropriate. As well as the Working Groups established under its work program, APEC has also set up two ad hoc Working Groups charged with fur- nishing policy input on timely questions to APEC ministerial and official meetings. One ad hoc group is addressing Economic Trends and Issues, shepherded by Canada, and is currently preparing a common concern to participating governments, notably (a) the need to galvanize support for a successful completion of the Uruguay Round of Multilateral Trade Negotiations, in order to strengthen the international trading system; (b) the importance of coordinating efforts to assess the prospects for, and obstacles to, increased trade and investment flows within the Asia Pacific region; and (c) the iden- tification of practical matters that call for joint activities in the common economic interest. To give operational expression to this high-level agenda, subsequent meetings of senior officials proceeded to devise a work program involving inter-governmental collaboration on topics of common regional concern. In addition, a special meeting of senior officials from participating countries met in Vancouver in December I990, to discuss the progress of the Uruguay Round. Other ad hoc working groups of officials were subsequently set up to provide policy input on timely issues. At the first APEC ministerial meeting the more advanced industri- alized countries wanted to have the APEC work program concentrate on trade and economic policy issues; however, the ASEAN particip- ants insisted that the APEC working agenda include human resource development and technology transfer as well. Following an APEC Senior Officials Meeting in Singapore in I990, a work program com- posed of seven projects was considered and adopted by APEC-II. This work program was structured around the formation of inter- governmental Working Groups, each one dealing with a particular project: Regional Economic Trends, Trade and Investment Data, Trade Liberalization Information, Trade Promotion, Investment and Technology Transfer, Multilateral Human Resource Development, Regional Energy Conservation, Marine Resource Conservation, and Telecommunications. Ministerial discussions also raised the question of additional work projects on fisheries, transportation, and tourism, and these were referred to officials for assessment. The definitive work program approved at APEC-IV consisted of ten Working Groups (see Table 3). Each Work Project was assigned 'shepherds' from countries demonstrating a leading interest in the issue area concerned. Apart from officials, the Working Groups were also to involve representat- ives from the private sector and academia as appropriate. As well as the Working Groups established under its work program, APEC has also set up two ad hoc Working Groups charged with fur- nishing policy input on timely questions to APEC ministerial and official meetings. One ad hoc group is addressing Economic Trends and Issues, shepherded by Canada, and is currently preparing a 419 419 419 This content downloaded from 175.144.128.157 on Thu, 14 Nov 2013 10:19:13 AM All use subject to JSTOR Terms and Conditions MARTIN RUDNER TABLE 3 APEC Working Groups MARTIN RUDNER TABLE 3 APEC Working Groups MARTIN RUDNER TABLE 3 APEC Working Groups Working Group Working Group Working Group Review of Trade and Investment Data Trade promotion: Programs and Mechanisms for Cooperation Expansion of Investment and Technology Transfer Human Resources Development - Network on Economic Development Management - Network on Business Management - Network on Industrial Technology Regional Energy Cooperation Telecommunications Marine Resource Conservation Fisheries Transportation Tourism Ad Hoc Groups Review of Trade and Investment Data Trade promotion: Programs and Mechanisms for Cooperation Expansion of Investment and Technology Transfer Human Resources Development - Network on Economic Development Management - Network on Business Management - Network on Industrial Technology Regional Energy Cooperation Telecommunications Marine Resource Conservation Fisheries Transportation Tourism Ad Hoc Groups Review of Trade and Investment Data Trade promotion: Programs and Mechanisms for Cooperation Expansion of Investment and Technology Transfer Human Resources Development - Network on Economic Development Management - Network on Business Management - Network on Industrial Technology Regional Energy Cooperation Telecommunications Marine Resource Conservation Fisheries Transportation Tourism Ad Hoc Groups Economic Trends and Issues Informal Group on Trade Liberalization Economic Trends and Issues Informal Group on Trade Liberalization Economic Trends and Issues Informal Group on Trade Liberalization 'Shepherds' 'Shepherds' 'Shepherds' Japan, Singapore, United States Korea, Malaysia Indonesia, Japan, the Philippines Canada, Indonesia, Japan, Korea, Thailand Korea (Coordinator) Canada (Coordinator) Australia (Coordinator) Australia United States Canada, Indonesia, New Zealand Japan, New Zealand, Thailand United States United States 'Shepherds' Japan, Singapore, United States Korea, Malaysia Indonesia, Japan, the Philippines Canada, Indonesia, Japan, Korea, Thailand Korea (Coordinator) Canada (Coordinator) Australia (Coordinator) Australia United States Canada, Indonesia, New Zealand Japan, New Zealand, Thailand United States United States 'Shepherds' Japan, Singapore, United States Korea, Malaysia Indonesia, Japan, the Philippines Canada, Indonesia, Japan, Korea, Thailand Korea (Coordinator) Canada (Coordinator) Australia (Coordinator) Australia United States Canada, Indonesia, New Zealand Japan, New Zealand, Thailand United States United States 'Shepherds' Canada Australia Canada Australia Canada Australia review of the short-to-medium term economic outlook for countries of the region and a study of investment flows in the Asia Pacific area for the I993 APEC ministerial meeting. The other, an informal group on trade liberalization, shepherded by Australia, is undertaking a number of studies of investment regulations, customs procedures, market access issues, and an electronic tariff database. This informal arrangement was subsequently superseded by APEC Trade and Investment Committee set up by APEC-V with a broad mandate to consider ways and means of further liberalizing trade and investment flows in the region. The inaugural i990 meeting of the Asia Pacific Multilateral Human Resource Development Initiative, as this Work Project is styled, identified three issues of strategic significance for regional action or cooperation. Special 'networks' were established to exchange information and consider policy options relating to these issues, including a Network on Economic Development Management, coordinated by Korea; a Network on Business Management, coordin- review of the short-to-medium term economic outlook for countries of the region and a study of investment flows in the Asia Pacific area for the I993 APEC ministerial meeting. The other, an informal group on trade liberalization, shepherded by Australia, is undertaking a number of studies of investment regulations, customs procedures, market access issues, and an electronic tariff database. This informal arrangement was subsequently superseded by APEC Trade and Investment Committee set up by APEC-V with a broad mandate to consider ways and means of further liberalizing trade and investment flows in the region. The inaugural i990 meeting of the Asia Pacific Multilateral Human Resource Development Initiative, as this Work Project is styled, identified three issues of strategic significance for regional action or cooperation. Special 'networks' were established to exchange information and consider policy options relating to these issues, including a Network on Economic Development Management, coordinated by Korea; a Network on Business Management, coordin- review of the short-to-medium term economic outlook for countries of the region and a study of investment flows in the Asia Pacific area for the I993 APEC ministerial meeting. The other, an informal group on trade liberalization, shepherded by Australia, is undertaking a number of studies of investment regulations, customs procedures, market access issues, and an electronic tariff database. This informal arrangement was subsequently superseded by APEC Trade and Investment Committee set up by APEC-V with a broad mandate to consider ways and means of further liberalizing trade and investment flows in the region. The inaugural i990 meeting of the Asia Pacific Multilateral Human Resource Development Initiative, as this Work Project is styled, identified three issues of strategic significance for regional action or cooperation. Special 'networks' were established to exchange information and consider policy options relating to these issues, including a Network on Economic Development Management, coordinated by Korea; a Network on Business Management, coordin- 420 420 420 This content downloaded from 175.144.128.157 on Thu, 14 Nov 2013 10:19:13 AM All use subject to JSTOR Terms and Conditions ASIA PACIFIC ECONOMIC COOPERATION ASIA PACIFIC ECONOMIC COOPERATION ASIA PACIFIC ECONOMIC COOPERATION ated by Japan; and a Network on Industrial Technology, coordinated by Australia. Each of these networks encompassed 'national lead institutes' in each participating country, which were assigned responsibility for information gathering and dissemination, and for mobilizing local capabilities for project activities in that particular area of human resource development. The Agenda for Asia Pacific Economic Cooperation The objectives of APEC, as stated in the Seoul Declaration issued at the APEC-III Ministerial Meeting in i99I, emphasize a 'focus on economic areas where there is scope to advance common interests and achieve mutual benefits, including through exchange of informa- tion and consultation on policies and developments relevant to the common efforts of APEC economies to sustain growth, promote adjustment and reduce economic disparities.' APEC is virtually unique among international economic groupings in that it involves participating countries at different levels of economic development, all sharing a principled predilection for open-ness in international economic relations and an aversion to protectionism. Certainly, the conceptual imperative behind APEC has derived from the commit- ment of participating countries to consultation, information exchange, and collaborative efforts towards regional economic cooperation. Much of the work in defining the future role and agenda of APEC has been vested, in effect, in two ad hoc working groups of senior officials, one devoted to identifying Economic Trends and Issues affecting the region as a whole, and the other to Regional Trade Liberalization. The ad hoc Group on Economic Trends and Issues was intended to help achieve a better understanding of economic conditions and developments in countries of the region, as a means of enhancing the prospects for dialogue and cooperation. Participants in the group included senior officials from Australia, Brunei, Canada ('Shepherd'), China, Indonesia, Japan, Korea, Malaysia, New Zealand, Singapore, Taiwan, Thailand and the United States. Korea prepared a report on 'APEC Economies: Recent Developments and Outlook,' summarizing available data and offering projections on future trends.28 At the same 28 APEC Economies: Recent Developments and Outlook, Appendix II to the Ad Hoc Economic Group Report to Ministers, Record of the Fourth Ministerial Meeting of Asia- Pacific Economic Cooperation (APEC), pp. 50-7. ated by Japan; and a Network on Industrial Technology, coordinated by Australia. Each of these networks encompassed 'national lead institutes' in each participating country, which were assigned responsibility for information gathering and dissemination, and for mobilizing local capabilities for project activities in that particular area of human resource development. The Agenda for Asia Pacific Economic Cooperation The objectives of APEC, as stated in the Seoul Declaration issued at the APEC-III Ministerial Meeting in i99I, emphasize a 'focus on economic areas where there is scope to advance common interests and achieve mutual benefits, including through exchange of informa- tion and consultation on policies and developments relevant to the common efforts of APEC economies to sustain growth, promote adjustment and reduce economic disparities.' APEC is virtually unique among international economic groupings in that it involves participating countries at different levels of economic development, all sharing a principled predilection for open-ness in international economic relations and an aversion to protectionism. Certainly, the conceptual imperative behind APEC has derived from the commit- ment of participating countries to consultation, information exchange, and collaborative efforts towards regional economic cooperation. Much of the work in defining the future role and agenda of APEC has been vested, in effect, in two ad hoc working groups of senior officials, one devoted to identifying Economic Trends and Issues affecting the region as a whole, and the other to Regional Trade Liberalization. The ad hoc Group on Economic Trends and Issues was intended to help achieve a better understanding of economic conditions and developments in countries of the region, as a means of enhancing the prospects for dialogue and cooperation. Participants in the group included senior officials from Australia, Brunei, Canada ('Shepherd'), China, Indonesia, Japan, Korea, Malaysia, New Zealand, Singapore, Taiwan, Thailand and the United States. Korea prepared a report on 'APEC Economies: Recent Developments and Outlook,' summarizing available data and offering projections on future trends.28 At the same 28 APEC Economies: Recent Developments and Outlook, Appendix II to the Ad Hoc Economic Group Report to Ministers, Record of the Fourth Ministerial Meeting of Asia- Pacific Economic Cooperation (APEC), pp. 50-7. ated by Japan; and a Network on Industrial Technology, coordinated by Australia. Each of these networks encompassed 'national lead institutes' in each participating country, which were assigned responsibility for information gathering and dissemination, and for mobilizing local capabilities for project activities in that particular area of human resource development. The Agenda for Asia Pacific Economic Cooperation The objectives of APEC, as stated in the Seoul Declaration issued at the APEC-III Ministerial Meeting in i99I, emphasize a 'focus on economic areas where there is scope to advance common interests and achieve mutual benefits, including through exchange of informa- tion and consultation on policies and developments relevant to the common efforts of APEC economies to sustain growth, promote adjustment and reduce economic disparities.' APEC is virtually unique among international economic groupings in that it involves participating countries at different levels of economic development, all sharing a principled predilection for open-ness in international economic relations and an aversion to protectionism. Certainly, the conceptual imperative behind APEC has derived from the commit- ment of participating countries to consultation, information exchange, and collaborative efforts towards regional economic cooperation. Much of the work in defining the future role and agenda of APEC has been vested, in effect, in two ad hoc working groups of senior officials, one devoted to identifying Economic Trends and Issues affecting the region as a whole, and the other to Regional Trade Liberalization. The ad hoc Group on Economic Trends and Issues was intended to help achieve a better understanding of economic conditions and developments in countries of the region, as a means of enhancing the prospects for dialogue and cooperation. Participants in the group included senior officials from Australia, Brunei, Canada ('Shepherd'), China, Indonesia, Japan, Korea, Malaysia, New Zealand, Singapore, Taiwan, Thailand and the United States. Korea prepared a report on 'APEC Economies: Recent Developments and Outlook,' summarizing available data and offering projections on future trends.28 At the same 28 APEC Economies: Recent Developments and Outlook, Appendix II to the Ad Hoc Economic Group Report to Ministers, Record of the Fourth Ministerial Meeting of Asia- Pacific Economic Cooperation (APEC), pp. 50-7. 