The “Asia-Pacific Community” is seen as a broader alternative to the Asia-Pacific Economic Cooperation(APEC) and Association of South East Asian Nations(ASEAN).

“It seems to me that we’re unlikely to see that degree of movement,” Jullia Gillard said. “I don’t get any indication, from the things that have been said, that there is going to be that degree of movement in the region.”

Australia PM doubtful on ‘Asia-Pacific community’ [AFP, 5 July 2010]

STRAITS TIMES – 11 Nov 2009
By Ignatius Low & Jeremy Au

PM Lee greeting ministers and delegates at the reception last night. - ST PHOTO: CAROLINE CHIA

TWENTY years ago, a group of 12 economies went against the grain, deciding to band together and commit to free trade.

Now, in a pivotal moment in economic history, the 21-member Asia-Pacific Economic Cooperation (Apec) must once again take the lead in breaking down trade barriers and helping global businesses.

That was Prime Minister Lee Hsien Loong’s call to his fellow Apec ministers, as he welcomed them to the Apec talks taking place here this week. Evoking memories of the past and the notion of family, Mr Lee, dressed casually in an open- necked red shirt, addressed the dark-suited crowd at an official reception last night.

‘We have some special guests with us, old friends who were involved in the formation and early development of Apec,’ he said with a smile.

‘For example, Bob Hawke, who was prime minister when Australia convened the first Apec meeting in Canberra, which (Foreign) Minister George Yeo and I were privileged to attend 20 years ago.

‘From his wise and imaginative initiative, Apec has taken root and grown, and hence we are here today.’

Mr Lee paid tribute to Apec’s efforts these past two decades.

‘Our work helped to keep markets open, brought our economies closer, and contributed to the successful conclusion of the Uruguay Round,’ he noted.

The Uruguay Round of trade talks was the last major breakthrough in freeing up world trade. Settled in 1994, it led to a major reduction in tariffs worldwide.

As if to echo Mr Lee’s point, Apec leaders of the past two decades smiled from old photos hung on the walls of the banquet hall on the sixth floor of the Suntec City Convention Centre. The mini-exhibition, poignantly titled ‘Family Portraits 1989-2008′, features the full set of traditional group photos that Apec leaders had taken at the end of every annual meeting.

In the photos, the heads of Apec economies, all garbed in special costumes prepared by the hosts, linked hands in a symbolic gesture of unity.

‘This 20th anniversary is a good time to re-energise Apec and re-commit ourselves to its work,’ concluded Mr Lee, as he reminded the audience of the task ahead of them this week.

‘(Our meeting) takes place at a pivotal moment, when the world economy is emerging from the global financial crisis,’ he added.

‘While the situation has stabilised, the economic outlook remains uncertain. Much still needs to be done to sustain the economic recovery and also to prepare for the post-crisis landscape.’

After the reception, Indonesian Foreign Minister Marty Natalegawa told The Straits Times that it was especially important that the grouping did not lapse or regress now, in the aftermath of a global financial crisis.

‘The Apec conference now is crucial because it can solidify the various efforts at the global level, at regional level.

‘Hopefully we can speak in the same single voice in terms of the need to maintain economic stimulus and open trade.’

Tan Sri Rafidah Aziz, Malaysia’s former international trade minister, said Apec had achieved a lot, whatever critics said.

‘Now is a good time to re-energise and to market Apec, and tell people what we’ve done because people do not understand it,’ she said. ‘They think it is a talk shop. It is not…We should tell everybody, Apec has been successful.’

Senior officials from the 21 Apec economies have been meeting since Sunday to hammer out concrete initiatives to foster growth and integrate the region’s economies. The grouping’s trade, finance and foreign ministers will mull over them in the next two days, before a final meeting of the heads of government wraps up the proceedings over the weekend.

***

Ignatius Low and Jeremy Au are the money editor and political correspondent for the Straits Times respectively.

STRAITS TIMES – 11 Nov 2009
By Teo Cheng Wee

Chile's Foreign Minister Mariano Fernandez Amunategui (left) and Singapore's Foreign Minister George Yeo at the Asia-Pacific Regional Forum symposium yesterday. -- ST PHOTO: LIM SIN THAI

APEC has overcome many hurdles in its 20 years of existence, but it should now set its sights on forging a free trade area comprising almost half the world’s trade.

That call by Foreign Minister George Yeo came yesterday at a symposium to mark the Asia-Pacific Regional Forum’s 20th anniversary. The timeframe he had in mind was around two years.

