TCS Daily


A Perfect Excuse to Commiserate or A Perfect Excuse to Celebrate?

By Charles Finny - September 15, 2005 12:00 AM

It has become fashionable in trade policy circles to find fault with APEC. Yet much of this criticism is unfounded. In the mid-1990s, the EU was so concerned about the threat posed by this experiment in Asia-Pacific regionalism that it made several key compromises in trade negotiations; the result was the completion of the Uruguay Round. But more recently I have seen EU officials shed tears of joy over further evidence that APEC has been unable to meet its goals. It has become trendy to question APECs continuing relevance and the value of APEC Leader and Ministerial meetings.

 

But the on-going positive role APEC has played in setting and determining the content of the global policy debate in several important areas is constantly overlooked. The list of contributions is extensive. I want to focus on three areas: non-agricultural market access; environmental goods and services; and fish subsidies. In all three areas APEC has either delivered meaningful results, or is seen as setting the way for any outcome likely to emerge from the WTO Doha Round.

 

In 1996 APEC Leaders decided that the outcome of the Uruguay Round was not enough. They wanted to keep the momentum of trade liberalization going by liberalizing some sectors of importance to the full APEC membership. Nine sectors were identified in 1997 as having sufficient support for further development -- chemicals, energy, environmental goods and services, fish and fish products, forest products, gems and jewelry, medical equipment and instruments, telecommunications equipment (MRA), and toys. The idea was to do something similar to the Information Technology Agreement (the Agreement which allows computers and associated technology to be traded freely around most of the world) and build a critical mass of support for trade liberalization and other initiatives in these sectors so that they could be liberalized as a priority.

 

Through 1998 a succession of liberalization offers were made inside APEC and in 1999 the initiative was taken to the WTO with the idea that these sectors would be included on the agenda for the round that was expected to be launched at Seattle. In effect a series of sectoral zero for zero deals were envisaged. Unfortunately no launch of a round was achieved in Seattle and the EU declined to join APEC in working on accelerated liberalization in these sectors. APEC plus the EU would have represented between 85% and 90% of world trade in these sectors -- plenty in terms of critical mass. Following Seattle many claimed that the whole exercise was a complete waste of time. I disagree.

 

Two very significant economies were both APEC members and were in the process of WTO accession in the late 1990s -- China and Taiwan. They made liberalization offers in APEC in these 9 sectors and when asked, repeated these offers in their WTO accession agreements. Now that China and Taiwan are WTO members these offers became firm commitments and liberalization in all nine sectors is in place or underway. A large part of the value of the Chinese and Taiwanese WTO accessions to other APEC economies and the world resulted from this groundbreaking work done sectorally by APEC.

 

The work done by APEC on fish and fish products was about much more than tariffs. A study was commissioned on the causes of over fishing and stock depletion. The issue of resource management and the link between trade and resource management were much in debate in the region. The conclusion was interesting -- government subsidies were the problem. Having a group of economies as diverse as APEC publish these results was ground breaking and had immediate impact on the global debate. The legacy is still playing out. The issue was deemed so significant it was referenced twice in the declaration launching the Doha Round and the negotiations are seeking to clarify and improve WTO disciplines on fisheries subsidies, taking into account the importance of this sector to developing countries. This issue is truly win-win. It is potentially good news for developing countries, good news for trade in fish products and good news for the environment.

 

Continuing with the environment theme, APEC looked at doing something practical to speed the uptake of environmentally friendly technology and expertise by liberalizing environmental goods and services. The issue was not new, having been the subject of work in the OECD, but it was contentious. Most barriers existed in developing economies, and many were suspicious of OECD country intentions in proposing liberalization of goods and services in these areas. Particularly contentious was the issue of what constituted an environmental good or service. Again APEC played the critical role in transforming an idea which had come from the rich economies club to one which had global appeal. APEC, with its mixture of developed and developing economies came up with a list which everyone could live with. Environmental goods and services also made it onto the list of topics for negotiation on the Doha Development Agenda. It is my understanding that the APEC list is at the core of this area of negotiation.

 

This is all pretty substantive stuff. What has Europe contributed to the global trade liberalization process over the same period? Next time I get an anti-APEC jibe from a Eurocrat, expect a response from my growing list of Kyoto Protocol jokes -- the subject of an article for another day.

 

Charles Finny is CEO of the Wellington Regional Chamber of Commerce, Wellington New Zealand. He was formerly director of New Zealand's Ministry of Foreign Affairs and Trade China FTA Task Force.

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