Look through the Apec "feel-good" talk for trade liberalisation truth

By Kerrin M Vautier

Yes - some will have been disappointed in the outcome on early tradeliberalisation in the Asia-Pacific Region. But the result was notunexpected and expectations were possibly too high. Early trade liberalisation is going to be harder and take longer than we would haveliked.

It was always doubtful that sectoral trade "negotiations" could be imported successfullyinto the APEC process. The essence and distinctiveness of APEC is thatactions are voluntary, unilateral and comprehensive, within the 2010-2020time frame previously set by APEC Leaders.

While it was obviously tempting for some to revert to the more familiarinternational practice of negotiating tit-for-tat concessions, APEC isreally about different protocols.

"Early liberalisation" was all about trying to getthere sooner rather than later. What is most important is to getthere.

Similarly, expectations may have been misplaced in respect of APEC's ability to deliver early solutions to the financial crisis. There are noquick fixes. In any event, APEC lacks the institutional capacity torespond directly, although it has been attempting to exert influence on others. The Pacific Economic CooperationCouncil (PECC) believes that finance issues should be brought more tocentre stage - not just in response to the crisis, but because of thefundamental importance to APEC's goals of having efficiently functioning and stable financial markets.

The recent headlines from Kuala Lumpur are but part of a wider picture.There was a very real risk that, in response to the financial crisis andpresent economic conditions, protectionism would loom large at the jointTrade/Foreign Ministers' meeting. It did not.

As one of PECC's observers at this forum, I heard nothing to suggestthat trade liberalisation either caused the crisis or should be a casualtyof it. Rather, recovery would be hampered if economies resile from theirliberalisation commitments.

APEC's long term vision is still in tact. This vision is about moreopen and competitive markets for trade and investment; about economicgrowth and shared improvements in living standards; about linking economicpriorities with APEC'ssocial purpose.

Reaffirmation by Leaders of their collective commitment to this vision isan important outcome from Kuala Lumpur.

The vision is justifiably long term - Leaders are fully aware of the majorpolitical, economic and social changes that will be necessary if it is tobe realized.

To be sure, there is much rhetoric and "feel-good"language. APEC-speak spreads like a Mexican wave around the Region. It ispart of the entry-ticket to the club and lends support to the spirit ofcooperation and sense of cohesion.Liberalisation, facilitation and ecotech are now embedded. Competition policy andregulatory reform are becoming well established. Capacity building, corporate governance, strengthening theinternational financial architecture and social safetynets are products of the crisis. And women have been discovered, because of the special risks they face. This ispart of a general acknowledgment that, without a broad policy reach,APEC's strategies cannot be relied upon to deliver positive outcomesfor all.

Malaysia's dynamic Minister Rafidah Aziz was right in her openingremarks at the KL Ministers' Meeting: now, after nearly 10 years,APEC must move from the rhetoric to market-driven and relevant initiatives;it must "add value" to domestic initiatives, including those in response to thecrisis.

Any strategy, government or corporate, has to be translated into practicaland effective actions if missions are to be accomplished.

One way of making APEC's good intentions more relevant is to ensurethat they find practical and transparent expression in APEC's Individual and Collective Action Plans. These Plans have been reaffirmedas the centrepiece of APEC. Both the (non-government) Pacific EconomicCooperation Council and APEC's Business Advisory Council support this stance. Policy implementation inline with these plans is the real test of whether APEC's visionarystrategies are being reflected in unilateral actions by individual membereconomies.

The Individual Action Plans provide an excellent focal point forcross-learning and the translation of APEC's ambitious goals into a wide range of specific policies. Revisions arereflecting financial reform priorities. And they are increasingly beingopened to peer review.

Some economies are saying explicitly - and correctly - that policy implementation is so farinadequate. Their concern reinforces the view that, while they set thescene, good strategic frameworks and policy intentions are not enough. Notonly can national interests dissect globalizing markets and inhibit progress; but also, the approach to policy inindividual bureaucracies is much less integrated and coherent than thatembodied in Ministerial and Leaders' Declarations.

So, while much rests on the pledge of APEC Leaders to continue improvements and implementation of their Individual and CollectiveAction Plans, much also rests on the need to modify the way governmentswork in practice. If we are to get from here to there, officials in APECeconomies will have to move outside their traditional policy compartments and to implement policies in a moreintegrated and coherent way.

The latest Declaration of APEC's Economic Leaders is drawn aroundthe theme of strengthening the foundations for growth through cooperativestrategy (not defined).The focus of the Declaration is on fixing and recovering and giving supportto the special needs of developing economies. But there is no resilingfrom commitments to integration through free and open markets for trade andinvestment.

Such reaffirmation was particularly important at this time. And, inacknowledging the role of policies relating to competition and regulatoryreform, the Leaders have gone further towards building a more coherentapproach to the pursuit of their goals.

In their Declaration, Leaders' signals range from "welcoming", "commending" and "supporting" various initiatives by APEC, individual economies and other internationalinstitutions - particularly in relation to the financial sector - tospecific "instructions" to Ministers involved in theAPEC process.

The Leaders' "instructions" cover project work,matters of process and a number of priorities for the financial markets.Calls for "concrete actions" within the next year arereserved for:

* further strengthening the development of small and mediumsized enterprises

* the formulation of strategies by Ministers and the World Bankaimed at strengthening social safety nets

* Finance Ministers to look for innovative ways to promote therecovery of capital flows into the region and to advance progress onvarious initiatives affecting the financial sector

As PECC noted in its Statement to Trade and Foreign Ministers, the Leaderof any economy has a strong influence on the perception of financing andinvestment risk. And the APEC Leaders have an even more powerful ability to change perceptions about theinvestment climate in the region.

In essence, the Declaration points to continuing with a number of steps onthe long path of economic development, while building mutual respect. AsPECC said in its Statement: "The architects of APEC understandably intended to lock the process intoachieving long-term targets through step-by-step change, which is bestsuited to developing building blocks for the medium and longerterm."


Kerrin Vautier is Chair of NZPECC, the NewZealand Committee of the Pacific Economic Cooperation Council. ThroughPECC's observer status at APEC she attended the Trade and ForeignMinisters' Meeting in Kuala Lumpur.

*Kerrin Vautier is chairwoman of the New Zealand Committee of the Pacific Economic Co-operation Council. She attended the Apec summit in Kuala Lumpur as an observer.