[asia-apec 47] Workers' Primer on APEC, Part I

[ALARM]

ALARM Update (online version)
Monthly newsletter of the APEC Labour Rights Monitor (ALARM) project
Issue Nos. 4 & 5, July & August 1996

               
1. What is APEC?

APEC, or the Asia Pacific Economic Cooperation, is a ministerial forum
involving 18 countries and territories bordering the Pacific Ocean. These
countries/territories are officially referred to as "member economies". They
stretch from Asia to Australia, across the Pacific to North and Latin America.

The 18 member economies are: Aotearoa (New Zealand), Australia, Brunei,
Canada, China, Chile, Hong Kong, Indonesia, Japan, Mexico, Malaysia, Papua
New Guinea, Philippines, Singapore, South Korea, Taiwan, Thailand, and the
United States of America. APEC wants to encourage closer regional
cooperation among the member economies. It aims to reduce trade barriers,
promote investments among members and achieve borderless trade within the
Asia-Pacific region by the year 2020.

The member countries have pledged, according to this "2020 Plan", to set in
motion a process of  "open regionalism" in which their governments would
liberalise trade on a "complete non-discriminatory"  basis, as well as to
"continue reducing ... trade barriers to non-member countries".[Bello,
Challenging the mainstream]

The APEC leaders signed a declaration in 1994 stating: "We wish to emphasize
our strong opposition to the creation of an inward- looking trading bloc
that would divert from the pursuit of global free trade. We are determined
to pursue free and open trade and investment in the Asia-Pacific in a manner
that will encourage and strengthen trade and investment liberalization in
the world as a whole." [Declaration of Common Resolve, 1994].

APEC is a diverse group of small, middle and major powers with conflicting
domestic concerns and international alliances and interests. Member
economies are also of varied levels of development (developed, newly
industrialising, and developing countries).

APEC meets at head-of-state (ministerial) level every year.  It has hardly
any bureaucratic infrastructure and is serviced by a small secretariat in
Singapore.

 2. How did APEC start?

Early 1989 -- APEC began as a cautious Japanese initiative to form a
consultative forum for technical cooperation. "It is interesting to note
that APEC was formed in 1989. This year saw the fall of the Berlin Wall,
which symbolically signified the end of the Cold War and the regaining of
supremacy of neoliberal economic policies." (Suthy Prasartset, Prof. of
Economics, Thailand). It the following months, Australia and the United
States took over. By the latter part of the year, APEC has ended up as some
kind of ministerial level cooperation on trade and economic issues.

November 1989  -- The first ministers' meeting was held in Canberra
(Australia). The ministers agreed to officially establish APEC as an
"informal economic dialogue" to help coordinate views on trade and economic
issues. The then  12 members (Malaysia, Singapore, Thailand, Philippines,
Indonesia, Brunei, South Korea, Japan, New Zealand, Australia, Canada and
the United States) agreed to establish a ministerial forum to discuss
Asia-Pacific economic issues, to be coordinated through senior officials'
consultations. "Beyond a general economic focus, the group had no stated
mission or goal." [Spero, Challenging the mainstream, 8 July 1995]

July 1990 -- The second ministers' meeting was held in Singapore, but little
was achieved. In the next two years, APEC was preoccupied with sorting out
its membership. Governments who feared being left in the cold queued up to
join. But being an artificial construct, with no natural geographical
boundaries, no common historical, cultural or social base, no coherent
identity of its own, APEC found it hard to set parameters for membership.
[Bello, Challenging the mainstream , 1995]		 			
November 1991 -- The third summit was held in Seoul, Korea. China, Taiwan
and Hong Kong were accepted as new members. One of the most important
developments in the history of APEC happened during this meeting. The
ministers issued the "Seoul Declaration of APEC Ministers" which gave APEC
its first sense of focus since it was founded in 1989. 

The Seoul Declaration argued that economic growth had fostered
interdependence and strong common interests ...and produced a healthy and
balanced development. It went on to say that this economic growth was "built
on a spirit of partnership ... and commitment to the free flow of goods and
capital. Closer cooperation would mean more effective use of human and
natural resources and sustained economic growth ..." (italics ours).
[Kelsey, Economic Fundamentalism, New Zealand,  1995]

1992 -- The 4th summit was held in Bangkok, Thailand. Mexico and Papua New
Guinea were accepted as new members. A small APEC Secretariat, to be based
in Singapore, was created.