His remarks also come ahead of this week’s summit of the 21-member grouping – grown since its original 12.

‘Creating consensus is often excruciating difficult. But 21 economies, meeting regularly, can set the pace and the direction for the whole world,’ Mr Yeo said.

‘And we can do it whether it is for financial reform or climate change or the global trading agenda. It would help us 21 economies to create a much better world,’ he added.

Mr Yeo noted that the germ for the Free Trade Area of the Asia-Pacific (FTAAP) was already in place with the creation of the Trans-Pacific Partnership involving Singapore, Chile, New Zealand and Brunei. The United States, Australia and Vietnam are said to be considering joining it.

He acknowledged that creating a region-wide free trade area would be no easy task, with some members concerned that their interests would be overwhelmed by those of the US and China.

‘But let’s keep pushing in that direction through bilateral and regional free trade agreements, creating a positive, competitive dynamic,’ he exhorted, even as he warned that any backsliding on trade liberalisation would be disastrous.

Yesterday’s symposium gathered many luminaries who reviewed the past and explored the future of the grouping.

Leaders and analysts from the US, Japan, Australia, Singapore and the Philippines, among others, took part in panel discussions organised by the Institute of Southeast Asian Studies and Singapore’s Ministry of Foreign Affairs.

At the end of the day, the consensus was that Apec has served to open up trade in the past two decades.

Former Australian prime minister Bob Hawke, a founding member, stressed that it was important to understand what Apec was intended to do when evaluating the organisation’s performance.

‘It’s no good saying it didn’t stop the financial crisis of 1999, because it wasn’t… set up to be that sort of institution,’ he said. ‘It was set up to facilitate investment and trade liberalisation processes… it did that, encouraged that.’

Mr Hawke pointed out that the best test of Apec was its growing membership. ‘People don’t clamour to get into something that’s not successful,’ he quipped.

Apec’s effect on Asean was another topic raised. With the US set to hold a historic summit with Asean on Sunday, some recalled the concerns Asean had about Apec in the early days.

The worry then was that Apec would weaken Asean, with some saying Asean needed to consolidate itself first, said former Philippine finance secretary Jesus Estanislao. But he felt that Apec has proven itself to be beneficial to Asean.

‘Apec has helped us. It made us more comfortable with one another and in fact it opened doors to discussion of other issues other than trade,’ he said.

Additional reporting by Cassandra Chew

***

Teo Cheng Wee is the regional correspondent for the Straits Times.

Businesses around the globe are currently facing two of the most detrimental crises of the 21st century – a financial crisis and an environmental crisis. I believe focusing only on financial concerns will be a big historic mistake. Hence, global environmental issues and promoting sustainable economic growth should be an imperative worldwide agenda, constituting an important topic for discussion in many forums, organizations and cooperation, including Asia-Pacific Economic Cooperation (APEC).

The essay begins by delving into the status quo related to climate change in the Asia-Pacific region. The environmental crisis will outlast the serious economic downturn that worsens the financial crisis in the region. Significant loss of marine, agricultural and industrial revenue and additional environmental costs will be both big burdens and obstacles for APEC economic activities.

To address the problems, this essay proposes APEC 5 GREEN steps. These include:

• Generating Climate Change Research in the Asia-Pacific Region
• Reinforcing Green Investment Officer
• Encouraging Green Investment and Funding
• Establishing Annual Asia-Pacific Green Economy Conference
• Navigating the Right Path for the Next Green Business Leader

APEC is beyond regional cooperation, it plays a global role and I am firmly certain that APEC can translate the environmental crisis into lucrative business opportunities. These strengths and opportunities can successfully tackle all major weaknesses and threats to the APEC 5 GREEN steps proposal. These will be briefly discussed through a SWOT (Strength, Weakness, Opportunity, and Threat) analysis. Afterwards, this essay shows economy benefits that APEC 5 GREEN steps will bring to Asia-Pacific economies.

Finally, the essay comes to the conclusion that APEC 5 GREEN steps are convincingly feasible steps to enhance the role of APEC in promoting sustainable green economy and simultaneously facilitating lucrative business in the region.