42 I 42 I 42 I This content downloaded from 175.144.128.157 on Thu, 14 Nov 2013 10:19:13 AM All use subject to JSTOR Terms and Conditions MARTIN RUDNER MARTIN RUDNER MARTIN RUDNER time, Japan undertook a study of economic and trade linkages among APEC economies, and included a future vision of the Asia Pacific Region in the year 2000.29 These documents were tabled for discus- sion at the ad hoc Group meeting in Tokyo in August, I992, and were subsequently presented to the APEC-IV Ministerial meeting in Bangkok later that same year. The Japanese study called attention to prospective challenges and difficulties that could constrain the growth of APEC economies over the long run. In order to ensure that the region would sustain its economic growth performance in face of these challenges and diffi- culties, nine policy 'tasks' were identified for solution at the APEC level.30 These nine tasks included: * Maintenance and strengthening of the multilateral trading system * Trade expansion, through continued trade liberalization and open-ness * Freer flow of managerial resources and capital * Nurturing of supporting industries * Human resource development for skills enhancement * Improvement and upgrading of industrial infrastructure * Harmonization of standards and statistics * Promotion of policy dialogue * Expansion of trans-Pacific trade At the Tokyo meeting of the ad hoc Group the absence was noted of a consistent, timely and reliable statistical database for the APEC region. Agreement was reached on introducing a regular exchange of economic statistics among APEC countries. Australia undertook to coordinate and circulate these data, with the expectation that the responsibility will devolve upon the APEC Secretariat, in due course. Other issue-areas identified for future study include the need for human resource development and labour mobility; the promotion of technology transfer, particularly from multinational enterprises to domestic producers; the protection of intellectual property and direct foreign investment; barriers to agricultural trade in the region; struc- tural adjustments to correct imbalances; harmonization of environ- mental management and economic development; balancing exports and domestic demand in promoting growth; and the regulatory 29 Vision for the Economy of the Asia-Pacific Region in the Year 2000 and the Tasks Ahead, APEC Ad Hoc Economic Group Meeting, IO-I i August I992, Tokyo, Japan. 30 Vision for the Economy of the Asia-Pacific Region in the Year 2000 and the Tasks Ahead, PP. 34-7. time, Japan undertook a study of economic and trade linkages among APEC economies, and included a future vision of the Asia Pacific Region in the year 2000.29 These documents were tabled for discus- sion at the ad hoc Group meeting in Tokyo in August, I992, and were subsequently presented to the APEC-IV Ministerial meeting in Bangkok later that same year. The Japanese study called attention to prospective challenges and difficulties that could constrain the growth of APEC economies over the long run. In order to ensure that the region would sustain its economic growth performance in face of these challenges and diffi- culties, nine policy 'tasks' were identified for solution at the APEC level.30 These nine tasks included: * Maintenance and strengthening of the multilateral trading system * Trade expansion, through continued trade liberalization and open-ness * Freer flow of managerial resources and capital * Nurturing of supporting industries * Human resource development for skills enhancement * Improvement and upgrading of industrial infrastructure * Harmonization of standards and statistics * Promotion of policy dialogue * Expansion of trans-Pacific trade At the Tokyo meeting of the ad hoc Group the absence was noted of a consistent, timely and reliable statistical database for the APEC region. Agreement was reached on introducing a regular exchange of economic statistics among APEC countries. Australia undertook to coordinate and circulate these data, with the expectation that the responsibility will devolve upon the APEC Secretariat, in due course. Other issue-areas identified for future study include the need for human resource development and labour mobility; the promotion of technology transfer, particularly from multinational enterprises to domestic producers; the protection of intellectual property and direct foreign investment; barriers to agricultural trade in the region; struc- tural adjustments to correct imbalances; harmonization of environ- mental management and economic development; balancing exports and domestic demand in promoting growth; and the regulatory 29 Vision for the Economy of the Asia-Pacific Region in the Year 2000 and the Tasks Ahead, APEC Ad Hoc Economic Group Meeting, IO-I i August I992, Tokyo, Japan. 30 Vision for the Economy of the Asia-Pacific Region in the Year 2000 and the Tasks Ahead, PP. 34-7. time, Japan undertook a study of economic and trade linkages among APEC economies, and included a future vision of the Asia Pacific Region in the year 2000.29 These documents were tabled for discus- sion at the ad hoc Group meeting in Tokyo in August, I992, and were subsequently presented to the APEC-IV Ministerial meeting in Bangkok later that same year. The Japanese study called attention to prospective challenges and difficulties that could constrain the growth of APEC economies over the long run. In order to ensure that the region would sustain its economic growth performance in face of these challenges and diffi- culties, nine policy 'tasks' were identified for solution at the APEC level.30 These nine tasks included: * Maintenance and strengthening of the multilateral trading system * Trade expansion, through continued trade liberalization and open-ness * Freer flow of managerial resources and capital * Nurturing of supporting industries * Human resource development for skills enhancement * Improvement and upgrading of industrial infrastructure * Harmonization of standards and statistics * Promotion of policy dialogue * Expansion of trans-Pacific trade At the Tokyo meeting of the ad hoc Group the absence was noted of a consistent, timely and reliable statistical database for the APEC region. Agreement was reached on introducing a regular exchange of economic statistics among APEC countries. Australia undertook to coordinate and circulate these data, with the expectation that the responsibility will devolve upon the APEC Secretariat, in due course. Other issue-areas identified for future study include the need for human resource development and labour mobility; the promotion of technology transfer, particularly from multinational enterprises to domestic producers; the protection of intellectual property and direct foreign investment; barriers to agricultural trade in the region; struc- tural adjustments to correct imbalances; harmonization of environ- mental management and economic development; balancing exports and domestic demand in promoting growth; and the regulatory 29 Vision for the Economy of the Asia-Pacific Region in the Year 2000 and the Tasks Ahead, APEC Ad Hoc Economic Group Meeting, IO-I i August I992, Tokyo, Japan. 30 Vision for the Economy of the Asia-Pacific Region in the Year 2000 and the Tasks Ahead, PP. 34-7. 422 422 422 This content downloaded from 175.144.128.157 on Thu, 14 Nov 2013 10:19:13 AM All use subject to JSTOR Terms and Conditions ASIA PACIFIC ECONOMIC COOPERATION ASIA PACIFIC ECONOMIC COOPERATION ASIA PACIFIC ECONOMIC COOPERATION regimes applicable to domestic services, including distribution systems. A second ad hoc group, the Informal Group on Regional Trade Liberalization (RTL) was established to evaluate the impact of trade and trade policy developments in the region in the context of the Uruguay Round, and to consider various approaches to regional trade liberalization. The RTL Group reiterated the APEC commitment to a timely and successful conclusion of the Uruguay Round of Multilat- eral Trade Negotiations, and agreed in the meantime to proceed with a set of initiatives intended to pave the way to a more liberal trading and investment regime for the region. Projects approved to date include a viability study for a proposed electronic tariff data base designed to disseminate detailed and timely tariff information among participating countries; a survey of regional tariff policies; preparation of an APEC customs guide; and publication of an Investment Regula- tions Guidebook for the countries of the APEC region. The RTL also endorsed an Australian proposal for the setting up of the Eminent Persons Group to formulate a future vision of eco- nomic trends, evolving trade patterns, and policy options for enhanced regional economic cooperation. This recommendation for an EPG was adopted by the Ministerial meeting at APEC-IV. The EPG was invited to assess the likely shape of trade and economic relations in the Asia Pacific region to the year 2000; identify policy options for advancing APEC regional development through strengthened trade, investment and other economic linkages; indicate what impediments and issues should be addressed by the inter- governmental community so as to advance the dynamism of trade and investment in the APEC region; and formulate regional priority concerns for future multilateral trade negotiations. Implementing the APEC Work Program By the end of 1992, all of APEC's Working Groups were functioning. Much of the activity involved meetings, and coordination efforts among bureaucrats of participating countries went some way to improve communications and linkages among governments, and while this can help facilitate regional economic cooperation the actual flow of activity - whether trade, investment, technology transfer, or knowledge-based exchanges - will only arise from the broader participation of the private and institutional sectors in these regimes applicable to domestic services, including distribution systems. A second ad hoc group, the Informal Group on Regional Trade Liberalization (RTL) was established to evaluate the impact of trade and trade policy developments in the region in the context of the Uruguay Round, and to consider various approaches to regional trade liberalization. The RTL Group reiterated the APEC commitment to a timely and successful conclusion of the Uruguay Round of Multilat- eral Trade Negotiations, and agreed in the meantime to proceed with a set of initiatives intended to pave the way to a more liberal trading and investment regime for the region. Projects approved to date include a viability study for a proposed electronic tariff data base designed to disseminate detailed and timely tariff information among participating countries; a survey of regional tariff policies; preparation of an APEC customs guide; and publication of an Investment Regula- tions Guidebook for the countries of the APEC region. The RTL also endorsed an Australian proposal for the setting up of the Eminent Persons Group to formulate a future vision of eco- nomic trends, evolving trade patterns, and policy options for enhanced regional economic cooperation. This recommendation for an EPG was adopted by the Ministerial meeting at APEC-IV. The EPG was invited to assess the likely shape of trade and economic relations in the Asia Pacific region to the year 2000; identify policy options for advancing APEC regional development through strengthened trade, investment and other economic linkages; indicate what impediments and issues should be addressed by the inter- governmental community so as to advance the dynamism of trade and investment in the APEC region; and formulate regional priority concerns for future multilateral trade negotiations. Implementing the APEC Work Program By the end of 1992, all of APEC's Working Groups were functioning. Much of the activity involved meetings, and coordination efforts among bureaucrats of participating countries went some way to improve communications and linkages among governments, and while this can help facilitate regional economic cooperation the actual flow of activity - whether trade, investment, technology transfer, or knowledge-based exchanges - will only arise from the broader participation of the private and institutional sectors in these regimes applicable to domestic services, including distribution systems. A second ad hoc group, the Informal Group on Regional Trade Liberalization (RTL) was established to evaluate the impact of trade and trade policy developments in the region in the context of the Uruguay Round, and to consider various approaches to regional trade liberalization. The RTL Group reiterated the APEC commitment to a timely and successful conclusion of the Uruguay Round of Multilat- eral Trade Negotiations, and agreed in the meantime to proceed with a set of initiatives intended to pave the way to a more liberal trading and investment regime for the region. Projects approved to date include a viability study for a proposed electronic tariff data base designed to disseminate detailed and timely tariff information among participating countries; a survey of regional tariff policies; preparation of an APEC customs guide; and publication of an Investment Regula- tions Guidebook for the countries of the APEC region. The RTL also endorsed an Australian proposal for the setting up of the Eminent Persons Group to formulate a future vision of eco- nomic trends, evolving trade patterns, and policy options for enhanced regional economic cooperation. This recommendation for an EPG was adopted by the Ministerial meeting at APEC-IV. The EPG was invited to assess the likely shape of trade and economic relations in the Asia Pacific region to the year 2000; identify policy options for advancing APEC regional development through strengthened trade, investment and other economic linkages; indicate what impediments and issues should be addressed by the inter- governmental community so as to advance the dynamism of trade and investment in the APEC region; and formulate regional priority concerns for future multilateral trade negotiations. Implementing the APEC Work Program By the end of 1992, all of APEC's Working Groups were functioning. Much of the activity involved meetings, and coordination efforts among bureaucrats of participating countries went some way to improve communications and linkages among governments, and while this can help facilitate regional economic cooperation the actual flow of activity - whether trade, investment, technology transfer, or knowledge-based exchanges - will only arise from the broader participation of the private and institutional sectors in these 423 423 423 This content downloaded from 175.144.128.157 on Thu, 14 Nov 2013 10:19:13 AM All use subject to JSTOR Terms and Conditions MARTIN RUDNER MARTIN RUDNER MARTIN RUDNER cooperative efforts. Canada has tended to concentrate its APEC efforts mainly in trade-related Work Projects; even though Canada is a shepherd in the HRD Work Project, most of the activities in that Work Project to date were initiated by other participants.31 While some problems were encountered in managing and coordinating the ten Work Projects with overlap, the report to the APEC-IV minister- ial meeting in Bangkok highlighted the progress made in regional programming and in resolving policy issues at the regional level.32 The APEC Working Group on the Review of Trade and Invest- ment Data has identified certain areas where discrepancies occur in the various national statistics recording merchandise trade, and has produced a consensus on a set of standards for the proposed APEC statistical database. Each participating country is expected to intro- duce these common standards wherever possible in order to provide greater comparability in data collection and utilization among APEC members. The Working Group is also gathering data inventories on trade in services and investment flows. It is expected that each member country will try to improve its own data on trade in services, while working to reconcile services trade data on a country-to-country basis over the next two years. The Working Group on Trade Promotion has concentrated on implementing the APEC Electronic Information Network. This Net- work connects the computer systems of all APEC countries and per- mits the exchange of information pertaining to trade, industry and business affairs. This Electronic Network is expected to provide the technological infrastructure for information exchange among other APEC Working Groups as well. Regionally-focussed training courses on trade promotion are becoming an increasingly prominent feature of APEC activity under the aegis of this Working Group. Korea initiated an annual series of APEC Trade Promotion Training Courses, beginning in September gg99, designed primarily to assist ASEAN countries strengthen their export promotion policies and programs. Subsequently, the Working Group adopted a Taiwan (Chinese Taipei) proposal for addressing the export development challenges of small- and medium-scale enter- 31 In January 1994, Canada took over from Japan as coordinator of the Business Management Network. This seems likely to engender a greater number of project proposals from Canadian sources. 