Dialogue: Time to turn off Apec's life-support machine?

JANE KELSEY* says that Apec has become moribund,
a peripheral and dispensable victim of disagreements
between members and bilateral initiatives.

Last July, Prime Minister Helen Clark told the Financial Times that little would come from Apec this year. Undiplomatic, perhaps, but she simply reflected what others had said for years. The Government could now afford that admission. Its term as Apec's chairman was over and the poisoned chalice had passed to the Sultan of Brunei.

Apec was kept on life support last year as part of the National Government's election-year publicity platform. Officials understood that every Apec activity was expected to reflect well on the Government.

Despite an excess of hype and spin, Apec proved hard to sell. Aucklanders especially were irritated at the cost and inconvenience, while the wider public seemed unconvinced that a regional version of New Zealand's failed free-market experiment was a truly desirable goal.

The 1999 talkfest was rescued from disaster by the imperative on leaders to address the tragedy in East Timor - an irony, given the New Zealand Government's insistence that non-trade issues had no place on the Apec agenda. Then a week of Clinton mania helped to eclipse the overpolicing of protests against Chinese Premier Jiang Zemin.

As for Apec itself, there was a signal lack of progress towards its defining goal of free trade and investment in the region by 2010 for its richer members and 2020 for poorer ones. The face-saver saw Apec's economies endorse a raft of issues for inclusion in the new World Trade Organisation round, to be launched in Seattle in late November last year. That strategy failed, too.

The paralysis has continued in Brunei this week. The ministerial meeting was reduced to debating the subtleties of the communiqué since nothing of substance could be agreed.

Malaysia insisted that poorer countries must retain the right to shape their policies according to domestic economic and social circumstances, and any negotiations in the WTO must have a balanced agenda with no rigid timeline. Apparently, Thailand and the Philippines supported that, with South Korea, Japan and others more quietly sympathetic.

Some believe that constructing a web of bilateral and sub-regional agreements can provide a circuit-breaker for both Apec and the WTO, with New Zealand and Singapore leading by example. Others fear that this will undermine the goal of free trade and investment on a global scale.

The motives behind the strategy are pragmatic and political. Negotiations between two governments are far less complex than with the 138 members of the WTO or even the 21 of Apec. The deals they reach can be selectively extended to others and refined as necessary.

Low-key bilateral negotiations also attract less publicity than regional and global deals. The forces of opposition are limited to the countries involved. The secrecy that surrounds the negotiations shields the details from scrutiny until the text is signed, allowing governments to consult and release information selectively and with optimum spin.

Such agreements are ad hoc and highly variable. Governments that are reluctant to make further global concessions can craft deals that produce more tangible returns to them, while protecting areas of primary concern. That applies even to governments that have been champions of free trade.

Singapore carefully safeguarded its sensitive economic interests in the recent treaty with New Zealand. Chile has rejected New Zealand's proposals for a similar agreement because of the impact on its dairy industry. An initially reluctant Australia has now expressed interest in such arrangements but only if there is something in it for it.

New Zealand, on the other hand, seems committed to entering such deals on almost any terms. The ideology of free trade and investment still reigns supreme, despite the rejection of a market-driven New Zealand by voters and, to varying degrees, the parties that make up the governing Coalition.

This bilateral strategy is not new, but it is gaining momentum. Most people know about the CER agreement with Australia, signed in 1983 and extended periodically since then and which some now suggest should include a common currency. Fewer people know that last July the National Government signed investment agreements with Chile and Argentina which promise to protect their investors from New Zealand Government actions that would undermine their profitability, and vice versa.

These agreements run for a minimum 15 years. If a government then withdraws, existing investors will continue to enjoy those protections for a further 15 years. Breaches can attract punitive sanctions. Although neither agreement has come into effect, that simply requires an exchange of letters between each government.

There has been no parliamentary scrutiny or debate and minimal public disclosure. The same applies to investment agreements New Zealand signed with China and Hong Kong in 1989 and 1995, respectively.

The Government is now aiming for a free-trade agreement with Hong Kong. It hopes this and similar deals can be signed off with a minimum of public and political opposition. That would be a serious miscalculation. A private member's bill to require full parliamentary approval of treaties is before a select committee. Whatever its fate, these agreements have now become politically charged.

At the same time, the Singapore, Chile and Argentina treaties provide solid examples around which the opponents of globalisation can campaign.

Where does Apec fit in this scenario? It is both peripheral and dispensable. Rather than leading the charge, the ministerial and leaders' meetings are little more than opportunities for governments to take soundings from each other and reaffirm the Apec rhetoric without having to deliver.

With China in the chair next year, the politics of Apec will be even more complex. By then, the multiplicity of bilateral negotiations may have further undermined its regional approach, while the battles among Apec members over the direction of the WTO remain unresolved.

For critics of Apec, this is no victory. The forum itself has never been the issue. It is merely one of many vehicles through which the global free market is pursued.

If Apec remains moribund, the free traders - and their opponents - will refocus their energies elsewhere.

* Jane Kelsey lectures in law at the University of Auckland.

Herald Online feature: Apec