By C. Fred Bergsten

The Asia Pacific Economic Cooperation (APEC) forum comprises 21 developed and developing economies that surround the Pacific Rim. The organization was created in 1989 and holds annual Leaders’ Meetings that bring together its heads of government. In this policy brief, I assess the record of the APEC over the 20 years of its existence and discuss the world environment in which APEC is likely to be operating in the next 20 years, with a particular focus on the major change in global institutional arrangements implied by the replacement of the Group of Seven/Eight (G-7/8) by the Group of Twenty (G-20) as the chief steering committee for the world economy and, within that group and other international economic organizations, the increasingly central role of an informal and de facto Group of Two (G-2) between China and the United States.

APEC at 20

APEC has gone through three distinct periods during its two decades of existence:

• the formative years of 1989–92, initiated by Australia and Japan, with annual ministerial meetings to chart the forum’s early course;
• the dynamic leadership years of 1993–97, sponsored primarily by Indonesia and the United States, when the newly instituted annual summits set out the ambitious Bogor Goals to achieve “free and open trade and investment in the region,” took the lead in negotiating the highly significant Information Technology Agreement (ITA), and accelerated the momentum of global trade liberalization by agreeing to launch a program of Early Voluntary Sectoral Liberalization (EVSL); and
• the marginalization of 1998–2008, during which the earlier initiatives faltered and the institution, despite its useful creation of extensive networks across a wide range of issues and its summits’ continued utility as a venue for important bilateral meetings, failed to adopt leadership positions on any of the key issues facing the region and the world economy.

The important issue for the future is why the early dynamism gave way to prolonged stagnation. The main cause was clearly the decision of the key Asian countries to prioritize economic cooperation within East Asia itself rather than across the broader APEC construct: a focus on Pacific Asia rather than the Asia Pacific. This advent of a “new Asian architecture” was driven and reinforced by four major factors:

• the Asian financial crisis of 1997–98, which generated strong and lasting distaste in Asia for the Washington Consensus and its institutions, especially the International Monetary Fund (IMF), propelling in particular the Chiang Mai Initiative and related steps toward creating an alternative Asian Monetary Fund;
• the absence of multilateral trade liberalization in the World Trade Organization (WTO) after the completion of the Uruguay Round and its “built-in agenda” follow-ups, pointedly underlined by the failures to first launch (Seattle 1999) and then negotiate the Doha Round;
• the addition of the North American Free Trade Agreement (NAFTA) to the European Union so that the world’s two other economic poles had created their own blocs, stimulating the proliferation of ASEAN + 1 and other preferential agreements throughout Pacific Asia that are creating a de facto East Asian Free Trade Area ; and
• the two economic bubbles that burst in the United States during the present decade, emanating from the dot.com sector in its early years and the financial sector at present, dragging down the world economy and discrediting the credibility and competence of the United States as both a model and global leader. Doubts about the United States increasingly extended to its performance on trade policy with Congress’ near rejection of liberalization initiatives in 2002 and 2005, abrogation of trade promotion (“fast track”) authority in 2007, and current failure to approve negotiated free trade agreements (FTAs) with Colombia, Korea, and Panama.

The United States sought to counter the emerging Asia only focus in the region by launching FTA negotiations of its own with several East Asian countries (Singapore, Australia, Thailand, Korea, and Malaysia) and especially by proposing in 2006 a Free Trade Area of the Asia Pacific (FTAAP)—an operational version of the original Bogor Goals. The idea attracted modest support from a few smaller APEC members, several of which tried to commence the process by setting up a P-4 (Brunei, Chile, Singapore, and New Zealand), which has now evolved into the Trans-Pacific Partnership (with some participation from Australia, Peru, the United States itself, and Vietnam).

None of the major Asian countries have joined this program, however, and suspicions remain that the United States is trying to derail Asian economic integration rather than promote a parallel transpacific counterpart to it.

Hence APEC enters its third decade with strong unresolved tensions between its original main purpose, to “avoid drawing a line down the middle of the Pacific,” and the Asia-centric cooperation priorities of most of its key members. Reconciliation of these goals is an essential prerequisite for any resumption of meaningful institutional development of APEC.

The Next 20 Years

The world and the region have undergone sweeping changes over the past 20 years and are likely to experience even more far-reaching evolution over the next two decades. These shifts in the global and regional settings will provide the context in which APEC will be operating. Four stand out as likely to be most relevant:

• the sharply increasing weight of Asia in the global economy as the developing countries, led by China, and Asia more broadly, already account for half of world output and are increasing their share by 2 to 3 percentage points per year;
• the “new mercantilism,” as more and more countries seek to self-insure against future crises by running large external surpluses in order to build even larger war chests of foreign exchange reserves (as well as export their way out of the current crisis) ;
• a slowing, if not a reversal, in financial globalization due to the responsibility of the financial sector for bringing on the current crisis and continuing doubts over the benefits of that process; and
• further deepening of area-wide monetary and trading arrangements in Asia, which will not yet be as integrated as Europe but will coalesce sufficiently to effectively form a third bloc in the world economy.

