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What is APEC and Does It Matter?

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It’s near impossible to follow the torrent of international trade deals currently in negotiation; the alphabet soup of the train of initialisms is hard enough to keep straight: the Trans-Pacific Partnership (TPP), the Transatlantic Trade and Investment Partnership TTIP) between the EU and US, the Regional Comprehensive Economic Partnership (RCEP) between ASEAN countries and a host of others like New Zealand and India, and a series of smaller free trade agreements (FTA) between China, Japan, South Korea, the US and the EU.

The map of world trade is being hurriedly redrawn by a bevy of  massive regional trade agreements, potentially redefining the rules that govern international commerce.

What about the Asia-Pacific Economic Cooperation (APEC)? Or maybe more pertinently, what precisely is the APEC? Inaugurated in 1989, it’s a consortia of twenty-one nations intended to promote trade liberalization amongst them. The pact is structured around what is commonly referred to as the “Borgor Goals,” a 1994 manifesto collectively authored at a summit in Borgor, Indonesia. The four main precepts of organization, according to the APEC’s official website, are these:

  • to find cooperative solutions to the challenges of our rapidly changing regional and global economy;
  • to support an expanding world economy and an open multilateral trading system;
  • to continue to reduce barriers to trade and investment to enable goods, services and capital to flow freely among our economies;
  • to ensure that our people share the benefits of economic growth, improve education and training, link our economies through advances in telecommunications and transportation, and use our resources sustainably.

Many have been critical of APEC’s paltry success in turning its lofty aspirations into concrete policy, devolving into something more akin to a chatty club than an collaborative engine of enforceable agreement. The Economist has complained that APEC is worse than an excuse to dither since it replaces real progress with its hallucination: “Its very existence creates the illusion that something is being done and so weakens other efforts to reach meaningful agreements on, for example, climate change and trade.”

However, some real strides have been made among this group of nations, though it remains unclear if the APEC accord itself it causally responsible. The average tariffs among the APEC economies have come down 15 percent since 1994 to 5 percent, substantive progress, indeed. But how much of this movement is ultimately attributable to their inclusion within the WTO? Or the fertile proliferation of regional free-trade agreements? APEC’s member nations comprise an impressive gathering, accounting for 55 percent of global GDP, 44 percent of global trade and 40 percent of the world’s population. But is their impressiveness a function of anything clearly attributable to APEC activity?

Part of the problem in assessing any on particular free-trade agreement is the surfeit of so many others, making it difficult to determine which pact causes what result. And this will only become more confusing as FTA’s continue to multiply, creating accords that overlap with several other accords, an indecipherable global Venn diagram of interlocking arrangements. As it stands now, twelve of the twenty-one APEC nations are poised to become members of the Trans-Pacific Partnership (TPP) which, at least ideologically, mirrors many of the same concerns and incentives. Eight TPP signatories, four other APEC nations, three nations with no TPP or APEC affiliation and India are in the embryonic stages of making another pact, the Regional Comprehensive Economic Partnership. If it were truly comprehensive, it would nullify the need for all the others.

Some have hypothesized that APEC could act as a binding agent unifying the otherwise fractured topography of global FTA’s, a kind of international command center within which they are all managed. Then it would be less like a global congress and more like a global lounge, facilitating communication between nations. But does the world need this? There already exists an East Asia Summit, an Asia-Europe Meeting, a WTO and  United Nations General Assembly. Will APEC supercede all of these? And, if so, under whose authority?

The question of authority is paramount. APEC’s ambitions significantly outstretch the mechanisms for enforcement at its disposal. The undergirding principle of APEC membership is what its charter calls “concerted unilateralism,” which is a dulcet euphemism for a lack of any binding power to make anyone do anything. In place of a governing body with the power of compulsion, there are endless technocratic committees predictably embroiled in equally endless ruminations. Bilateral talks are good but bilateral progress is better.

And there are other, darker objections one could make to these international accords. A report issued by the UN Economic Commission for LATAM and the Caribbean warns that such agreements are fraught with often concealed difficulties and motives. The first the report mentions is that some of these accords might not have adequate protections for smaller, less well-heeled nations that lack the negotiating leverage to cut a good deal for themselves. Too diminutive to possess real sway over larger members, to to be able to afford to beg off, these minor players can be easily muscled into disadvantageous terms.

All of the agreements, in principle, are motivated by laudable aspirations that involve the consolidation of a region’s market into a more liberalized block of sovereign trade. At least nominally, these FTA’s are driven by a collective, regional desire to create harmonized production rules, streamline supply chains, eliminate gratuitous barriers to trade and pool resources in the service of increased competitiveness.

But it has certainly become much harder to isolate the benefits of  any particular agreement amidst the dense thicket of all the others, each jostling for its own claim to political efficacy. Has the APEC driven further trade liberalization among its members, or has the organization merely claimed responsibility for victories independent of its efforts? Few seem to know, or to have even heard of the APEC in the first place. It’s remarkable to ponder that we inhabit an age in which an economic syndicate of twenty-one nations could operate in near oblivion.

 

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