32 Consolidated Report on APEC Work Programme, Record of the Fourth Ministerial Meeting of Asia-Pacific Economic Cooperation (APEC), lo-II September I992, Bangkok, Thailand. cooperative efforts. Canada has tended to concentrate its APEC efforts mainly in trade-related Work Projects; even though Canada is a shepherd in the HRD Work Project, most of the activities in that Work Project to date were initiated by other participants.31 While some problems were encountered in managing and coordinating the ten Work Projects with overlap, the report to the APEC-IV minister- ial meeting in Bangkok highlighted the progress made in regional programming and in resolving policy issues at the regional level.32 The APEC Working Group on the Review of Trade and Invest- ment Data has identified certain areas where discrepancies occur in the various national statistics recording merchandise trade, and has produced a consensus on a set of standards for the proposed APEC statistical database. Each participating country is expected to intro- duce these common standards wherever possible in order to provide greater comparability in data collection and utilization among APEC members. The Working Group is also gathering data inventories on trade in services and investment flows. It is expected that each member country will try to improve its own data on trade in services, while working to reconcile services trade data on a country-to-country basis over the next two years. The Working Group on Trade Promotion has concentrated on implementing the APEC Electronic Information Network. This Net- work connects the computer systems of all APEC countries and per- mits the exchange of information pertaining to trade, industry and business affairs. This Electronic Network is expected to provide the technological infrastructure for information exchange among other APEC Working Groups as well. Regionally-focussed training courses on trade promotion are becoming an increasingly prominent feature of APEC activity under the aegis of this Working Group. Korea initiated an annual series of APEC Trade Promotion Training Courses, beginning in September gg99, designed primarily to assist ASEAN countries strengthen their export promotion policies and programs. Subsequently, the Working Group adopted a Taiwan (Chinese Taipei) proposal for addressing the export development challenges of small- and medium-scale enter- 31 In January 1994, Canada took over from Japan as coordinator of the Business Management Network. This seems likely to engender a greater number of project proposals from Canadian sources. 32 Consolidated Report on APEC Work Programme, Record of the Fourth Ministerial Meeting of Asia-Pacific Economic Cooperation (APEC), lo-II September I992, Bangkok, Thailand. cooperative efforts. Canada has tended to concentrate its APEC efforts mainly in trade-related Work Projects; even though Canada is a shepherd in the HRD Work Project, most of the activities in that Work Project to date were initiated by other participants.31 While some problems were encountered in managing and coordinating the ten Work Projects with overlap, the report to the APEC-IV minister- ial meeting in Bangkok highlighted the progress made in regional programming and in resolving policy issues at the regional level.32 The APEC Working Group on the Review of Trade and Invest- ment Data has identified certain areas where discrepancies occur in the various national statistics recording merchandise trade, and has produced a consensus on a set of standards for the proposed APEC statistical database. Each participating country is expected to intro- duce these common standards wherever possible in order to provide greater comparability in data collection and utilization among APEC members. The Working Group is also gathering data inventories on trade in services and investment flows. It is expected that each member country will try to improve its own data on trade in services, while working to reconcile services trade data on a country-to-country basis over the next two years. The Working Group on Trade Promotion has concentrated on implementing the APEC Electronic Information Network. This Net- work connects the computer systems of all APEC countries and per- mits the exchange of information pertaining to trade, industry and business affairs. This Electronic Network is expected to provide the technological infrastructure for information exchange among other APEC Working Groups as well. Regionally-focussed training courses on trade promotion are becoming an increasingly prominent feature of APEC activity under the aegis of this Working Group. Korea initiated an annual series of APEC Trade Promotion Training Courses, beginning in September gg99, designed primarily to assist ASEAN countries strengthen their export promotion policies and programs. Subsequently, the Working Group adopted a Taiwan (Chinese Taipei) proposal for addressing the export development challenges of small- and medium-scale enter- 31 In January 1994, Canada took over from Japan as coordinator of the Business Management Network. This seems likely to engender a greater number of project proposals from Canadian sources. 32 Consolidated Report on APEC Work Programme, Record of the Fourth Ministerial Meeting of Asia-Pacific Economic Cooperation (APEC), lo-II September I992, Bangkok, Thailand. 424 424 424 This content downloaded from 175.144.128.157 on Thu, 14 Nov 2013 10:19:13 AM All use subject to JSTOR Terms and Conditions ASIA PACIFIC ECONOMIC COOPERATION ASIA PACIFIC ECONOMIC COOPERATION ASIA PACIFIC ECONOMIC COOPERATION prises in the Asia-Pacific Trade Promotion Training Course. China has now also offered to host a Course, along with a series of seminars focussing on export development for small- and medium-scale enter- prises. In addition, the Working Group has placed its imprimatur on the First Asia-Pacific International Trade Fair, planned for I994 in Japan. The Working Group on the Expansion of Investment and Techno- logy Transfer in the Asia-Pacific Region endorsed a technopark pro- gram to assist newly industrializing member countries establish suit- ably equipped and supported industrial parks so as to attract external investment in more advanced industrial technologies. Towards this end, Japan proposed compiling a handbook on techno-industrial parks in cooperation with APEC members. In another initiative under this Work Project, an expert's meeting to discuss the various networking options available for the dissemination of investment and technology information was held in Yogyakarta, Indonesia, in 1992. The networks established within the framework of Human Resource Development Initiative have launched an array of indi- vidual projects involving joint research, information exchange, sem- inars and workshops.33 A Domestic Network structure is being put in place in participating countries, with Canada taking a lead, in order to create linkages among institutions engaged in the relevant areas of human resource development. An APEC Education Minister- ial Meeting took place in Washington, DC, in August 1992, and further consultations will take place in the Education Forum estab- lished under the auspices of the Working Group. The APEC HRD Working Group has also embraced other cooperative activities in education and training, notably the so-called 'partnership' initiatives linking APEC and Japan and the United States, respectively; an Australian study of University Mobility in Asia-Pacific; and the Asia-Pacific Human Resource Development Outlook prepared by the Pacific Economic Cooperation Council (PECC). The Working Group on Regional Energy Cooperation has agreed on a format for an APEC energy database, which is intended for use in information exchanges and discussions on energy policy issues. The 33 In addition to the activities it itself sponsors, the APEC HRD Working Group also provides liaison with other cooperative initiatives at the regional level in educa- tion and training. Examples include the so-called 'partnership' projects between Japan and the United States, an Australian initiated study of University Mobility in Asia-Pacific, and the Pacific Economic Cooperation Council (PECC) Asia-Pacific HRD Outlook presented to the APEC Working Group. prises in the Asia-Pacific Trade Promotion Training Course. China has now also offered to host a Course, along with a series of seminars focussing on export development for small- and medium-scale enter- prises. In addition, the Working Group has placed its imprimatur on the First Asia-Pacific International Trade Fair, planned for I994 in Japan. The Working Group on the Expansion of Investment and Techno- logy Transfer in the Asia-Pacific Region endorsed a technopark pro- gram to assist newly industrializing member countries establish suit- ably equipped and supported industrial parks so as to attract external investment in more advanced industrial technologies. Towards this end, Japan proposed compiling a handbook on techno-industrial parks in cooperation with APEC members. In another initiative under this Work Project, an expert's meeting to discuss the various networking options available for the dissemination of investment and technology information was held in Yogyakarta, Indonesia, in 1992. The networks established within the framework of Human Resource Development Initiative have launched an array of indi- vidual projects involving joint research, information exchange, sem- inars and workshops.33 A Domestic Network structure is being put in place in participating countries, with Canada taking a lead, in order to create linkages among institutions engaged in the relevant areas of human resource development. An APEC Education Minister- ial Meeting took place in Washington, DC, in August 1992, and further consultations will take place in the Education Forum estab- lished under the auspices of the Working Group. The APEC HRD Working Group has also embraced other cooperative activities in education and training, notably the so-called 'partnership' initiatives linking APEC and Japan and the United States, respectively; an Australian study of University Mobility in Asia-Pacific; and the Asia-Pacific Human Resource Development Outlook prepared by the Pacific Economic Cooperation Council (PECC). The Working Group on Regional Energy Cooperation has agreed on a format for an APEC energy database, which is intended for use in information exchanges and discussions on energy policy issues. The 33 In addition to the activities it itself sponsors, the APEC HRD Working Group also provides liaison with other cooperative initiatives at the regional level in educa- tion and training. Examples include the so-called 'partnership' projects between Japan and the United States, an Australian initiated study of University Mobility in Asia-Pacific, and the Pacific Economic Cooperation Council (PECC) Asia-Pacific HRD Outlook presented to the APEC Working Group. prises in the Asia-Pacific Trade Promotion Training Course. China has now also offered to host a Course, along with a series of seminars focussing on export development for small- and medium-scale enter- prises. In addition, the Working Group has placed its imprimatur on the First Asia-Pacific International Trade Fair, planned for I994 in Japan. The Working Group on the Expansion of Investment and Techno- logy Transfer in the Asia-Pacific Region endorsed a technopark pro- gram to assist newly industrializing member countries establish suit- ably equipped and supported industrial parks so as to attract external investment in more advanced industrial technologies. Towards this end, Japan proposed compiling a handbook on techno-industrial parks in cooperation with APEC members. In another initiative under this Work Project, an expert's meeting to discuss the various networking options available for the dissemination of investment and technology information was held in Yogyakarta, Indonesia, in 1992. The networks established within the framework of Human Resource Development Initiative have launched an array of indi- vidual projects involving joint research, information exchange, sem- inars and workshops.33 A Domestic Network structure is being put in place in participating countries, with Canada taking a lead, in order to create linkages among institutions engaged in the relevant areas of human resource development. An APEC Education Minister- ial Meeting took place in Washington, DC, in August 1992, and further consultations will take place in the Education Forum estab- lished under the auspices of the Working Group. The APEC HRD Working Group has also embraced other cooperative activities in education and training, notably the so-called 'partnership' initiatives linking APEC and Japan and the United States, respectively; an Australian study of University Mobility in Asia-Pacific; and the Asia-Pacific Human Resource Development Outlook prepared by the Pacific Economic Cooperation Council (PECC). The Working Group on Regional Energy Cooperation has agreed on a format for an APEC energy database, which is intended for use in information exchanges and discussions on energy policy issues. The 33 In addition to the activities it itself sponsors, the APEC HRD Working Group also provides liaison with other cooperative initiatives at the regional level in educa- tion and training. Examples include the so-called 'partnership' projects between Japan and the United States, an Australian initiated study of University Mobility in Asia-Pacific, and the Pacific Economic Cooperation Council (PECC) Asia-Pacific HRD Outlook presented to the APEC Working Group. 425 425 425 This content downloaded from 175.144.128.157 on Thu, 14 Nov 2013 10:19:13 AM All use subject to JSTOR Terms and Conditions MARTIN RUDNER MARTIN RUDNER MARTIN RUDNER Working Group has approved a set of recommendations regarding the use of clean coal technologies. A compendium on energy saving practices in APEC countries was compiled, and several additional information sharing exercises relating to energy technology co- operation are being developed. The APEC Work Project on Marine Resource Cooperation has formulated detailed priorities for addressing issues concerning sensit- ive marine ecosystems and coastal communities. The Working Group endorses integrated coastal planning as an approach to marine envir- onmental protection and sustainable development. An outline plan has been formulated for the setting up of task teams to deal with the problems of toxic algae/red tide afflicting the APEC region. The Working Group on Telecommunications has published a first study of'The States of Telecommunications Infrastructure and Regu- latory Environments of APEC Economies,' and a second study on telecommunications operational training. Several electronic data interchange (EDI) pilot projects have been implemented in order to broaden awareness of this technology facility and to facilitate trade among APEC countries. In the infrastructure context, consideration has been given to a Japanese proposal for teleports to help improve business communications across the region, and to the development of advanced broadband high-speed data highways. A Training Needs Assessment study sponsored by the United States provoked some controversy among Telecommunications Working Group partici- pants. Most of the efforts of the Working Group on Fisheries were directed at cooperation on identification of fish stocks, harvesting and post- harvest fishery technologies, marketing, and management arrange- ments. Current activities of the Working Group include a survey of species requiring international cooperation in management efforts; a survey of information on fish stocks, existing management arrange- ments and provisions for scientific support; an inventory of existing facilities and opportunities for transfers of fishery technology between APEC participants; and periodic assessments of global and regional markets for seafood products from the APEC region. The Taiwanese project proposal on Promoting Development of Medium and Small Enterprises through Cooperation, which is already incorporated into the Trade Promotion Work Project, has also been considered by the Work Project on Fisheries. The Working Group on Transportation conducted a range of surveys addressing regional transportation systems and services, Working Group has approved a set of recommendations regarding the use of clean coal technologies. A compendium on energy saving practices in APEC countries was compiled, and several additional information sharing exercises relating to energy technology co- operation are being developed. The APEC Work Project on Marine Resource Cooperation has formulated detailed priorities for addressing issues concerning sensit- ive marine ecosystems and coastal communities. The Working Group endorses integrated coastal planning as an approach to marine envir- onmental protection and sustainable development. An outline plan has been formulated for the setting up of task teams to deal with the problems of toxic algae/red tide afflicting the APEC region. The Working Group on Telecommunications has published a first study of'The States of Telecommunications Infrastructure and Regu- latory Environments of APEC Economies,' and a second study on telecommunications operational training. Several electronic data interchange (EDI) pilot projects have been implemented in order to broaden awareness of this technology facility and to facilitate trade among APEC countries. In the infrastructure context, consideration has been given to a Japanese proposal for teleports to help improve business communications across the region, and to the development of advanced broadband high-speed data highways. A Training Needs Assessment study sponsored by the United States provoked some