A major and highly uncertain variable will be the response of the global economic institutions, especially the IMF and the WTO, to these challenges. The Bretton Woods system is undergoing its first real stress test, as a result of the crisis, to see if it can fulfill its fundamental purpose of preventing a return to the world of the 1930s. Its effectiveness in promoting recovery, and avoiding competitive devaluations and protectionism, is yet to be determined. The outcome will have far-reaching implications for all regional institutions, including APEC and the new Asia-only bodies, because failures at the global level would spur much greater reliance on regional regimes.

The Ascent of the G-20

One momentous institutional change is already clear: the replacement of the G-7/8 by the G-20 as the chief steering committee for the world economy. This evolution was inevitable, in light of the global growth trends cited above, but has been sharply accelerated by the current crisis.

This development has three major implications for APEC. First, it greatly enhances the role of Asia in the global leadership structure because the G-20 includes five Asian countries, seven if Australia and Russia are counted, while the G-7 has only one. Second, the role of the United States (and, even more so, Europe) is diluted. No protracted negotiation over “chairs and shares,” as in the IMF, was required when it became essential to forge a global response to the first global economic crisis since the 1930s by including the countries that constitute the bulk of worldwide economic activity.

Third, APEC countries account for half the membership of the entire G-20. Hence the group could dominate the new process if it chose to act together. There could in fact be considerable merit in forming an “APEC caucus” within the G-20 to address at least some issues—e.g., Europe’s reluctance to reform the governance structure of the multilateral institutions and India’s blockage of the Doha Round. Such a group would amount to the new Asia Pacific Summit, or “G-10 of the Asia Pacific,” that has been proposed by such Asian leaders as Prime Minister Kevin Rudd of Australia and Hadi Soesastro from Indonesia.

The De Facto G-2

Whatever happens with the current multilateral institutions and the larger steering committees, global leadership will increasingly devolve onto the two most important countries in the world: China and the United States. They will shortly be the two largest economies and the two largest traders. They are the largest polluters and will determine much of the outcome on climate change. They lead the two groups of countries, developed and developing, that each now account for about half of world output. They are on opposite sides of the global imbalances as the world’s largest creditor/surplus and debtor/deficit countries, respectively.

Hence China and the United States bear primary responsibility for the success and stability of the world economy. Only they have the heft and policy flexibility to exercise such responsibility. They must of course do so informally and diplomatically, operating as a de facto “G-2” without ever announcing or even acknowledging its existence, and China has publicly enunciated its opposition to the concept (while obviously being attracted by it). Their chief goal should in fact be to make the other “Gs” and broader institutions work much more effectively, by reaching agreement between themselves before engaging the larger fora, thus supplementing rather than supplanting these other bodies. This should assuage the other major countries that might otherwise feel slighted by such a new leadership construct.

The G-2 could and should provide leadership for APEC as well. Indeed, it is perhaps clearer in the regional context than in any other that nothing of consequence will happen without the concurrence, and probably the leadership, of these two economic superpowers. Thus any serious planning for the future of APEC must focus on the views of China and the United States and the potential for finding agreement between them.

Options for APEC: Pacific Asia and /or Asia Pacific?

These dramatic changes in the world economy and global governance patterns will influence the policy choices of countries in the region but they do not alter the basic issue described at the outset: Do the Asian members of APEC want a primarily Pacific Asia future (whether constructed via a 10+3, 10+6, or something else) or do they want an Asia Pacific dimension as well? The answer to that question will go far to determine the architecture of the region.

Option One: Terminate APEC. If the Asians decide that their futures lie in Asia-only arrangements, that their sizable presence in the new G-20 steering committee assures them of an adequately powerful seat at the global table, and that their evergrowing economic and political weight guarantees respectful attention by the United States without any direct institutional linkages, there is a case for ending APEC. All of its original and continuing rationales would largely disappear in that context (though the Asians would obviously still have to find a way to manage their economic and broader relations with the United States).