November 1993 -- The 5th summit was held in Blake Island, Seattle, USA. "In
that meeting, APEC developed a guiding vision. APEC announced its commitment
to more open trade and investment, application of free market principles,
and the concept of 'open regionalism' ". 

The Committee on Trade and Investment (CTI) was created "to simplify and
harmonise customs procedures and standards, identify barriers to trade,
implement a set of non-binding investment principles, and work to harmonise
GATT-Uruguay Round implementation among APEC members." [Spero, Challenging
the mainstream,1995]

Other support bodies are: Economic Committee, Budget and Administrative
Committee, Eminent Persons Group (EPG), Asia-Pacific Business Forum, 

November 1994 -- 6th summit was held in Bogor, Indonesia. Chile was accepted
as 18th member. APEC announced a moratorium on new members until 1996. The
Bogor summit was held only 3 days after the Indonesian police arrested
several trade unionists including independent trade union leader Muchtar
Pakpahan for "inciting unrest"  following workers' protests in Medan. The
Indonesia summit gave life to the Blake Island free market vision when the
18 "APEC Economic Leaders" signed and issued the "Declaration of Common
Resolve" on 15 November 1994. This declaration gave full and active support
to WTO, and gave birth to the "2020 Plan" when the leaders announced their
governments' "commitment to complete the achievement of free and open trade
and investment no later than 2010 for industrialised economies, 2015 for
NICs, and 2020 for developing economies". [Declaration of Common Resolve, 1994]

November 1995 -- 7th ministerial summit was held in Osaka, Japan.

25 November 1996 -- The Philippines will host the 8th APEC summit in Subic.

1997 and 1998 -- Canada and Malaysia will host the 9th and 10th summits,
respectively.

3. What is APEC's "open regionalism"?

According to APEC's Eminent Persons Group (EPG), "open regionalism", is one
of APEC's guiding principles. "It means a process of regional cooperation
whose outcome is not only the actual reduction of internal (intra-regional)
barriers ... but also the actual reduction of external barriers to economies
not part of [APEC]. [O]ur commitment, above all, to the process of global
liberalization is thus in no way compromised; indeed, it is emphasized and
strengthened."

The EPG recommended the following at the 1994 summit: "We believe the
concept of 'open regionalism' can be fully achieved if the APEC members
continue to work for global liberalization in GATT and in the WTO, ... and
if they include 4 elements in their regional liberalization program:

(1) the maximum possible extent of unilateral liberalization;   (2) a
commitment to further reduce their trade and investment barriers toward
non-APEC countries;  (3) an offer to extend the benefits of APEC
liberalization to non-members on a mutually reciprocal basis; and, (4) a
recognition that any individual APEC member can extend its APEC
liberalization to non-members on a conditional basis (via free trade
arrangements), or on an unconditional basis (to all non members, or to all
developing countries, inconformity with the GATT rules)." 

The EPG proposed that the process of Asia-Pacific liberalization be started
by 2000 and completed by 2020. Thus the "2020 plan" embodied in the 1994
Declaration of Common Resolve.

4. What are other free trade initiatives in the Asia-Pacific  region?

There are numerous sub-regional and multilateral economic integration
initiatives in Asia-Pacific, all differing in structure, time frame and
strategies. However, they all aim to liberalise trade and investments. APEC
is a relative newcomer in this field. Other free trade initiatives in the
Asia-Pacific region include:

AFTA or the ASEAN Free Trade Area  (agreed in 1992) - the Association of
Southeast Asian Nations (ASEAN) aims to create a free-trade zone by the year
2008. In 1994, they announced that tariffs within AFTA will be lowered to 5%
by 2003, moving the deadline up by 5 years. ASEAN includes Malaysia,
Thailand, Philippines, Indonesia, Brunei, Singapore and recently, Vietnam.

EAEC or the East Asia Economic Cooperation (proposed in 1991) - advocated by
Malaysian Prime Minister Mahathir as a response to the formation of regional
blocs in Europe and North America and to APEC's evolution in this direction.

ANCERTA or the Australia-New Zealand Closer Economic Relationship Treaty
Agreement.