controversy among Telecommunications Working Group partici- pants. Most of the efforts of the Working Group on Fisheries were directed at cooperation on identification of fish stocks, harvesting and post- harvest fishery technologies, marketing, and management arrange- ments. Current activities of the Working Group include a survey of species requiring international cooperation in management efforts; a survey of information on fish stocks, existing management arrange- ments and provisions for scientific support; an inventory of existing facilities and opportunities for transfers of fishery technology between APEC participants; and periodic assessments of global and regional markets for seafood products from the APEC region. The Taiwanese project proposal on Promoting Development of Medium and Small Enterprises through Cooperation, which is already incorporated into the Trade Promotion Work Project, has also been considered by the Work Project on Fisheries. The Working Group on Transportation conducted a range of surveys addressing regional transportation systems and services, Working Group has approved a set of recommendations regarding the use of clean coal technologies. A compendium on energy saving practices in APEC countries was compiled, and several additional information sharing exercises relating to energy technology co- operation are being developed. The APEC Work Project on Marine Resource Cooperation has formulated detailed priorities for addressing issues concerning sensit- ive marine ecosystems and coastal communities. The Working Group endorses integrated coastal planning as an approach to marine envir- onmental protection and sustainable development. An outline plan has been formulated for the setting up of task teams to deal with the problems of toxic algae/red tide afflicting the APEC region. The Working Group on Telecommunications has published a first study of'The States of Telecommunications Infrastructure and Regu- latory Environments of APEC Economies,' and a second study on telecommunications operational training. Several electronic data interchange (EDI) pilot projects have been implemented in order to broaden awareness of this technology facility and to facilitate trade among APEC countries. In the infrastructure context, consideration has been given to a Japanese proposal for teleports to help improve business communications across the region, and to the development of advanced broadband high-speed data highways. A Training Needs Assessment study sponsored by the United States provoked some controversy among Telecommunications Working Group partici- pants. Most of the efforts of the Working Group on Fisheries were directed at cooperation on identification of fish stocks, harvesting and post- harvest fishery technologies, marketing, and management arrange- ments. Current activities of the Working Group include a survey of species requiring international cooperation in management efforts; a survey of information on fish stocks, existing management arrange- ments and provisions for scientific support; an inventory of existing facilities and opportunities for transfers of fishery technology between APEC participants; and periodic assessments of global and regional markets for seafood products from the APEC region. The Taiwanese project proposal on Promoting Development of Medium and Small Enterprises through Cooperation, which is already incorporated into the Trade Promotion Work Project, has also been considered by the Work Project on Fisheries. The Working Group on Transportation conducted a range of surveys addressing regional transportation systems and services, 426 426 426 This content downloaded from 175.144.128.157 on Thu, 14 Nov 2013 10:19:13 AM All use subject to JSTOR Terms and Conditions ASIA PACIFIC ECONOMIC COOPERATION ASIA PACIFIC ECONOMIC COOPERATION ASIA PACIFIC ECONOMIC COOPERATION transport bottlenecks, data bases, and work of other international organizations. The Work Project also includes a long-term projection of transportation requirements for the APEC region. The Working Group on Tourism is drafting work plans which will also address the activities of other international organizations in this area. Among the topics on the Working Group's agenda are tourism data collection and statistics; creation of an inventory of tourism pro- jects; tourism training; tourism and aviation; tourism and the envir- onment; and the identification of impediments to tourism. The APEC work program admits to difficulties with duplication, overlap, and over-bureaucratization of activities. Duplication and overlap have been especially pervasive in data collection, information networking and human resource development, which span several Working Groups in a largely uncoordinated manner. For example, the plan to set up an investment information network under the Work Project on Expansion of Investment and Technology Transfer may duplicate or overlap with the information exchanges run through the APEC Electronic Information Network (APECNet) sponsored by the Trade Promotion Working Group, and the surveys on investment flows implemented by the Review of Trade and Investment Data Projects. Several Working Groups are therefore looking to APECNet to service their information sharing requirements. There has been a similar proliferation of training activities across various Work Pro- jects, most notably in the Work Project on Multilateral Human Resource Development and in other projects in Trade Promotion and in Telecommunications, with little inter-group coordination or common direction. Most of the Working Group activities to date involve government bureaucrats, with little private sector or extended public sector participation. While some progress has taken place in regional cooperation under APEC auspices, most of this has been confined to information exchanges, inventories and surveys, and sem- inars for officials. APEC and the Uruguay Round of Multilateral Trade Negotiations The Uruguay Round of multilateral trade negotiations figured prom- inently on the agenda of APEC. This concern and attention to the stalled Uruguay Round was reiterated in various APEC fora, most forcefully in a combined ministerial statement on the Uruguay Round issued on the occasion of the APEC-IV meeting in Bangkok in Sep- transport bottlenecks, data bases, and work of other international organizations. The Work Project also includes a long-term projection of transportation requirements for the APEC region. The Working Group on Tourism is drafting work plans which will also address the activities of other international organizations in this area. Among the topics on the Working Group's agenda are tourism data collection and statistics; creation of an inventory of tourism pro- jects; tourism training; tourism and aviation; tourism and the envir- onment; and the identification of impediments to tourism. The APEC work program admits to difficulties with duplication, overlap, and over-bureaucratization of activities. Duplication and overlap have been especially pervasive in data collection, information networking and human resource development, which span several Working Groups in a largely uncoordinated manner. For example, the plan to set up an investment information network under the Work Project on Expansion of Investment and Technology Transfer may duplicate or overlap with the information exchanges run through the APEC Electronic Information Network (APECNet) sponsored by the Trade Promotion Working Group, and the surveys on investment flows implemented by the Review of Trade and Investment Data Projects. Several Working Groups are therefore looking to APECNet to service their information sharing requirements. There has been a similar proliferation of training activities across various Work Pro- jects, most notably in the Work Project on Multilateral Human Resource Development and in other projects in Trade Promotion and in Telecommunications, with little inter-group coordination or common direction. Most of the Working Group activities to date involve government bureaucrats, with little private sector or extended public sector participation. While some progress has taken place in regional cooperation under APEC auspices, most of this has been confined to information exchanges, inventories and surveys, and sem- inars for officials. APEC and the Uruguay Round of Multilateral Trade Negotiations The Uruguay Round of multilateral trade negotiations figured prom- inently on the agenda of APEC. This concern and attention to the stalled Uruguay Round was reiterated in various APEC fora, most forcefully in a combined ministerial statement on the Uruguay Round issued on the occasion of the APEC-IV meeting in Bangkok in Sep- transport bottlenecks, data bases, and work of other international organizations. The Work Project also includes a long-term projection of transportation requirements for the APEC region. The Working Group on Tourism is drafting work plans which will also address the activities of other international organizations in this area. Among the topics on the Working Group's agenda are tourism data collection and statistics; creation of an inventory of tourism pro- jects; tourism training; tourism and aviation; tourism and the envir- onment; and the identification of impediments to tourism. The APEC work program admits to difficulties with duplication, overlap, and over-bureaucratization of activities. Duplication and overlap have been especially pervasive in data collection, information networking and human resource development, which span several Working Groups in a largely uncoordinated manner. For example, the plan to set up an investment information network under the Work Project on Expansion of Investment and Technology Transfer may duplicate or overlap with the information exchanges run through the APEC Electronic Information Network (APECNet) sponsored by the Trade Promotion Working Group, and the surveys on investment flows implemented by the Review of Trade and Investment Data Projects. Several Working Groups are therefore looking to APECNet to service their information sharing requirements. There has been a similar proliferation of training activities across various Work Pro- jects, most notably in the Work Project on Multilateral Human Resource Development and in other projects in Trade Promotion and in Telecommunications, with little inter-group coordination or common direction. Most of the Working Group activities to date involve government bureaucrats, with little private sector or extended public sector participation. While some progress has taken place in regional cooperation under APEC auspices, most of this has been confined to information exchanges, inventories and surveys, and sem- inars for officials. APEC and the Uruguay Round of Multilateral Trade Negotiations The Uruguay Round of multilateral trade negotiations figured prom- inently on the agenda of APEC. This concern and attention to the stalled Uruguay Round was reiterated in various APEC fora, most forcefully in a combined ministerial statement on the Uruguay Round issued on the occasion of the APEC-IV meeting in Bangkok in Sep- 427 427 427 This content downloaded from 175.144.128.157 on Thu, 14 Nov 2013 10:19:13 AM All use subject to JSTOR Terms and Conditions MARTIN RUDNER MARTIN RUDNER MARTIN RUDNER tember I991. The ministerial statement34 emphasized the importance of a strengthened international trading system for the continued expansion of world trade, and for facilitating further economic reform in the region, upon which the future growth and development of the APEC economies depend. APEC ministers expressed unanimous support for the principles espoused in the Uruguay Round, while lamenting the lack of progress in negotiations over agricultural trade, market access, and trade in services. APEC countries clearly regarded an early and successful conclusion of the Uruguay Round as being of vital significance to the region. The economic dynamism of the APEC region was generally viewed as hinging upon an open, multilateral framework for trade. This posi- tion was clearly articulated by the APEC-V ministerial meeting and the Asia Pacific summit that followed. Yet, it is also clear that this consensual support for the multilateral trading system does not over- ride the propensity of governments to try to preserve and maintain their own protectionist impediments to trade. Thus, Korea's response to the Draft Final Act (the so-called 'Dunkel Package') put forward in December I99I, rejected any compromises to its notoriously pro- hibitive agricultural import policy, while ASEAN countries have been loath to forgo their own restrictions on trade and investment and impediments to market access.35 What is significant, however, is the broad acceptance of a linkage between regional economic cooperation and the multilateral trading system that crystallized as the conceptual cornerstone of APEC. The countries of APEC do not envision that grouping becoming a regional substitute or alternative to a multilateral trading system. Indeed, the APEC conception of plurilateral regional economic cooperation is predicated upon an open, comprehensive, and non-discriminatory framework for international trade and investment. The ASEAN developing countries, in particular, are wary about adopting an APEC trade and investment framework, lest this leave them vulner- able to managed trade initiatives on the part of the US or other powerful trading partners. Instead, ASEAN insists that any APEC framework agreement be compatible with the principles espoused by GATT. 'Open' regionalism, as expressed in APEC, presumes the 34 APEC Statement on the Uruguay Round, reprinted in Record of the Fourth Minis- terial Meeting of Asia-Pacific Economic Cooperation (APEC), p. 17. 35 On trade restrictions and impediments among the ASEAN countries see Aus- tralia's Business Challenge. Southeast Asia in the g99os, pp. 70-8. tember I991. The ministerial statement34 emphasized the importance of a strengthened international trading system for the continued expansion of world trade, and for facilitating further economic reform in the region, upon which the future growth and development of the APEC economies depend. APEC ministers expressed unanimous support for the principles espoused in the Uruguay Round, while lamenting the lack of progress in negotiations over agricultural trade, market access, and trade in services. APEC countries clearly regarded an early and successful conclusion of the Uruguay Round as being of vital significance to the region. The economic dynamism of the APEC region was generally viewed as hinging upon an open, multilateral framework for trade. This posi- tion was clearly articulated by the APEC-V ministerial meeting and the Asia Pacific summit that followed. Yet, it is also clear that this consensual support for the multilateral trading system does not over- ride the propensity of governments to try to preserve and maintain their own protectionist impediments to trade. Thus, Korea's response to the Draft Final Act (the so-called 'Dunkel Package') put forward in December I99I, rejected any compromises to its notoriously pro- hibitive agricultural import policy, while ASEAN countries have been loath to forgo their own restrictions on trade and investment and impediments to market access.35 What is significant, however, is the broad acceptance of a linkage between regional economic cooperation and the multilateral trading system that crystallized as the conceptual cornerstone of APEC. The countries of APEC do not envision that grouping becoming a regional substitute or alternative to a multilateral trading system. Indeed, the APEC conception of plurilateral regional economic cooperation is predicated upon an open, comprehensive, and non-discriminatory framework for international trade and investment. The ASEAN developing countries, in particular, are wary about adopting an APEC trade and investment framework, lest this leave them vulner- able to managed trade initiatives on the part of the US or other powerful trading partners. Instead, ASEAN insists that any APEC framework agreement be compatible with the principles espoused by GATT. 'Open' regionalism, as expressed in APEC, presumes the 34 APEC Statement on the Uruguay Round, reprinted in Record of the Fourth Minis- terial Meeting of Asia-Pacific Economic Cooperation (APEC), p. 17. 