Option Two: Business as Usual. This “path of least resistance” would acknowledge and accept APEC’s marginalization over the past decade but nevertheless keep it in place as an insurance policy against a failure of Asia’s integration efforts and the risk of US withdrawal from the region. Important decisions would be left to another day.

Option Three: Support Major Reform of the Global Economic Architecture. APEC has paid lip service to the WTO and the Doha Round over the past decade but has never made a serious effort to actually support them. Indeed, sharp divisions among major APEC countries contributed mightily to the failure of the Seattle Ministerial in 1999, the near-death of Doha at Cancún in 2003, and its latest setback in July 2008. Moreover, Asia’s distaste (or worse) for the IMF is a basic datum of the current milieu.

With APEC’s newly central role in the now-dominant G-20, however, and the systemic stress test that the crisis has forced onto the Bretton Woods institutions, the members (led informally by the G-2) might reasonably choose to explicitly forget about the Bogor Goals and other regional objectives in favor of trying to break the deadlocks over the governance structure in the IMF and the Doha Round in the WTO. They could use their strong position in the new G-20, via an “APEC caucus” within that grouping, to do so. The trouble of course, even if APEC could really get its act together for these purposes, is that non-APEC countries can and might well also wield veto power: the Europeans in the Fund, India and Brazil in the WTO. Hence a sole reliance on the multilateral system, even if sincerely and ardently pursued, is likely to be as unproductive over the next decade as it has been over the past 10 years.

Option Four: Renew Aggressive Leadership of the Asia Pacific. This option would reconcile the “Pacific Asia versus Asia Pacific” debate by embracing both as parallel initiatives. The United States would agree to support Asian regional integration (as it has always supported European regional integration) as long as its components were compatible with the (perhaps amended) global rules. The Asians would agree to simultaneously liberalize across the Pacific (as the Europeans always supported transatlantic liberalization via the GATT/WTO to reduce the discriminatory impact of their increasingly preferential arrangements). The Bogor Goals/FTAAP would be updated, to embrace “behind the border” and “across the border” as well as “at the border” issues, and realistic new timetables would be set for concluding them.

There are several possible techniques for achieving parallel progress in economic cooperation within Pacific Asia and across the Asia Pacific. The United States could negotiate a series of bilateral FTAs with major Asian countries, building on the Singapore and Korea pacts that have already been agreed and the Thailand and Malaysia talks that have begun (but are now in suspense). It could pursue its own “ASEAN + 1” arrangement as China, Japan, and Korea have already done. These alternatives are distinctly inferior to an APEC-wide initiative, however, as they would inevitably include numerous inconsistent and even conflicting provisions that would limit their practical utility, especially with respect to rules of origin, and leave important gaps in country linkages.

The goals of the North Atlantic Treaty Organization (NATO), one of the most successful regional institutions of all time, whose 60th anniversary is also being celebrated this year, were stated very succinctly by a prescient observer at the time of its creation: to keep the Soviet Union out, to keep the United States in, and to keep Germany down.

APEC has no external enemy like the Soviet Union, except perhaps for terrorism and the specter of trade and investment protectionism, so the case for transpacific cohesion is less compelling than it was for transatlantic cohesion six decades ago. But virtually all Asians want to keep the United States in. There is no other institutional economic link between Pacific Asia and the United States and a number of Asian countries clearly want to retain US engagement, including to provide a counterweight to the growing preponderance of China. The hedging strategies of many Asian governments, designed to provide insurance against any adverse effects from China’s rising power, would be significantly promoted by a combination of Asia-only economic linkages and an ongoing Asia Pacific economic compact with the United States. US allies in the region, including Japan and Korea, would benefit greatly from a strategy that avoided their ever having to “choose between China and the United States.”

China too should welcome such an outcome. Its symbiotic economic relationship with the United States, to which it exports a substantial share of its GDP and where it holds enormous investments, is of crucial importance to its continued economic success and thus its political stability. As the regional hegemon, it should certainly prefer having the United States “inside the tent” rather than prowling outside it. Its systemic interests, ranging from the global role of the dollar through policy coordination toward North Korea, could be seriously damaged by excluding the United States from the Asian region. Trade and currency disagreements between China and the United States continue to smolder and launching a transpacific cooperation project should help contain them. Option four would appear to be a winning proposition for all concerned.

