Hawke-eye view sees hope

There may be clouds on the horizon, but the man who got Apec started remains hopeful about the way ahead. By Greg Ansley

For those who look for omens in such things, the signs were not good at Canberra's art deco Hyatt Hotel in November 1989.

As politicians from the world's most dynamic economies gathered to launch the Asia Pacific Economic Co-operation forum, rain seeped on to carpets to squelch beneath the feet of the great, and pounded down on the marquees that held the international media outside.

A decade later, storm clouds are again gathering over Apec, as Auckland prepares to host what appears likely to become a pivotal summit for a region teetering uncertainly on the brink of a new millennium.

From his 13th floor Sydney office, looking out across The Domain to a sparking blue harbour, Bob Hawke surveys the political thunderheads and worries that the organisation he fathered may run foul of the immense pressures on its most powerful members.

The former Australian Prime Minister fears that American leadership may founder on domestic politics, and that the goal of trade liberalisation could be buried beneath the weight of rising antagonisms between the US and China, and renewed tensions across the Taiwan Straits.

But he believes Apec's value has been proved, and that as Asia recovers from the crisis in 1997 the momentum of trade liberalisation will resume.

"I am by nature, and always have been, an optimist," he says.

"In the end, unless you believe and certainly hope that human beings are going to act rationally on a basis of intelligent self-interest then there's not much hope for us, is there?"

Hawke's optimism and belief in the value of free trade took form soon after his Labour Government won office in 1983, articulating the concept of economic integration across the region. That process led first to the creation of the Cairns Group of free trading nations - effectively inserting a third force between the giant European and US blocs in word trade negotiations - and ultimately to Apec.

In January 1989 Hawke unveiled his Apec concept to Korean businessmen; by November, an unprecedented gathering of Asia-Pacific economic might was assembling in Canberra.

For Hawke it was both a personal triumph and a demonstration of the ability of minor powers to influence the great.

"At times there is a strength in smaller (nations)," he says.

"In the establishment of Apec one of the serious issues was China, Taiwan, Hong Kong; Apec was the first institution at which the ministers of China and Taiwan sat down at the same table.

"If the US had been the moving force, the problems would have been much more difficult, but China didn't see Australia as a threat.

"We didn't have any accumulated historical baggage of oppression in the region, we weren't a military threat and so on, so an initiative by a small country like Australia was seen for what it was - a genuine attempt to optimise economic growth in the region."

On that basis, Hawke says, Apec has been a success.

He rejects "stupid" criticisms - including claims that the organisation should have foreseen and averted the worst of the Asian financial crisis - and points to its two founding aims: reducing tariff barriers and the establishment of specific working group in key areas.

In both, Hawke says, significant progress has been made.

"The question mark I suppose has been how satisfied people are ... individual countries within that agreed framework, how committed they are with their individual action plans to put themselves into a position to meet those target dates."

He believes the barrier-free target dates of 2010 for developed countries and 2020 for developing nations, agreed on in 1994 at Bogor, Indonesia, remain achievable despite recent pessimism.

"I think it's a realistic goal ...

"We're still a decade and two decades away and I don't see any reason - once confidence grows as I believe it will and growth resumes in Asia - why people will want to walk away from those goals ...

"Did any intelligent person believe that all the fundamentals that underlay the high growth rates of the preceding decade all went suddenly out the window on July 2 1977 (as the crisis broke)?

"It's crazy to assume that they did."

As reforms correct the failings that precipitated the crisis, financial and banking structures would be strengthened.

"As they emerge and they are superimposed on the fundamentals that are still there, logic always said to me that growth would resume and in some senses the region would be stronger ...

"I think that will give them more confidence (to continue trade liberalisation)."

Hawke points to the region's high growth rates during most of Apec's life.

"I think one could claim that at the margin - and I don't put it any higher than that - but at the margin the existence of Apec mechanisms were of some assistance in that ...

"I think Apec created the environment in which there was an enhanced understanding of the beneficial effects for economic growth of enhancing and liberalising international and intra-regional trade."

The immediate problems facing Apec, and the largest hurdles for the Auckland summit, are political - US domestic politics and serious lesions in the region's security.

Hawke says there are "disturbing signals" coming from the US, whose leadership is needed for further trade liberalisation.

Protectionism has grown with a burgeoning trade deficit and the run-up to a presidential election. Tensions have increased with China over Washington's rejection of concessions by Beijing to aid its bid to join the World Trade Organisation (WTO), and - more seriously - over the bombing of the Chinese embassy in Belgrade.

Further clouds are gathering with chest-thumping in the Taiwan Straits.

But Hawke remains hopeful.

"I don't want to sound too pessimistic about it.

"The basic thing that should be there going for intelligent leadership is the understanding that trade liberalisation has been an intrinsically important element in growth ...

"There are going to be difficulties, but I hope good sense will mean that it is not just a question of survival but that they'll be taking out of that meeting an impetus to the broader WTO (negotiations) that will follow almost immediately."