35 On trade restrictions and impediments among the ASEAN countries see Aus- tralia's Business Challenge. Southeast Asia in the g99os, pp. 70-8. tember I991. The ministerial statement34 emphasized the importance of a strengthened international trading system for the continued expansion of world trade, and for facilitating further economic reform in the region, upon which the future growth and development of the APEC economies depend. APEC ministers expressed unanimous support for the principles espoused in the Uruguay Round, while lamenting the lack of progress in negotiations over agricultural trade, market access, and trade in services. APEC countries clearly regarded an early and successful conclusion of the Uruguay Round as being of vital significance to the region. The economic dynamism of the APEC region was generally viewed as hinging upon an open, multilateral framework for trade. This posi- tion was clearly articulated by the APEC-V ministerial meeting and the Asia Pacific summit that followed. Yet, it is also clear that this consensual support for the multilateral trading system does not over- ride the propensity of governments to try to preserve and maintain their own protectionist impediments to trade. Thus, Korea's response to the Draft Final Act (the so-called 'Dunkel Package') put forward in December I99I, rejected any compromises to its notoriously pro- hibitive agricultural import policy, while ASEAN countries have been loath to forgo their own restrictions on trade and investment and impediments to market access.35 What is significant, however, is the broad acceptance of a linkage between regional economic cooperation and the multilateral trading system that crystallized as the conceptual cornerstone of APEC. The countries of APEC do not envision that grouping becoming a regional substitute or alternative to a multilateral trading system. Indeed, the APEC conception of plurilateral regional economic cooperation is predicated upon an open, comprehensive, and non-discriminatory framework for international trade and investment. The ASEAN developing countries, in particular, are wary about adopting an APEC trade and investment framework, lest this leave them vulner- able to managed trade initiatives on the part of the US or other powerful trading partners. Instead, ASEAN insists that any APEC framework agreement be compatible with the principles espoused by GATT. 'Open' regionalism, as expressed in APEC, presumes the 34 APEC Statement on the Uruguay Round, reprinted in Record of the Fourth Minis- terial Meeting of Asia-Pacific Economic Cooperation (APEC), p. 17. 35 On trade restrictions and impediments among the ASEAN countries see Aus- tralia's Business Challenge. Southeast Asia in the g99os, pp. 70-8. 428 428 428 This content downloaded from 175.144.128.157 on Thu, 14 Nov 2013 10:19:13 AM All use subject to JSTOR Terms and Conditions ASIA PACIFIC ECONOMIC COOPERATION ASIA PACIFIC ECONOMIC COOPERATION ASIA PACIFIC ECONOMIC COOPERATION maintenance and enhancement of multilateral trading arrangements at the global level. Challenges and Responses to 'Open' Asia Pacific Regionalism The main threat to the 'open' concept of Asia Pacific regionalism expounded by APEC stems from the penchant of some governments for managed trade through subregional or bilateral arrangements. The phenomenon of managed trade covers such devices as exclusivist preferential trading agreements, trans-border investment enclaves (so-called 'growth triangles'), bilateral deals and market sharing arrangements, including 'voluntary import expansions' (VIEs), arrangements analogous to externalized protection. These managed trade arrangements are inherently exclusivist and therefore discrimin- atory against non-signatories. Owing to the power equations implicit in managed trade, it is mostly the province of stronger, more domin- ant, hegemonical countries, and offers relatively little advantage to smaller, weaker, poorer, more dependent economies. To a consider- able extent managed trade militates against the non-discriminatory, transparent, open-market principles of the multilateral trading system. Several such sub-regional preferential agreements and bilateral managed trade arrangements actually co-exist in the Asia Pacific area. Well before APEC came into being, Australia and New Zealand concluded a Closer Economic Relations and Trade Agreement offering one another reciprocal trade preferences. ASEAN, for its part, also instituted a Preferential Trade Arrangement among member countries, which is now being supplanted by an ASEAN Free Trade Area (AFTA).36 Various trans-border industrial enclaves have been established, most notably the Singapore - Indonesia (Riau) Malaysia (Johor) 'Growth Triangle,' representing still another schema for the sub-regional management of international trade and investment.37 36 Vide Mari Pangestu, Hadi Soesastro and Mubariq Ahmad, 'A New Look at Intra-ASEAN Economic Cooperation,' ASEAN Economic Bulletin, vol. 8, no. 3 (1992); Martin Rudner, 'ASEAN, Asia Pacific Economic Cooperation and Hemispheric Free Trade for the Americas,' pp. I41-3. 37 Other sub-regional economic zones being planned or mooted include a Northern Growth Triangle covering (Northeast) Malaysia, (Southern) Thailand and possibly Indonesia (Sumatra); a Borneo growth triangle covering Indonesian Kalimantan, maintenance and enhancement of multilateral trading arrangements at the global level. Challenges and Responses to 'Open' Asia Pacific Regionalism The main threat to the 'open' concept of Asia Pacific regionalism expounded by APEC stems from the penchant of some governments for managed trade through subregional or bilateral arrangements. The phenomenon of managed trade covers such devices as exclusivist preferential trading agreements, trans-border investment enclaves (so-called 'growth triangles'), bilateral deals and market sharing arrangements, including 'voluntary import expansions' (VIEs), arrangements analogous to externalized protection. These managed trade arrangements are inherently exclusivist and therefore discrimin- atory against non-signatories. Owing to the power equations implicit in managed trade, it is mostly the province of stronger, more domin- ant, hegemonical countries, and offers relatively little advantage to smaller, weaker, poorer, more dependent economies. To a consider- able extent managed trade militates against the non-discriminatory, transparent, open-market principles of the multilateral trading system. Several such sub-regional preferential agreements and bilateral managed trade arrangements actually co-exist in the Asia Pacific area. Well before APEC came into being, Australia and New Zealand concluded a Closer Economic Relations and Trade Agreement offering one another reciprocal trade preferences. ASEAN, for its part, also instituted a Preferential Trade Arrangement among member countries, which is now being supplanted by an ASEAN Free Trade Area (AFTA).36 Various trans-border industrial enclaves have been established, most notably the Singapore - Indonesia (Riau) Malaysia (Johor) 'Growth Triangle,' representing still another schema for the sub-regional management of international trade and investment.37 36 Vide Mari Pangestu, Hadi Soesastro and Mubariq Ahmad, 'A New Look at Intra-ASEAN Economic Cooperation,' ASEAN Economic Bulletin, vol. 8, no. 3 (1992); Martin Rudner, 'ASEAN, Asia Pacific Economic Cooperation and Hemispheric Free Trade for the Americas,' pp. I41-3. 37 Other sub-regional economic zones being planned or mooted include a Northern Growth Triangle covering (Northeast) Malaysia, (Southern) Thailand and possibly Indonesia (Sumatra); a Borneo growth triangle covering Indonesian Kalimantan, maintenance and enhancement of multilateral trading arrangements at the global level. Challenges and Responses to 'Open' Asia Pacific Regionalism The main threat to the 'open' concept of Asia Pacific regionalism expounded by APEC stems from the penchant of some governments for managed trade through subregional or bilateral arrangements. The phenomenon of managed trade covers such devices as exclusivist preferential trading agreements, trans-border investment enclaves (so-called 'growth triangles'), bilateral deals and market sharing arrangements, including 'voluntary import expansions' (VIEs), arrangements analogous to externalized protection. These managed trade arrangements are inherently exclusivist and therefore discrimin- atory against non-signatories. Owing to the power equations implicit in managed trade, it is mostly the province of stronger, more domin- ant, hegemonical countries, and offers relatively little advantage to smaller, weaker, poorer, more dependent economies. To a consider- able extent managed trade militates against the non-discriminatory, transparent, open-market principles of the multilateral trading system. Several such sub-regional preferential agreements and bilateral managed trade arrangements actually co-exist in the Asia Pacific area. Well before APEC came into being, Australia and New Zealand concluded a Closer Economic Relations and Trade Agreement offering one another reciprocal trade preferences. ASEAN, for its part, also instituted a Preferential Trade Arrangement among member countries, which is now being supplanted by an ASEAN Free Trade Area (AFTA).36 Various trans-border industrial enclaves have been established, most notably the Singapore - Indonesia (Riau) Malaysia (Johor) 'Growth Triangle,' representing still another schema for the sub-regional management of international trade and investment.37 36 Vide Mari Pangestu, Hadi Soesastro and Mubariq Ahmad, 'A New Look at Intra-ASEAN Economic Cooperation,' ASEAN Economic Bulletin, vol. 8, no. 3 (1992); Martin Rudner, 'ASEAN, Asia Pacific Economic Cooperation and Hemispheric Free Trade for the Americas,' pp. I41-3. 37 Other sub-regional economic zones being planned or mooted include a Northern Growth Triangle covering (Northeast) Malaysia, (Southern) Thailand and possibly Indonesia (Sumatra); a Borneo growth triangle covering Indonesian Kalimantan, 429 429 429 This content downloaded from 175.144.128.157 on Thu, 14 Nov 2013 10:19:13 AM All use subject to JSTOR Terms and Conditions MARTIN RUDNER MARTIN RUDNER MARTIN RUDNER The preferential trading arrangement that fomented the most unease among Asian countries, at least, was the formation of a North American trading area, initially by the Canada-US Free Trade Agreement and its extension to Mexico through an expanded NAFTA. Despite attempts by the Americans and Canadians to reas- sure their Asian trading partners, serious concerns about the possible discriminatory implications were indicated by Japan and the ASEAN countries, in particular. At the APEC-IV ministerial meeting in Bangkok ASEAN governments expressed misgivings over trade- diverting elements in NAFTA.38 Malaysia was especially piqued that the North American members of APEC felt it necessary to embark on exclusivist continental trading agreements that discriminated against trans-Pacific trading partners.39 At the I993 ASEAN Post Ministerial Conference, Canada and the United States tried to temper apprehen- sions about North American free trade by agreeing to explore ways and means of creating linkages and areas of cooperation between NAFTA and AFTA.40 The recent propensity of major trading countries like the United States and Japan to seek bilateral trade remedies denoted still another element of exclusion and trade discrimination. The United States has been particularly inclined to resort to bilateral trade management mechanisms like the US-Japan Strategic Impediments Initiative to achieve improved access to markets, sometimes at the expense of Malaysian Sarawak and Sabah, and Brunei; a Bhat Economic Zone embracing Thai- land, Cambodia, Laos, and possibly Burma; and a wider Southern China Economic Zone encompassing South China, Hong Kong, and Taiwan. Even more tenuous perhaps are suggestions of a Pan Japan Sea Economic Zone involving China, Pacific Russia and Japan, and a Pan Yellow Sea Economic Zone involving Japan, China, and North and South Korea. On sub-regional economic zones in Southeast and Eastern Asia, see Lee Tsao Yuan, Growth Triangle: The Johor-Singapore-Riau Experience, Singapore: Institute of Southeast Asian Studies, i991; Martin Rudner, 'The Dimen- sions of Asia Pacific Economic Cooperation,' Transnational Law & Contemporary Prob- lems, vol. 4, no. 2 (I994); Chia Siow Yue and Lee Tsao Yuan, 'Subregional Economic Zones: A New Motive Force in Asia-Pacific Development, in Bergsten and Noland (eds), Pacific Dynamism and the International Economic System, pp. 225-69. 38 For a study of the implications of NAFTA for East and Southeast Asian develop- ing countries, see Han Soo Kim and Ann Weston, 'A North American Free Trade Agreement and East Asian Developing Countries,' ASEAN Economic Bulletin, vol. 9, no. 3 (I993). 39 Vide speech by the Hon. Dato Seri Rafidah Aziz, Minister of International Trade and Industry of Malaysia, in Record of the Fourth Ministerial Meeting of Asia-Pacific Economic Cooperation (APEC), p. 97. 40 At the same ASEAN Post Ministerial Conference, the ASEAN and Canadian foreign ministers signed a revised Canada-ASEAN Economic Cooperation Agree- ment, aimed at expanding governmental and private sector linkages. The preferential trading arrangement that fomented the most unease among Asian countries, at least, was the formation of a North American trading area, initially by the Canada-US Free Trade Agreement and its extension to Mexico through an expanded NAFTA. Despite attempts by the Americans and Canadians to reas- sure their Asian trading partners, serious concerns about the possible discriminatory implications were indicated by Japan and the ASEAN countries, in particular. At the APEC-IV ministerial meeting in Bangkok ASEAN governments expressed misgivings over trade- diverting elements in NAFTA.38 Malaysia was especially piqued that the North American members of APEC felt it necessary to embark on exclusivist continental trading agreements that discriminated against trans-Pacific trading partners.39 At the I993 ASEAN Post Ministerial Conference, Canada and the United States tried to temper apprehen- sions about North American free trade by agreeing to explore ways and means of creating linkages and areas of cooperation between NAFTA and AFTA.40 The recent propensity of major trading countries like the United States and Japan to seek bilateral trade remedies denoted still another element of exclusion and trade discrimination. The United States has been particularly inclined to resort to bilateral trade management mechanisms like the US-Japan Strategic Impediments Initiative to achieve improved access to markets, sometimes at the expense of Malaysian Sarawak and Sabah, and Brunei; a Bhat Economic Zone embracing Thai- land, Cambodia, Laos, and possibly Burma; and a wider Southern China Economic Zone encompassing South China, Hong Kong, and Taiwan. Even more tenuous perhaps are suggestions of a Pan Japan Sea Economic Zone involving China, Pacific Russia and Japan, and a Pan Yellow Sea Economic Zone involving Japan, China, and North and South Korea. On sub-regional economic zones in Southeast and Eastern Asia, see Lee Tsao Yuan, Growth Triangle: The Johor-Singapore-Riau Experience, Singapore: Institute of Southeast Asian Studies, i991; Martin Rudner, 'The Dimen- sions of Asia Pacific Economic Cooperation,' Transnational Law & Contemporary Prob- lems, vol. 4, no. 2 (I994); Chia Siow Yue and Lee Tsao Yuan, 'Subregional Economic Zones: A New Motive Force in Asia-Pacific Development, in Bergsten and Noland (eds), Pacific Dynamism and the International Economic System, pp. 225-69. 38 For a study of the implications of NAFTA for East and Southeast Asian develop- ing countries, see Han Soo Kim and Ann Weston, 'A North American Free Trade Agreement and East Asian Developing Countries,' ASEAN Economic Bulletin, vol. 9, no. 3 (I993). 39 Vide speech by the Hon. Dato Seri Rafidah Aziz, Minister of International Trade and Industry of Malaysia, in Record of the Fourth Ministerial Meeting of Asia-Pacific Economic Cooperation (APEC), p. 97. 40 At the same ASEAN Post Ministerial Conference, the ASEAN and Canadian foreign ministers signed a revised Canada-ASEAN Economic Cooperation Agree- ment, aimed at expanding governmental and private sector linkages. The preferential trading arrangement that fomented the most unease among Asian countries, at least, was the formation of a North American trading area, initially by the Canada-US Free Trade Agreement and its extension to Mexico through an expanded NAFTA. Despite attempts by the Americans and Canadians to reas- sure their Asian trading partners, serious concerns about the possible discriminatory implications were indicated by Japan and the ASEAN countries, in particular. At the APEC-IV ministerial meeting in Bangkok ASEAN governments expressed misgivings over trade- diverting elements in NAFTA.38 Malaysia was especially piqued that the North American members of APEC felt it necessary to embark on exclusivist continental trading agreements that discriminated against trans-Pacific trading partners.39 At the I993 ASEAN Post Ministerial Conference, Canada and the United States tried to temper apprehen- sions about North American free trade by agreeing to explore ways and means of creating linkages and areas of cooperation between NAFTA and AFTA.40 The recent propensity of major trading countries like the United States and Japan to seek bilateral trade remedies denoted still another element of exclusion and trade discrimination. The United States has been particularly inclined to resort to bilateral trade management mechanisms like the US-Japan Strategic Impediments Initiative to achieve improved access to markets, sometimes at the expense of Malaysian Sarawak and Sabah, and Brunei; a Bhat Economic Zone embracing Thai- land, Cambodia, Laos, and possibly Burma; and a wider Southern China Economic Zone encompassing South China, Hong Kong, and Taiwan. Even more tenuous perhaps are suggestions of a Pan Japan Sea Economic Zone involving China, Pacific Russia and Japan, and a Pan Yellow Sea Economic Zone involving Japan, China, and North and South Korea. On sub-regional economic zones in Southeast and Eastern Asia, see Lee Tsao Yuan, Growth Triangle: The Johor-Singapore-Riau Experience, Singapore: Institute of Southeast Asian Studies, i991; Martin Rudner, 'The Dimen- sions of Asia Pacific Economic Cooperation,' Transnational Law & Contemporary Prob- lems, vol. 4, no. 2 (I994); Chia Siow Yue and Lee Tsao Yuan, 'Subregional Economic Zones: A New Motive Force in Asia-Pacific Development, in Bergsten and Noland (eds), Pacific Dynamism and the International Economic System, pp. 225-69. 