Some Asian countries, including Japan, avowedly support both Pacific Asia and Asia Pacific integration but want the former to proceed to completion before tackling the latter. Such sequencing would be very dangerous because it would inevitably defer the transpacific dimension for a very long time and risk the adverse consequences of the Asia-only approach in the meanwhile—sizable trade and investment discrimination and diversion, transpacific disintegration rather than integration, and the inevitable security implications thereof.

The 2009–11 Window

Option three or, preferably, option four could be adopted and implemented over the coming three years with Singapore, Japan, and the United States successively in the chair of APEC. Singapore has been a cardinal architect of both the 10+1 agreements that are forging an East Asia Free Trade Area and continued transpacific ties. Japan, an original founder of APEC, is a close US ally with particular anxieties over the growing clout of China. The United States wants to stay engaged in the region, in security as well as economic terms, and can do so successfully if Asia agrees to avoid excessive discrimination against outsiders as it pursues its internal integration.

A three-step process can be envisaged if it proves impossible to move directly toward an FTAAP. First, the United States and one or more major Asian countries—probably Korea and Japan—should join the Trans-Pacific Partnership, which would then comprise about half of APEC. This would be fully

consistent with the “pioneer” and “21-x” strategies that APEC has pursued on other issues. Second, the Trans-Pacific Partnership should be transformed into an FTAAP—perhaps with less comprehensive terms than the “gold standard” agreements championed by previous US administrations—as soon as a critical mass (70 to 80 percent of the trade-weighted membership, on the model of the Information Technology Agreement) could be engaged. Third, in a combination of options three and four, the new Asia Pacific grouping could then respond positively and forcefully to support revival of the Doha Round as will surely be demanded by non-APEC countries to counter such a new burst of Asia Pacific trade assimilation.

The Obama administration is formulating a new trade policy for the United States.17 It has already signaled a focus on Asia and will be looking to implement major initiatives when it hosts APEC’s 2011 summit (in Honolulu?), for which planning could begin at the Singapore summit later this year and continue through 2010. However, it faces strong domestic opposition (mainly within its own party in the Congress) to any new trade liberalization and needs support from its trading partners to get back on track. The timing offers a golden opportunity for Pacific Asia to simultaneously achieve its regional objectives and solidify its relationship with the United States. APEC could thereby restore the dynamic leadership role of its initial decade and immeasurably strengthen both the region and the world economy as it addresses the likely global evolution of the next 20 years.

***

C. Fred Bergsten has been director of the Peterson Institute for International Economics since its creation in 1981.

N.B. This article first appeared in the July 2009 policy brief published by the Peterson Institute for International Economics

OP-ED CONTRIBUTOR

By Charles E. Morrison, Jusuf Wanandi & Tan Khee Giap

In a little over a month’s time, leaders from the Asia-Pacific economies will gather in Singapore for the annual APEC summit. This meeting comes at a very opportune time. It will be sandwiched nicely between the Pittsburgh G-20 summit meeting and the forthcoming Copenhagen Climate Change Conference. It will also mark APEC’s 20th anniversary.

APEC was established out of the recognition that the increasing interdependence of regional economies underscored a need for “effective consultations among regional decision-makers.”  In the past two decades, this level of interdependence has continued to increase, bringing with it new – and more complex – requirements for cooperation.              In 1997-98, APEC was heavily criticized for doing next to nothing to help the economies of the region recover from the Asian economic crisis.  More than ten years later, it should learn from that lesson: it has to seize the opportunity presented by the current crisis and reassert its position as the premier regional forum for dealing with economic issues.

The trough of the crisis may have passed, but this should not cause complacency. As the pressing priorities for immediate fiscal and monetary stimuli fade away, the longer-term question of sustaining the recovery and rebalancing of Asia-Pacific economies to prevent future crises will come to the fore.

In this context, APEC has a critical role to play, since it represents more than half of global economic output and encompasses the economies most in need of rebalancing. There are four key areas where APEC could make a substantial contribution.

First, policy-makers need to focus on structural reforms that will allow their economies to grow at a high but stable rate.  This will involve rebalancing the sources of growth within economies.

G20 members have already committed to work together to ensure their rebalancing strategies are consistent. APEC can further deepen the coherence of these new growth strategies, both by intensifying interchanges among the Asia-Pacific members of G20 and by bringing a wider group of economies into the framework.

Second, the economic crisis has exposed the extant vulnerability of free trade.  Liberalized trade has been a wellspring of growth for the world at large and in particular for the economies of Asia and the Pacific.