Asian "growth areas" - common free trade and investment areas among
neighbouring Asian countries. Examples:

South  Pacific Forum (1971): involving Australia, Fiji, Aotearoa, Papua New
Guinea and other Pacific islands; Southern China Growth Triangle (1980's):
involving China, Hong Kong, Taiwan; South Asian Preferential Trade Area
(SAPTA, 1985), involving Bhutan, Nepal, Pakistan, Sri Lanka, India,
Bangladesh, Maldives; Singapore-Johor-Riau Growth Triangle (1989); Greater
Mekong Subregion (1991), involving Cambodia, China, Burma, Laos, Thailand,
Vietnam; Indonesia- Malaysia-Thailand Growth Triangle(1993);
BIMP-EAGA(1994),Brunei-Indonesia-Malaysia- Philippines East ASEAN Growth
Area  etc.

NAFTA or the North American Free Trade Agreement (1994) - A trade agreement
between Mexico, US, Canada implemented on 1 January 1994. The US is the
centre of NAFTA, accounting for 70% of all imports and exports in the
region. [Keidanren, Challenging the mainstream, 1994]

Trade blocs outside of Asia-Pacific include: the European Union (EU), Gulf
Cooperation Council, Mediterranean Free Trade Area (proposed 1995),
MERCOSUR, the Andean Pact, Caribbean Common Market (CARICOM), Central
American Common Market (CACM), etc.

5. What is WTO?

On 1st January 1995, the World Trade Organization (WTO) was created "to
provide a solid foundation for the open, multilateral trading system -- a
system that will allow regional arrangements like the EU, NAFTA, or APEC to
flourish but keep the world economy from breaking into costly, exclusionary
blocs." [Spero,Chanllenging the mainstream, 1995] 

The main task of WTO is to implement the General Agreement on Tariffs and
Trade - Uruguay Round (GATT-UR). According to Spero, "The Uruguay Round
agreement is the most far-reaching trade agreement in history: it will
modernize the international trading system; significantly reduce tariffs and
non-tariff barriers; expand the trade regime to services,intellectual
property, and investment; and cover agriculture in a meaningful way for the
first time."

The WTO is also the "centerpiece of the US policy of international economic
engagement," said Spero. In relation to this, the US "has (also) taken the
first steps toward a thorough overhaul of the world's monetary and
development institutions" (i.e. IMF, WB).

The WTO therefore represents and completes the "three pillars" of  the
global free market system (the World Bank and the International Monetary
Fund being the first two). These three institutions will ensure the process
of creating an integrated, global free trade, free market economy (i.e.
economic globalisation). They symbolise the  renewed global supremacy of
neoliberal economic policies.

6. What is globalisation? What is neoliberalism?

As discussed above, globalisation is the ongoing process of the integration
of national economies into a global free trade, free market system. The IMF,
WB, WTO and regional trade blocs, including APEC, are the instruments by
which this process is being implemented. The basic agenda of global free
market integration is the elimination of all trade barriers so that there is
unrestricted mobilisation of goods, services, capital, investments,
production and information systems, as well as labour. The ongoing economic
globalisation follows the neoliberal economic model. According to Professor
of Economics, Suthy Prasartset, "the key elements of neoliberalism are:

     * the liberalization of trade and capital flows;
     * the market pricing of both private and public goods, which are usually
       controlled by international oligopolies;
     * privatisation as a means of expanding business for the corporate sector; 
     * eliminating state regulations; and
     * reductions in social programmes, especially social subsidies for the
       poor." [Prasartset, AMPO, 1995]

Globalisation however, has not meant the elimination of rules and government
intervention. In fact, it has necessitated the creation of more laws and
regulations, including government intervention. 

These rules and interventions are ensuring, on one hand, that the movement
of trade, investments and capital is unrestricted; on the other, they ensure
that the basic freedoms and rights of the people (e.g. to organise, protest,
job security, just wages, health and safety protection, food security, safe
environment, etc.) are controlled so as not to hinder the free movement of
capital and trade.

"Governments around the world are adjusting their economic policies to face
the new realities of integration into the new global market economy ...
Globalisation also refers to the rapidly improved communication systems
(information and transportation) which serve to reduce distances between
countries and regions, bringing not only greater exchange of goods and
services but more exchanges between people and information from different
countries." [Bronson, & Rousseau, Working Paper on Globalisation..., 1995]