38 For a study of the implications of NAFTA for East and Southeast Asian develop- ing countries, see Han Soo Kim and Ann Weston, 'A North American Free Trade Agreement and East Asian Developing Countries,' ASEAN Economic Bulletin, vol. 9, no. 3 (I993). 39 Vide speech by the Hon. Dato Seri Rafidah Aziz, Minister of International Trade and Industry of Malaysia, in Record of the Fourth Ministerial Meeting of Asia-Pacific Economic Cooperation (APEC), p. 97. 40 At the same ASEAN Post Ministerial Conference, the ASEAN and Canadian foreign ministers signed a revised Canada-ASEAN Economic Cooperation Agree- ment, aimed at expanding governmental and private sector linkages. 430 430 430 This content downloaded from 175.144.128.157 on Thu, 14 Nov 2013 10:19:13 AM All use subject to JSTOR Terms and Conditions ASIA PACIFIC ECONOMIC COOPERATION ASIA PACIFIC ECONOMIC COOPERATION ASIA PACIFIC ECONOMIC COOPERATION other Asia Pacific suppliers. Its predilection for 'aggressive' trade policies, retaliatory measures, and market-sharing agreements usually entail trade diversion effects, often at the expense of the more vulner- able, weaker developing economies of the region. The reactions of Asia Pacific countries to seemingly exclusionary and protectionist trends in international economic affairs may well impel the govern- ments concerned to contemplate alternative, sub-regional arrange- ments. The East Asia Economic Group/Caucus Proposal The formation of APEC did little to assuage the apprehensions of ASEAN countries over the deadlocked Uruguay Round, nor their uneasiness over the perceived threat of protectionist trade blocs emer- ging in Europe and North America. Some ASEAN governments also reacted warily to the North American penchant to inject environ- mental and labour issues into international trade negotiations. Aware of their vulnerabilities, the ASEAN countries and some of the Asian NIEs felt pressed to explore alternative modalities for regional cooperation in defense of their economic and trading inter- ests. Taking the lead, the Malaysian Prime Minister Dr Mahathir Mohammed proposed the creation of an East Asian Economic Group (EAEG) consisting the ASEAN countries, the Asian NIEs, China and Japan.41 As originally conceived, the EAEG would constitute a preferential arrangement for intra-Asian trade, investment and col- laboration on economic policy. What Malaysia called for was tanta- mount to the formation of an exclusive East Asian economic bloc as a counterweight to perceived bloc formation in Europe and North America. The United States, Canada, Australia and New Zealand were pointedly excluded. The EAEG proposal found some favour on the part of China42 and Korea; however, Japan maintained a studied ambivalence. While reluctant actually to endorse the formation of an exclusivist trading bloc, the Japanese seemed unwilling to foreclose on Asia whilst regional protectionism was threatening to spread across Europe and the Americas. The United States for its part was vigorously opposed 41 Tan, Toh and Low, 'ASEAN and Pacific Economic Co-operation,' pp. 325-8. 42 'China Seeks Close Ties with ASEAN Nations', Beijing Review (20-26 January 1992), pp. 7-8. other Asia Pacific suppliers. Its predilection for 'aggressive' trade policies, retaliatory measures, and market-sharing agreements usually entail trade diversion effects, often at the expense of the more vulner- able, weaker developing economies of the region. The reactions of Asia Pacific countries to seemingly exclusionary and protectionist trends in international economic affairs may well impel the govern- ments concerned to contemplate alternative, sub-regional arrange- ments. The East Asia Economic Group/Caucus Proposal The formation of APEC did little to assuage the apprehensions of ASEAN countries over the deadlocked Uruguay Round, nor their uneasiness over the perceived threat of protectionist trade blocs emer- ging in Europe and North America. Some ASEAN governments also reacted warily to the North American penchant to inject environ- mental and labour issues into international trade negotiations. Aware of their vulnerabilities, the ASEAN countries and some of the Asian NIEs felt pressed to explore alternative modalities for regional cooperation in defense of their economic and trading inter- ests. Taking the lead, the Malaysian Prime Minister Dr Mahathir Mohammed proposed the creation of an East Asian Economic Group (EAEG) consisting the ASEAN countries, the Asian NIEs, China and Japan.41 As originally conceived, the EAEG would constitute a preferential arrangement for intra-Asian trade, investment and col- laboration on economic policy. What Malaysia called for was tanta- mount to the formation of an exclusive East Asian economic bloc as a counterweight to perceived bloc formation in Europe and North America. The United States, Canada, Australia and New Zealand were pointedly excluded. The EAEG proposal found some favour on the part of China42 and Korea; however, Japan maintained a studied ambivalence. While reluctant actually to endorse the formation of an exclusivist trading bloc, the Japanese seemed unwilling to foreclose on Asia whilst regional protectionism was threatening to spread across Europe and the Americas. The United States for its part was vigorously opposed 41 Tan, Toh and Low, 'ASEAN and Pacific Economic Co-operation,' pp. 325-8. 42 'China Seeks Close Ties with ASEAN Nations', Beijing Review (20-26 January 1992), pp. 7-8. other Asia Pacific suppliers. Its predilection for 'aggressive' trade policies, retaliatory measures, and market-sharing agreements usually entail trade diversion effects, often at the expense of the more vulner- able, weaker developing economies of the region. The reactions of Asia Pacific countries to seemingly exclusionary and protectionist trends in international economic affairs may well impel the govern- ments concerned to contemplate alternative, sub-regional arrange- ments. The East Asia Economic Group/Caucus Proposal The formation of APEC did little to assuage the apprehensions of ASEAN countries over the deadlocked Uruguay Round, nor their uneasiness over the perceived threat of protectionist trade blocs emer- ging in Europe and North America. Some ASEAN governments also reacted warily to the North American penchant to inject environ- mental and labour issues into international trade negotiations. Aware of their vulnerabilities, the ASEAN countries and some of the Asian NIEs felt pressed to explore alternative modalities for regional cooperation in defense of their economic and trading inter- ests. Taking the lead, the Malaysian Prime Minister Dr Mahathir Mohammed proposed the creation of an East Asian Economic Group (EAEG) consisting the ASEAN countries, the Asian NIEs, China and Japan.41 As originally conceived, the EAEG would constitute a preferential arrangement for intra-Asian trade, investment and col- laboration on economic policy. What Malaysia called for was tanta- mount to the formation of an exclusive East Asian economic bloc as a counterweight to perceived bloc formation in Europe and North America. The United States, Canada, Australia and New Zealand were pointedly excluded. The EAEG proposal found some favour on the part of China42 and Korea; however, Japan maintained a studied ambivalence. While reluctant actually to endorse the formation of an exclusivist trading bloc, the Japanese seemed unwilling to foreclose on Asia whilst regional protectionism was threatening to spread across Europe and the Americas. The United States for its part was vigorously opposed 41 Tan, Toh and Low, 'ASEAN and Pacific Economic Co-operation,' pp. 325-8. 42 'China Seeks Close Ties with ASEAN Nations', Beijing Review (20-26 January 1992), pp. 7-8. 43I 43I 43I This content downloaded from 175.144.128.157 on Thu, 14 Nov 2013 10:19:13 AM All use subject to JSTOR Terms and Conditions MARTIN RUDNER MARTIN RUDNER MARTIN RUDNER to the Malaysian proposal, partly because of a long-standing irritation with Dr Mahathir's provocative foreign policy posturing, but mainly out of concern that an exclusivist East Asian economic grouping could 'divide the Pacific region in half.'43 In the event, it was the antipathy of other ASEAN members that thwarted the EAEG proposal. The motivation and purpose behind the Malaysian initiative was questioned. Thailand and Indonesia came out strongly against an exclusivist and inward-oriented trading arrangement. Opposition among the ASEAN governments, doubtless bolstered by the stance of the US, resulted in the Malaysian EAEG proposal being shelved-at least for the time being-in favour of a seemingly more benign and acceptable notion of an East Asian Eco- nomic Caucus (EAEC). The modified proposal for an EAEC envisaged an informal consult- ative mechanism embracing ASEAN, the Asian NIEs, China and Japan for purposes of policy discussions, information sharing, and consensus building on trade and economic matters. The US, Canada, Australia and New Zealand would still be excluded. Malaysia, the leading champion of the EAEC, maintains that the Caucus would function in a manner consistent with the GATT, ASEAN and APEC. Other governments in the region have so far been hesitant, even reluctant, to take up the EAEC concept. The United States remains steadfastly opposed to any exclusionary arrangement in Asia, although the Clinton administration indicated a softening in its reac- tion to a strictly consultative forum. The I992 ASEAN Summit acknowledged that an EAEC could serve as a useful deliberative forum, while reaffirming support for APEC as the main arena for regional economic policy discourse. Agreement was subsequently reached at the I993 ASEAN ministerial meeting in Singapore on a compromise solution, by which the EAEC would be configured as sub-grouping of a wider APEC, linked also to the ASEAN Economic Ministers Meeting. It remains to be revealed how and to what extent such an EAEC could expedite pro- gress towards economic cooperation among Asian countries, and where such a mechanism would fit, if at all, within the APEC frame- work. Japan and Korea do not seem keen to take part in an EAEC sub-grouping, lest this give offense to the Americans. In its essentials the EAEC proposal confronts Asian countries with a choice between the alternative of a geographically exclusivist to the Malaysian proposal, partly because of a long-standing irritation with Dr Mahathir's provocative foreign policy posturing, but mainly out of concern that an exclusivist East Asian economic grouping could 'divide the Pacific region in half.'43 In the event, it was the antipathy of other ASEAN members that thwarted the EAEG proposal. The motivation and purpose behind the Malaysian initiative was questioned. Thailand and Indonesia came out strongly against an exclusivist and inward-oriented trading arrangement. Opposition among the ASEAN governments, doubtless bolstered by the stance of the US, resulted in the Malaysian EAEG proposal being shelved-at least for the time being-in favour of a seemingly more benign and acceptable notion of an East Asian Eco- nomic Caucus (EAEC). The modified proposal for an EAEC envisaged an informal consult- ative mechanism embracing ASEAN, the Asian NIEs, China and Japan for purposes of policy discussions, information sharing, and consensus building on trade and economic matters. The US, Canada, Australia and New Zealand would still be excluded. Malaysia, the leading champion of the EAEC, maintains that the Caucus would function in a manner consistent with the GATT, ASEAN and APEC. Other governments in the region have so far been hesitant, even reluctant, to take up the EAEC concept. The United States remains steadfastly opposed to any exclusionary arrangement in Asia, although the Clinton administration indicated a softening in its reac- tion to a strictly consultative forum. The I992 ASEAN Summit acknowledged that an EAEC could serve as a useful deliberative forum, while reaffirming support for APEC as the main arena for regional economic policy discourse. Agreement was subsequently reached at the I993 ASEAN ministerial meeting in Singapore on a compromise solution, by which the EAEC would be configured as sub-grouping of a wider APEC, linked also to the ASEAN Economic Ministers Meeting. It remains to be revealed how and to what extent such an EAEC could expedite pro- gress towards economic cooperation among Asian countries, and where such a mechanism would fit, if at all, within the APEC frame- work. Japan and Korea do not seem keen to take part in an EAEC sub-grouping, lest this give offense to the Americans. In its essentials the EAEC proposal confronts Asian countries with a choice between the alternative of a geographically exclusivist to the Malaysian proposal, partly because of a long-standing irritation with Dr Mahathir's provocative foreign policy posturing, but mainly out of concern that an exclusivist East Asian economic grouping could 'divide the Pacific region in half.'43 In the event, it was the antipathy of other ASEAN members that thwarted the EAEG proposal. The motivation and purpose behind the Malaysian initiative was questioned. Thailand and Indonesia came out strongly against an exclusivist and inward-oriented trading arrangement. Opposition among the ASEAN governments, doubtless bolstered by the stance of the US, resulted in the Malaysian EAEG proposal being shelved-at least for the time being-in favour of a seemingly more benign and acceptable notion of an East Asian Eco- nomic Caucus (EAEC). The modified proposal for an EAEC envisaged an informal consult- ative mechanism embracing ASEAN, the Asian NIEs, China and Japan for purposes of policy discussions, information sharing, and consensus building on trade and economic matters. The US, Canada, Australia and New Zealand would still be excluded. Malaysia, the leading champion of the EAEC, maintains that the Caucus would function in a manner consistent with the GATT, ASEAN and APEC. Other governments in the region have so far been hesitant, even reluctant, to take up the EAEC concept. The United States remains steadfastly opposed to any exclusionary arrangement in Asia, although the Clinton administration indicated a softening in its reac- tion to a strictly consultative forum. The I992 ASEAN Summit acknowledged that an EAEC could serve as a useful deliberative forum, while reaffirming support for APEC as the main arena for regional economic policy discourse. Agreement was subsequently reached at the I993 ASEAN ministerial meeting in Singapore on a compromise solution, by which the EAEC would be configured as sub-grouping of a wider APEC, linked also to the ASEAN Economic Ministers Meeting. It remains to be revealed how and to what extent such an EAEC could expedite pro- gress towards economic cooperation among Asian countries, and where such a mechanism would fit, if at all, within the APEC frame- work. Japan and Korea do not seem keen to take part in an EAEC sub-grouping, lest this give offense to the Americans. In its essentials the EAEC proposal confronts Asian countries with a choice between the alternative of a geographically exclusivist 43 'Block Politics,' Far Eastern Economic Review (28 November I99I), p. 26. 43 'Block Politics,' Far Eastern Economic Review (28 November I99I), p. 26. 43 'Block Politics,' Far Eastern Economic Review (28 November I99I), p. 26. 