At the beginning of the crisis, it was feared that governments would give in to political pressures by adopting protectionist measures. There have certainly been cases of this, but the ability of many economies to withstand most of such pressures has helped to ensure that the economic crisis did deteriorate.

However, the Doha Round of world trade negotiations remains stuck at an impasse. The completion of the Round will maintain the momentum of freer trade and create another source of positive expectations and real growth needed to sustain the recovery.

The APEC summit should be used an opportunity to define what the Asia-Pacific can – and will – do to contribute to a conclusion of the Doha Round by 2010. A resolution at the level of political leaders needs to be followed up with serious offers at the negotiating table.

Third, concerns about climate change remain. The Asia-Pacific region accounts for over half of the world’s carbon dioxide emissions. The APEC summit will be the last major meeting at the ministerial level before work begins in Copenhagen to narrow gaps between more developed and less developed economies.

After Copenhagen, APEC will be an important forum for the exchange of views, developing modes of Asia-Pacific leadership, and collaboration on energy technology research.

Lastly, and central to all of the above, is the manner in which APEC adjusts to the welcome changes to the governance of the global economy that the crisis has accelerated.

Long before the crisis, there was already a palpable need for greater representation of Asia’s emerging economies in managing the global economy. The crisis has shown that the era of the Group of 8 – for the longest time a self-selected group of largely trans-Atlantic powers responsible for building consensus on global issues – has now become passé.

The newly-formed Group of 20, or G20, has been dubbed “the steering committee of the global economy.” By their very nature, the memberships of steering committees are select. The G20 only includes the systemically most important developed and developing economies.

If the G20 is to be credible and effective as the premier forum for global economic issues, it needs to take into account the interests of smaller economies as well. One mechanism for achieving this is for APEC to play a constructive role in articulating the concerns of the whole region on the global stage.

APEC, whose membership includes half of the G20 members, can be an important foundation for the building of a new and emerging global economic architecture. As such, APEC could provide a venue for important economies left out of the G20 framework to provide input into the emerging discourse on economic reform.

***

Dr Charles E. Morrison is the President of the East West Center. Mr Jusuf Wanandi is the Vice-Chair of the Board of Trustees of the Center of Strategic and International Studies Foundation (Jakarta). Both are the co-chairs of the Pacific Economic Cooperation Council (PECC). Prof Tan Khee Giap is the chair of the Singapore National Committee for PECC.

N.B. This op-ed first appeared in Straits Times on 2 Oct 2009.

SINGAPORE, Oct 20 (Reuters) – Leaders of Asia-Pacific nations will focus on protectionism, trade imbalances and the ease of doing business when they meet in Singapore next month, the director of the APEC grouping said on Tuesday.

These are issues that have emerged as threats to a global economic recovery for the Asia Pacific Economic Cooperation (APEC) group of countries, which include the United States, China, Japan and Russia.

“For the coming summit we are not past the crisis,” APEC’s executive director, Michael Tay, told the Singapore Foreign Correspondents Association. “They’ll be looking at whether subsidies constitute protectionist measures … the market is now more imperfect.”

…

Click here to read the full article.

Source: Neil Chatterjee, “APEC to focus on protectionism, trade imbalances,” Reuters, October 20, 2009, http://www.reuters.com/article/latestCrisis/idUSSP525547.

Mr Raymond Lim, Minister for Transport and Second Minister for Foreign Affairs, Singapore.

This year marks the 20th anniversary of the Asia-Pacific Economic Cooperation (APEC). The end of the Cold War opened the way for the beginning of a new grouping in the Asia-Pacific dedicated to fostering growth and prosperity through the liberalisation of trade and investment.

Over the past two decades, APEC’s scope of regional economic cooperation has been broadened, and membership expanded. APEC has also made important contributions, including pushing for the conclusion of multilateral trade accords. During this time, the Asia-Pacific region has prospered. APEC economies have not just prospered individually. The region forms important supply chains and is part of the global pattern of merchandise flow. Taken together, these are impressive achievements.

New Global Economic Challenges

As APEC enters its third decade, the world is emerging slowly from the worst global recession since the Great Depression. The precipitous drop in global demand, coupled with the seizing up of trade-finance, has taken its toll on international trade, the life-blood of many APEC economies.

