TCS Daily

Trade and Terrorism

By Alan Oxley - November 4, 2003 12:00 AM

Trade is supposed to promote peace, and in an unexpected way it may be helping to fight terrorism. APEC, a grouping of economies in the Asian Pacific rim, was established in 1989 to promote trade. The leaders of its 21 members, including Indonesia, the world's largest Muslim nation, have just agreed at a summit to fight terrorism[1].


APEC was founded in 1989 because of a different fear: that the world was about to break up into trade blocs. The United States, Canada and Mexico announced they would create NAFTA. The European Community declared it would reshape the moribund Common Market into "The Single Market." East Asia feared it would instead create "Fortress Europe" and that NAFTA would close out Asian imports.


They were wrong. The Eurocrats freed investment and liberalized Europe's services industries. Trade between the US and Asia continued to expand. But it is easy to see why they were jumpy.


The economic boom in East Asia had driven global growth for nearly two decades. While the Atlantic economies grappled with stagflation in the 1970s and uneven growth in the 1980s, Asia expanded at record rates.


If Europe and North America set up trade blocs which locked out exports from East Asia, this would have been the end. An East Asian trade bloc made no sense; their major markets were in Europe and the US. So a Pacific Rim group to promote free trade, not create a trade bloc, was established. It was the joint initiative of Australia and South Korea.


The two countries were so averse to institutionalizing the arrangement, it was never even called an organization. Gareth Evans, the Australian foreign minister at the time, quipped that APEC (Asian Pacific Economic Cooperation) was four adjectives without a noun. Public figures should not be so clever. Filipino campaigners against free trade later appropriated his quip to parody APEC. They disliked its success.


APEC had made free trade fashionable in Asia. At their 1994 summit in Bogor, Indonesia, APEC leaders pledged to clear all barriers to trade and investment by 2020. This was something. The US, Japan and China were on board. What the protestors did not know was that APEC Leaders over-reached themselves.


When the APEC countries tried to set out a long term program to meet this target in 1999, Japan blocked it with a veto. Diplomats did what they are trained to do: turn defeat into success. APEC officials decided it was better to use the WTO and regional and bilateral trade agreements among APEC countries to reach the goal. This was not just the best "Plan B" they could have come up with. It is what they should have done from the beginning. APEC works best as a political forum, not a trade organization.


The Bogor Declaration remains influential. It is a reference point for long-term economic policy in East Asia. The ten ASEAN countries just announced at their annual summit that they would have a free common market by 2020. But if APEC is to be just a political organization, has it run out of things to do?


Bring 21 leaders of economies that produce 60 percent of world output and straddle the world's most dynamic areas together every year for a summit and pretty quickly they find problems they should work out together.


Osama bin Laden gave them a new subject. The attacks on 9/11 riveted the attention of the US and the world on the al-Qaeda leader. But the great Asian nations, all with a Buddhist tradition, had already been looking closely at his host and ally, the Taliban, a year before when they destroyed the great and ancient Buddhist statues in the mountainsides in Afghanistan.


And when bin Laden's allies detonated bombs in Bali, killing Australians and Indonesians, and at the Marriott Hotel in Jakarta, Indonesia, another member of APEC and the world's largest Muslim nation, also got the bitter taste of terrorism.


So the APEC Summit in Bangkok forged a pact to collaborate against terrorism. This could be effective. Governments, and not an unwieldy and large bureaucracy like the UN, implement decisions in APEC. This works. At previous summits, APEC leaders committed to improve security of trade and prevent money laundering. They have done so and in the process have reduced opportunities for terrorists.


The Thai prime minister, Thaksin, the host of APEC, used the summit to expand APEC's role to combat terrorism. He is George Bush's strongest supporter in ASEAN. While in Southeast Asia, Bush himself toured Indonesia and the Philippines (they all have Muslim populations which are targets for bin Laden's operatives) and Australia (an ally in Afghanistan and Iraq).


In one sense it is a historic coincidence that APEC has acquired a new mission to deal with Islamic extremism. China and Russia have feared it for centuries. Indonesia and Malaysia are moderate Islamic nations to which extremism is a constant threat. The great Buddhist nations of Asia are appalled. The US was hit on September 11. Australia was a target in Bali because it is a western culture.


But there is a modern morality tale. The Asian Pacific region holds the key to global economic growth this century. It expects prosperity based on trade to expand, has reasonable ambition to lift a great share of the worlds' poor out of poverty and knows that the future lies in the Information Age.


So no one should be surprised that nations which share this view of the future would collaborate against a terrorist movement that aims to create mayhem, has medieval social values and can survive only in failed states.



[1] Members of APEC are Australia, Brunei, Canada, Chile, China , (Chinese) Hong Kong, Indonesia, Korea, Malaysia, Mexico, Peru, Philippines, Singapore, Taiwan (Chinese Taipei), Thailand, Vietnam


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