432 432 432 This content downloaded from 175.144.128.157 on Thu, 14 Nov 2013 10:19:13 AM All use subject to JSTOR Terms and Conditions ASIA PACIFIC ECONOMIC COOPERATION ASIA PACIFIC ECONOMIC COOPERATION ASIA PACIFIC ECONOMIC COOPERATION approach to regional economic integration, with the EAEC as a pos- sible precursor to a EAEG, as against the more open, outward- oriented arrangement for wider regional economic cooperation exem- plified by APEC. Already, economic neo-nationalists in the Asian NIEs, China and ASEAN, and especially in Malaysia, are inviting reconsideration of the EAEG concept in response to what they see as the US and Canadian abandonment of Asia in favour of a more protectionist hemispheric realignment in the Americas, epitomized by NAFTA.44 If the APEC ideal of open regionalism should flounder on the shoals of discriminatory and diversionary trade policies, it is possible or even likely that the exclusivist and inward-oriented EAEG alternative, or something akin to it, may re-emerge as a politically attractive option for vulnerable East and Southeast Asian countries. The ASEAN Free Trade Area Although the I991 meeting of ASEAN economic ministers deferred the Malaysian proposal for an EAEG, it did agree to a counter- proposal from Thailand calling for the creation of an ASEAN free trade area for manufactures over a fifteen-year time horizon. The AFTA agreement was subsequently endorsed by the I992 ASEAN Summit, and will transform ASEAN from a loosely-knit forum for policy dialogue and coordination into an institutional mechanism for trade liberalization.45 AFTA aims to combine the six relatively small and vulnerable Southeast Asian economies into a wider market of some 330 million people, generating an aggregate Gross Domestic Product of some US$293 billion and growing at 7% a year in real terms. The creation of a more closely-integrated AFTA market is expected to attract new external investment to the region in response 44 Advocates of North American free trade deny that NAFTA need become a protectionist bloc, and some indeed see it as potentially becoming a regional pillar of multilateralism, as a counterpart to APEC for the Americas: H. Edward English and Murray G. Smith, 'NAFTA and Pacific Partnership: Advancing Multilat- eralism?' in Bergsten and Noland (eds), Pacific Dynamism and the International Economic System. 45 On the evolution of ASEAN economic cooperation, see Martin Rudner, 'ASEAN, Asia Pacific Economic Co-operation, and Hemispheric Free Trade for the Americas,' pp. 141-3; Ronald Palmer and Thomas Reckford, Building ASEAN. 20 Years of Southeast Asian Cooperation, New York, Praeger, I987; John Wong, ASEAN Economies in Perspective, London, Macmillan, 1979; Marjorie Suriyamongkol, The Polit- ics of ASEAN Economic Cooperation, Oxford University Press, 1988. approach to regional economic integration, with the EAEC as a pos- sible precursor to a EAEG, as against the more open, outward- oriented arrangement for wider regional economic cooperation exem- plified by APEC. Already, economic neo-nationalists in the Asian NIEs, China and ASEAN, and especially in Malaysia, are inviting reconsideration of the EAEG concept in response to what they see as the US and Canadian abandonment of Asia in favour of a more protectionist hemispheric realignment in the Americas, epitomized by NAFTA.44 If the APEC ideal of open regionalism should flounder on the shoals of discriminatory and diversionary trade policies, it is possible or even likely that the exclusivist and inward-oriented EAEG alternative, or something akin to it, may re-emerge as a politically attractive option for vulnerable East and Southeast Asian countries. The ASEAN Free Trade Area Although the I991 meeting of ASEAN economic ministers deferred the Malaysian proposal for an EAEG, it did agree to a counter- proposal from Thailand calling for the creation of an ASEAN free trade area for manufactures over a fifteen-year time horizon. The AFTA agreement was subsequently endorsed by the I992 ASEAN Summit, and will transform ASEAN from a loosely-knit forum for policy dialogue and coordination into an institutional mechanism for trade liberalization.45 AFTA aims to combine the six relatively small and vulnerable Southeast Asian economies into a wider market of some 330 million people, generating an aggregate Gross Domestic Product of some US$293 billion and growing at 7% a year in real terms. The creation of a more closely-integrated AFTA market is expected to attract new external investment to the region in response 44 Advocates of North American free trade deny that NAFTA need become a protectionist bloc, and some indeed see it as potentially becoming a regional pillar of multilateralism, as a counterpart to APEC for the Americas: H. Edward English and Murray G. Smith, 'NAFTA and Pacific Partnership: Advancing Multilat- eralism?' in Bergsten and Noland (eds), Pacific Dynamism and the International Economic System. 45 On the evolution of ASEAN economic cooperation, see Martin Rudner, 'ASEAN, Asia Pacific Economic Co-operation, and Hemispheric Free Trade for the Americas,' pp. 141-3; Ronald Palmer and Thomas Reckford, Building ASEAN. 20 Years of Southeast Asian Cooperation, New York, Praeger, I987; John Wong, ASEAN Economies in Perspective, London, Macmillan, 1979; Marjorie Suriyamongkol, The Polit- ics of ASEAN Economic Cooperation, Oxford University Press, 1988. approach to regional economic integration, with the EAEC as a pos- sible precursor to a EAEG, as against the more open, outward- oriented arrangement for wider regional economic cooperation exem- plified by APEC. Already, economic neo-nationalists in the Asian NIEs, China and ASEAN, and especially in Malaysia, are inviting reconsideration of the EAEG concept in response to what they see as the US and Canadian abandonment of Asia in favour of a more protectionist hemispheric realignment in the Americas, epitomized by NAFTA.44 If the APEC ideal of open regionalism should flounder on the shoals of discriminatory and diversionary trade policies, it is possible or even likely that the exclusivist and inward-oriented EAEG alternative, or something akin to it, may re-emerge as a politically attractive option for vulnerable East and Southeast Asian countries. The ASEAN Free Trade Area Although the I991 meeting of ASEAN economic ministers deferred the Malaysian proposal for an EAEG, it did agree to a counter- proposal from Thailand calling for the creation of an ASEAN free trade area for manufactures over a fifteen-year time horizon. The AFTA agreement was subsequently endorsed by the I992 ASEAN Summit, and will transform ASEAN from a loosely-knit forum for policy dialogue and coordination into an institutional mechanism for trade liberalization.45 AFTA aims to combine the six relatively small and vulnerable Southeast Asian economies into a wider market of some 330 million people, generating an aggregate Gross Domestic Product of some US$293 billion and growing at 7% a year in real terms. The creation of a more closely-integrated AFTA market is expected to attract new external investment to the region in response 44 Advocates of North American free trade deny that NAFTA need become a protectionist bloc, and some indeed see it as potentially becoming a regional pillar of multilateralism, as a counterpart to APEC for the Americas: H. Edward English and Murray G. Smith, 'NAFTA and Pacific Partnership: Advancing Multilat- eralism?' in Bergsten and Noland (eds), Pacific Dynamism and the International Economic System. 45 On the evolution of ASEAN economic cooperation, see Martin Rudner, 'ASEAN, Asia Pacific Economic Co-operation, and Hemispheric Free Trade for the Americas,' pp. 141-3; Ronald Palmer and Thomas Reckford, Building ASEAN. 20 Years of Southeast Asian Cooperation, New York, Praeger, I987; John Wong, ASEAN Economies in Perspective, London, Macmillan, 1979; Marjorie Suriyamongkol, The Polit- ics of ASEAN Economic Cooperation, Oxford University Press, 1988. 433 433 433 This content downloaded from 175.144.128.157 on Thu, 14 Nov 2013 10:19:13 AM All use subject to JSTOR Terms and Conditions to opportunities for increased economies of scope and scale in a high- growth market of 370 million by the end of this century. The impact of AFTA in attracting direct investment to ASEAN might help offset to some extent any diversion of capital flows to the hemispheric free trade area in the Americas. According to plan, AFTA will come into being gradually over a fifteen-year transition, during which a Common Effective Preferential Tariff (CEPT) will be enacted at progressively reduced rates, along two tracks, 'normal' and 'fast.'46 Although details of the new CEPT schedules have not yet been clarified, the agreement allows for a differential dismantling of existing tariffs at varying rates for different countries. Each ASEAN country will determine the composition of its own liberalization program. Thus, Malaysia and Singapore made immediate cuts in some tariffs, but Indonesia and Thailand will only begin reducing their tariffs in 1998. Trade liberalization under the AFTA agreement is expected to be limited to particular industrial sectors. Scheduled tariff reductions will apply to intra-regional exports of manufactured goods only (provided they have 40% ASEAN content, at least). Trade in agricul- tural products, unprocessed raw materials or services will not be covered. Even within its areas of coverage, the agreement is hedged with exemptions for 'sensitive' products. Moreover, there are gener- ous provisions for opting-out, and for safeguard actions. Non-tariff barriers are not addressed, nor are there clear procedures for dispute settlement. Nevertheless, despite these gaps and weaknesses, AFTA signals the intention of ASEAN governments to achieve a more closely-knit structure of (sub-) regional economic integration. While AFTA aims to cater to the increasingly mature export structure of the ASEAN developing countries, the exclusion of such important elements as financial services and agricultural commodities will doubtless detract from the effectiveness of regional cooperation at the sub-regional Southeast Asian level. While AFTA represents a modest but meaningful step forward along the path to ASEAN economic cooperation, implementation of the CEPT remains vulnerable, nevertheless, to protectionist pressures from within each country.47 Tensions between trade liberalization 46 The 'special' fast track list includes cement, ceramic and glass products, chem- icals, copper cathodes, electronics, fertilizers, furniture (wooden and rattan), jewel- lery and gems, pharmaceuticals, plastics, pulp, rubber products, and textiles; Aus- tralia's Business Challenge, p. 69. 47 On the gap between rhetoric and policy practice as regards AFTA, see 'Market or Mirage,' Far Eastern Economic Review (15 April 1993), pp. 48-50. to opportunities for increased economies of scope and scale in a high- growth market of 370 million by the end of this century. The impact of AFTA in attracting direct investment to ASEAN might help offset to some extent any diversion of capital flows to the hemispheric free trade area in the Americas. According to plan, AFTA will come into being gradually over a fifteen-year transition, during which a Common Effective Preferential Tariff (CEPT) will be enacted at progressively reduced rates, along two tracks, 'normal' and 'fast.'46 Although details of the new CEPT schedules have not yet been clarified, the agreement allows for a differential dismantling of existing tariffs at varying rates for different countries. Each ASEAN country will determine the composition of its own liberalization program. Thus, Malaysia and Singapore made immediate cuts in some tariffs, but Indonesia and Thailand will only begin reducing their tariffs in 1998. Trade liberalization under the AFTA agreement is expected to be limited to particular industrial sectors. Scheduled tariff reductions will apply to intra-regional exports of manufactured goods only (provided they have 40% ASEAN content, at least). Trade in agricul- tural products, unprocessed raw materials or services will not be covered. Even within its areas of coverage, the agreement is hedged with exemptions for 'sensitive' products. Moreover, there are gener- ous provisions for opting-out, and for safeguard actions. Non-tariff barriers are not addressed, nor are there clear procedures for dispute settlement. Nevertheless, despite these gaps and weaknesses, AFTA signals the intention of ASEAN governments to achieve a more closely-knit structure of (sub-) regional economic integration. While AFTA aims to cater to the increasingly mature export structure of the ASEAN developing countries, the exclusion of such important elements as financial services and agricultural commodities will doubtless detract from the effectiveness of regional cooperation at the sub-regional Southeast Asian level. While AFTA represents a modest but meaningful step forward along the path to ASEAN economic cooperation, implementation of the CEPT remains vulnerable, nevertheless, to protectionist pressures from within each country.47 Tensions between trade liberalization 46 The 'special' fast track list includes cement, ceramic and glass products, chem- icals, copper cathodes, electronics, fertilizers, furniture (wooden and rattan), jewel- lery and gems, pharmaceuticals, plastics, pulp, rubber products, and textiles; Aus- tralia's Business Challenge, p. 69. 47 On the gap between rhetoric and policy practice as regards AFTA, see 'Market or Mirage,' Far Eastern Economic Review (15 April 1993), pp. 48-50. to opportunities for increased economies of scope and scale in a high- growth market of 370 million by the end of this century. The impact of AFTA in attracting direct investment to ASEAN might help offset to some extent any diversion of capital flows to the hemispheric free trade area in the Americas. According to plan, AFTA will come into being gradually over a fifteen-year transition, during which a Common Effective Preferential Tariff (CEPT) will be enacted at progressively reduced rates, along two tracks, 'normal' and 'fast.'46 Although details of the new CEPT schedules have not yet been clarified, the agreement allows for a differential dismantling of existing tariffs at varying rates for different countries. Each ASEAN country will determine the composition of its own liberalization program. Thus, Malaysia and Singapore made immediate cuts in some tariffs, but Indonesia and Thailand will only begin reducing their tariffs in 1998. Trade liberalization under the AFTA agreement is expected to be limited to particular industrial sectors. Scheduled tariff reductions will apply to intra-regional exports of manufactured goods only (provided they have 40% ASEAN content, at least). Trade in agricul- tural products, unprocessed raw materials or services will not be covered. Even within its areas of coverage, the agreement is hedged with exemptions for 'sensitive' products. Moreover, there are gener- ous provisions for opting-out, and for safeguard actions. Non-tariff barriers are not addressed, nor are there clear procedures for dispute settlement. Nevertheless, despite these gaps and weaknesses, AFTA signals the intention of ASEAN governments to achieve a more closely-knit structure of (sub-) regional economic integration. While AFTA aims to cater to the increasingly mature export structure of the ASEAN developing countries, the exclusion of such important elements as financial services and agricultural commodities will doubtless detract from the effectiveness of regional cooperation at the sub-regional Southeast Asian level. While AFTA represents a modest but meaningful step forward along the path to ASEAN economic cooperation, implementation of the CEPT remains vulnerable, nevertheless, to protectionist pressures from within each country.47 Tensions between trade liberalization 46 The 'special' fast track list includes cement, ceramic and glass products, chem- icals, copper cathodes, electronics, fertilizers, furniture (wooden and rattan), jewel- lery and gems, pharmaceuticals, plastics, pulp, rubber products, and textiles; Aus- tralia's Business Challenge, p. 69. 