Even though the immediate crisis has waned, the key pre-occupation is how we can build, as the G20 Leaders declared in Pittsburgh, ‘strong, sustained and balanced’ global growth. We need to guard against complacency. The crisis came about because of excesses and imbalances. These still have to be put right. We need to persist with the often domestically difficult structural reforms that are necessary to re-balance the world economy.

As we press on, we should not let down our guard against the threat of protectionism. Left unmanaged, tit-for-tat retaliation will constrict the main arteries of trade and investment flows. This will leave us all worse off.

Supporting the Global Agenda

Singapore has assumed the APEC Chairmanship at a challenging time. Nevertheless, the crisis has provided an opportunity for APEC to define its role more sharply and to inject renewed impetus to its work.

The PECC Co-Chairs Charles Morrison and Jusuf Wanandi, and SINCPEC Chair Tan Khee Giap in a recent Op-Ed (Straits Times, 2 October 2009) put forward a clear view of how APEC can be “an important foundation for the building of a new global economic architecture”.

Our core agenda in APEC – promoting balanced, inclusive and sustainable growth while pursuing trade liberalisation – complements the G20 Pittsburgh Summit’s broad approach on addressing global macroeconomic imbalances and keeping markets open. These are areas where APEC has a strong track record, and can contribute and support the global agenda.

In your discussions over the next two days, we look forward to the PECC contributing concrete ideas on the specific areas in which APEC can make a positive contribution.

Evolving Regional Architecture

Looking forward, we can never be sure how events will unfold. A fundamental political and economic rebalancing of the world is taking place. Developments in the Asia-Pacific, especially the relationship between China and the US, are at the epicentre of these changes. The cumulative effects of momentous events can reverberate over time.

We will require structures to manage these changes. To do so, we will need to deliver new levels of cooperation and coordination, at both the global and regional levels.

The designation of the G-20 as the premier forum for international economic cooperation has been the most pronounced response at the global level to these new challenges.

In the Asia-Pacific, the challenge has always been to develop the right framework for regional cooperation. We all share some basic interests that are centred on enhancing the region’s economic growth.

• We want a region that is stable, open, and inter-connected through trade and investments, both among ourselves and with the rest of the world.
• We want a region where economies can deepen cooperation and linkages, and also compete peacefully in the economic realm; and
• We want a robust framework of cooperation within which economies can contain and manage disagreements.

To achieve these basic interests, we have multiple structures with different, sometimes overlapping membership and goals. Though messy, this engages all the players – big and small. This has proven to be resilient as it reflects a realistic appraisal of the disparate political, cultural and economic interests in the region. The strength of this framework is that it is representative in nature and gives everyone a stake in the region’s success. Ideas to modify the existing architecture to one that is less representative are unlikely to gain wide support.

APEC with its core mission of promoting regional economic integration remains a vital piece of the regional equation. Within East Asia, there are two complementary and mutually supporting groups to foster intra-regional cooperation and provide concrete steps towards an East Asian community. One is the ASEAN+3 group, comprising ASEAN plus China, Japan and South Korea. The other is the East Asia Summit (EAS), which adds India, Australia and New Zealand. Across the Pacific, there is NAFTA and Mercosur.

APEC brings together both sides of the Pacific and prevents it from being split down the middle. It is fundamental to our interest to include the US in the region, given that it plays such an important strategic and economic role here. The construction of APEC had this in mind from the beginning. With the evolution of the global architecture and Asian integration accelerating, APEC’s role has become even more vital.

Conclusion

Let me therefore end by returning to the beginning. The core objectives that the founding members of APEC set forth in 1989 are to:

• Strengthen the multilateral trading system;
• Increase the interdependence and prosperity of member economies;
• Promote sustainable economic growth.

APEC’s vision was further defined in 1994, when APEC Leaders committed to the ‘Bogor Goals’ of free and open trade in the region.

The region will undergo even more sweeping changes in the next twenty years. APEC 2009 will mark a critical milestone in how APEC positions itself for the future. Nevertheless, APEC’s guiding principles remain relevant. As long as we focus on them, APEC will remain the premier vehicle for regional cooperation and the centre-piece of the regional architecture.

*The speech is edited for length.

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Raymond Lim is the Minister for Transport and Second Minister for Foreign Affairs, Singapore.

This article is taken from the Speech given by Mr Lim at the Conference Dinner for the Pacific Economic Cooperation Council (PECC) Conference on “Economic Crisis and Recovery: Enhancing Resilience, Structural Reform, and Freer Trade in the Asia-Pacific Region”, on 9 October 2009