Adviser: Apec risks suicide

By Yoke Har Lee

The United States has come under sharp criticism by a Japanese economist for engineering a slow death for the Asia Pacific Economic Cooperation (Apec) forum by placing high priority on the early abolition of import tarrifs in certain industries.

"This is a very important time for Apec. Depending on how the chair country leads or sets the agenda, Apec could either regain momentum and provide hope for people in the 21st century or it might very well commit suicide," Professor Haruo Shimada told the Business Herald. Professor Shimada is an outspoken academic from Keio University who is also adviser to the Japanese Government.

He said current developments built around the voluntary liberalisation were really attempts to dwarf Apec's importance.

Over the last few years, Apec has lapsed from its original purpose of promoting creative solutions to open trade and liberalisation.

Instead, the United States, Canada and a few others, have led Apec into "a strange direction" by introducing the concept of early voluntary sector liberalisation, Professor Shimada said.

Under the voluntary liberalisation agenda, certain sectors of the economy among Apec members have been earmarked for fast-track liberalisation. Japan scuttled plans last year for the sectors selected because it could not agree on liberalising its fisheries industries.

Apec had to return to its basics, he said.

"My proposal is that New Zealand defines the agenda for the 21st century - what I call the development of market infrastructure. Liberalisation, deregulation can destroy economies if there is not good infrastructure that people can rely on."

Many countries failed to achieve the ultimate benefits of market liberalisation because they did not have the accompanying infrastructure to protect themselves.

He cited the case of Japan, which pursued the big bang of financial liberalisation without the infrastructure to support the move. The same was true of Asian countries where credit was given excessively to borrowers unable to digest it.

Professor Shimada said New Zealand should focus its agenda on creating this market infrastructure, allowing a transparent exchange of information to support market liberalisation.