47 On the gap between rhetoric and policy practice as regards AFTA, see 'Market or Mirage,' Far Eastern Economic Review (15 April 1993), pp. 48-50. MARTIN RUDNER MARTIN RUDNER MARTIN RUDNER 434 434 434 This content downloaded from 175.144.128.157 on Thu, 14 Nov 2013 10:19:13 AM All use subject to JSTOR Terms and Conditions ASIA PACIFIC ECONOMIC COOPERATION ASIA PACIFIC ECONOMIC COOPERATION ASIA PACIFIC ECONOMIC COOPERATION and domestic protectionism reflect a deeper, more profound strategy question confronting the ASEAN countries, requiring that they decide between two alternative courses of action. One approach would be to manage trade so as to respond to the protective instincts of economies having similar factor endowments that make them direct competitors in many areas of trade. This protectionist impulse would invariably lead to inward-oriented, economically nationalistic and regionally exclusivist solutions. The other course of action would address the commanding imperative to create an expanded framework for trade in order to sustain current high levels of investment and economic growth. Calls for the creation of self-centered, trade-diversionary sub- regional groupings denote, in effect, a defensive response to perceived protectionist and discriminatory tendencies in managed trade and bloc formation elsewhere. Yet, any shift towards more extensive reli- ance on managed trade risks rending the seamless fabric of the multi- lateral trading system, and would inevitably militate against the smaller, weaker, more vulnerable economies. The ASEAN experience itself demonstrates how regional development can sustain an out- ward-oriented trading framework that complements rather than dis- places the multilateral system. Were AFTA to become a means of expediting the opening domestic markets to international trade and investment, its trade creation effects would help stimulate economic innovation and efficiency in the ASEAN economies, enhancing their dynamic competitive advantages. It remains to be seen whether the ASEAN governments will choose to utilize AFTA as a vehicle for sub-regional protectionism, or will AFTA be wielded as a lever to accelerate trade liberalization in Southeast Asia in congruence with an open, outward-oriented APEC, and in conformity with the prin- ciples of the multilateral trading system. Asia Pacific Regional Integration and Multilateralism Intra-regional trade continues to expand strongly in East and South- east Asia and across the Pacific, as an accompaniment to economic growth, and contributing to that growth and gaining from it. If the Asia Pacific region is to maintain its economic dynamism, it behooves all the countries concerned to cooperate and work together at upholding and even accelerating the process of trade liberalization that has served them all so well. and domestic protectionism reflect a deeper, more profound strategy question confronting the ASEAN countries, requiring that they decide between two alternative courses of action. One approach would be to manage trade so as to respond to the protective instincts of economies having similar factor endowments that make them direct competitors in many areas of trade. This protectionist impulse would invariably lead to inward-oriented, economically nationalistic and regionally exclusivist solutions. The other course of action would address the commanding imperative to create an expanded framework for trade in order to sustain current high levels of investment and economic growth. Calls for the creation of self-centered, trade-diversionary sub- regional groupings denote, in effect, a defensive response to perceived protectionist and discriminatory tendencies in managed trade and bloc formation elsewhere. Yet, any shift towards more extensive reli- ance on managed trade risks rending the seamless fabric of the multi- lateral trading system, and would inevitably militate against the smaller, weaker, more vulnerable economies. The ASEAN experience itself demonstrates how regional development can sustain an out- ward-oriented trading framework that complements rather than dis- places the multilateral system. Were AFTA to become a means of expediting the opening domestic markets to international trade and investment, its trade creation effects would help stimulate economic innovation and efficiency in the ASEAN economies, enhancing their dynamic competitive advantages. It remains to be seen whether the ASEAN governments will choose to utilize AFTA as a vehicle for sub-regional protectionism, or will AFTA be wielded as a lever to accelerate trade liberalization in Southeast Asia in congruence with an open, outward-oriented APEC, and in conformity with the prin- ciples of the multilateral trading system. Asia Pacific Regional Integration and Multilateralism Intra-regional trade continues to expand strongly in East and South- east Asia and across the Pacific, as an accompaniment to economic growth, and contributing to that growth and gaining from it. If the Asia Pacific region is to maintain its economic dynamism, it behooves all the countries concerned to cooperate and work together at upholding and even accelerating the process of trade liberalization that has served them all so well. and domestic protectionism reflect a deeper, more profound strategy question confronting the ASEAN countries, requiring that they decide between two alternative courses of action. One approach would be to manage trade so as to respond to the protective instincts of economies having similar factor endowments that make them direct competitors in many areas of trade. This protectionist impulse would invariably lead to inward-oriented, economically nationalistic and regionally exclusivist solutions. The other course of action would address the commanding imperative to create an expanded framework for trade in order to sustain current high levels of investment and economic growth. Calls for the creation of self-centered, trade-diversionary sub- regional groupings denote, in effect, a defensive response to perceived protectionist and discriminatory tendencies in managed trade and bloc formation elsewhere. Yet, any shift towards more extensive reli- ance on managed trade risks rending the seamless fabric of the multi- lateral trading system, and would inevitably militate against the smaller, weaker, more vulnerable economies. The ASEAN experience itself demonstrates how regional development can sustain an out- ward-oriented trading framework that complements rather than dis- places the multilateral system. Were AFTA to become a means of expediting the opening domestic markets to international trade and investment, its trade creation effects would help stimulate economic innovation and efficiency in the ASEAN economies, enhancing their dynamic competitive advantages. It remains to be seen whether the ASEAN governments will choose to utilize AFTA as a vehicle for sub-regional protectionism, or will AFTA be wielded as a lever to accelerate trade liberalization in Southeast Asia in congruence with an open, outward-oriented APEC, and in conformity with the prin- ciples of the multilateral trading system. Asia Pacific Regional Integration and Multilateralism Intra-regional trade continues to expand strongly in East and South- east Asia and across the Pacific, as an accompaniment to economic growth, and contributing to that growth and gaining from it. If the Asia Pacific region is to maintain its economic dynamism, it behooves all the countries concerned to cooperate and work together at upholding and even accelerating the process of trade liberalization that has served them all so well. 435 435 435 This content downloaded from 175.144.128.157 on Thu, 14 Nov 2013 10:19:13 AM All use subject to JSTOR Terms and Conditions 436 MARTIN RUDNER Now that a framework for inter-governmental consultations and a comprehensive work program has been put in place, governments have begun to contemplate the future architecture and thrust of APEC. The new US administration and the new Australian Labour Party government of Prime Minister Paul Keating have emerged as leading proponents of an enhanced role for APEC in promoting closer regional economic integration. Be that as it may, inter-governmental meetings of ministers and officials do not, of themselves, create trade. Consultations among governments may help in overcoming policy and institutional impediments to international commerce. Trade pro- motion organizations and knowledge institutions like universities can help expand the horizons of business and governments.48 Yet, in the last analysis, it is business that is the engine of trade and investment, and it is the business communities of the participating countries who together represent the targets of regional efforts at economic cooperation. Until recently there has been but minimal involvement of the region's business communities in APEC meetings, Working Groups and related activities. These remain very largely the preserve of offi- cialdom. The APEC-V ministerial meeting in Seattle provided a first opportunity for regional private sector participation in a Business Forum. It remains to be seen whether and to what extent the future APEC agenda will include provision for a non-governmental role in the development of regional initiatives, policy positions and work projects. APEC exemplifies a uniquely equalizing, plurilateral forum for international policy discourse. All participating countries, including economies at different stages of development, share equal access to its fora. As APEC continues to evolve in response to emergent expectations, this plurilateral dimension will tend to empower the smaller, weaker participating countries through the exercise of group leverage or moral suasion on matters of shared concern vis a vis the larger economies in the region. This could have far-reaching implica- tions for trade policy convergence or coordination, not to say harmon- ization, across the Asia Pacific region. 48 On the role of academic research in East and Southeast Asian policy reform and trade development, see Sylvia Ostry (ed.), Authority and Academic Scribblers. The Role of Research in East Asian Policy Reform, San Francisco: ICS Press for the Interna- tional Center for Economic Growth, National Centre for Development Studies of Australian National University and the Economic Development Institute of the World Bank, I99i. 436 MARTIN RUDNER Now that a framework for inter-governmental consultations and a comprehensive work program has been put in place, governments have begun to contemplate the future architecture and thrust of APEC. The new US administration and the new Australian Labour Party government of Prime Minister Paul Keating have emerged as leading proponents of an enhanced role for APEC in promoting closer regional economic integration. Be that as it may, inter-governmental meetings of ministers and officials do not, of themselves, create trade. Consultations among governments may help in overcoming policy and institutional impediments to international commerce. Trade pro- motion organizations and knowledge institutions like universities can help expand the horizons of business and governments.48 Yet, in the last analysis, it is business that is the engine of trade and investment, and it is the business communities of the participating countries who together represent the targets of regional efforts at economic cooperation. Until recently there has been but minimal involvement of the region's business communities in APEC meetings, Working Groups and related activities. These remain very largely the preserve of offi- cialdom. The APEC-V ministerial meeting in Seattle provided a first opportunity for regional private sector participation in a Business Forum. It remains to be seen whether and to what extent the future APEC agenda will include provision for a non-governmental role in the development of regional initiatives, policy positions and work projects. APEC exemplifies a uniquely equalizing, plurilateral forum for international policy discourse. All participating countries, including economies at different stages of development, share equal access to its fora. As APEC continues to evolve in response to emergent expectations, this plurilateral dimension will tend to empower the smaller, weaker participating countries through the exercise of group leverage or moral suasion on matters of shared concern vis a vis the larger economies in the region. This could have far-reaching implica- tions for trade policy convergence or coordination, not to say harmon- ization, across the Asia Pacific region. 48 On the role of academic research in East and Southeast Asian policy reform and trade development, see Sylvia Ostry (ed.), Authority and Academic Scribblers. The Role of Research in East Asian Policy Reform, San Francisco: ICS Press for the Interna- tional Center for Economic Growth, National Centre for Development Studies of Australian National University and the Economic Development Institute of the World Bank, I99i. 436 MARTIN RUDNER Now that a framework for inter-governmental consultations and a comprehensive work program has been put in place, governments have begun to contemplate the future architecture and thrust of APEC. The new US administration and the new Australian Labour Party government of Prime Minister Paul Keating have emerged as leading proponents of an enhanced role for APEC in promoting closer regional economic integration. Be that as it may, inter-governmental meetings of ministers and officials do not, of themselves, create trade. Consultations among governments may help in overcoming policy and institutional impediments to international commerce. Trade pro- motion organizations and knowledge institutions like universities can help expand the horizons of business and governments.48 Yet, in the last analysis, it is business that is the engine of trade and investment, and it is the business communities of the participating countries who together represent the targets of regional efforts at economic cooperation. Until recently there has been but minimal involvement of the region's business communities in APEC meetings, Working Groups and related activities. These remain very largely the preserve of offi- cialdom. The APEC-V ministerial meeting in Seattle provided a first opportunity for regional private sector participation in a Business Forum. It remains to be seen whether and to what extent the future APEC agenda will include provision for a non-governmental role in the development of regional initiatives, policy positions and work projects. APEC exemplifies a uniquely equalizing, plurilateral forum for international policy discourse. All participating countries, including economies at different stages of development, share equal access to its fora. As APEC continues to evolve in response to emergent expectations, this plurilateral dimension will tend to empower the smaller, weaker participating countries through the exercise of group leverage or moral suasion on matters of shared concern vis a vis the larger economies in the region. This could have far-reaching implica- tions for trade policy convergence or coordination, not to say harmon- ization, across the Asia Pacific region. 48 On the role of academic research in East and Southeast Asian policy reform and trade development, see Sylvia Ostry (ed.), Authority and Academic Scribblers. The Role of Research in East Asian Policy Reform, San Francisco: ICS Press for the Interna- tional Center for Economic Growth, National Centre for Development Studies of Australian National University and the Economic Development Institute of the World Bank, I99i. This content downloaded from 175.144.128.157 on Thu, 14 Nov 2013 10:19:13 AM All use subject to JSTOR Terms and Conditions ASIA PACIFIC ECONOMIC COOPERATION 437 Future initiatives designed to enhance the architecture of APEC are likely to encounter parallel concerns that regional trading arrangements be openly accessible, of broad coverage, and regionally equitable. Looking ahead, APEC may well see fit to introduce its own regional mechanisms for trade conflict resolution and problem- solving, in order to complement its framework supporting trade creation. The availability of APEC trade conflict resolution and policy-solving mechanisms would enable vulnerable countries to counteract discriminatory bilateral arrangements within the region, at least, by way of appealing to a readily accessible, plurilateral mech- anism. As momentum is gained, the creative synergy of plurilateral economic cooperation through APEC might perhaps provide a telling example of the compatibility between national development object- ives, regional economic integration and the maintenance of an open, non-discriminatory multilateral trading system. ASIA PACIFIC ECONOMIC COOPERATION 437 Future initiatives designed to enhance the architecture of APEC are likely to encounter parallel concerns that regional trading arrangements be openly accessible, of broad coverage, and regionally equitable. Looking ahead, APEC may well see fit to introduce its own regional mechanisms for trade conflict resolution and problem- solving, in order to complement its framework supporting trade creation. The availability of APEC trade conflict resolution and policy-solving mechanisms would enable vulnerable countries to counteract discriminatory bilateral arrangements within the region, at least, by way of appealing to a readily accessible, plurilateral mech- anism. As momentum is gained, the creative synergy of plurilateral economic cooperation through APEC might perhaps provide a telling example of the compatibility between national development object- ives, regional economic integration and the maintenance of an open, non-discriminatory multilateral trading system. ASIA PACIFIC ECONOMIC COOPERATION 437 Future initiatives designed to enhance the architecture of APEC are likely to encounter parallel concerns that regional trading arrangements be openly accessible, of broad coverage, and regionally equitable. Looking ahead, APEC may well see fit to introduce its own regional mechanisms for trade conflict resolution and problem- solving, in order to complement its framework supporting trade creation. The availability of APEC trade conflict resolution and policy-solving mechanisms would enable vulnerable countries to counteract discriminatory bilateral arrangements within the region, at least, by way of appealing to a readily accessible, plurilateral mech- anism. As momentum is gained, the creative synergy of plurilateral economic cooperation through APEC might perhaps provide a telling example of the compatibility between national development object- ives, regional economic integration and the maintenance of an open, non-discriminatory multilateral trading system. This content downloaded from 175.144.128.157 on Thu, 14 Nov 2013 10:19:13 AM All use subject to JSTOR Terms and Conditions