The Multinational Monitor



The Geopolitics of APEC
An interview with Walden Bello

Walden Bello is chairperson of the International Convenors' Committee of the Manila People's Forum on APEC; co-director of Focus on the Global South, a program of policy research and analysis based in Bangkok, Thailand; and professor of sociology and public administration at the University of the Philippines. He is author of numerous books, including: Dark Victory: the United States, Structural Adjustment and Global Poverty, Dragons in Distress: Asia's Miracle Economies in Crisis and Development Debacle: The World Bank in the Philippines.



Multinational Monitor: What is APEC?

Walden Bello: Beyond being some sort of economic association of 18 countries that represent about a third of the world's merchandise trade and more than 50 percent of its GNP, there is no clear mission for this organization, and it is not clear where it is going to go.

MM: But there is a plan to have it turned into a free trade area by 2020?

Bello: Yes. The United States is leading the drive to convert APEC from what it is now, which is a loose type of consultative forum, into a free trade area. This vision was articulated in the Bogor Declaration, issued after the November 1994 APEC Summit in Bogor, Indonesia. The declaration says there will be borderless trade among the 18 countries by the year 2020, with the industrialized countries having free trade, with tariffs virtually down to zero, by 2010.

That was mainly pushed by the United States, New Zealand, Australia and Canada. Many of the Asian governments were and are quite skeptical of the idea of a free trade area. Many of the Asian countries would be quite comfortable where APEC is at today -- as originally intended by the Japanese -- as a loose forum for tactical cooperation over economic issues, much like the OECD [Organization for Economic Cooperation and Development].

Immediately after the Bogor declaration, Malaysia and Thailand issued their statements, appended to the declaration, saying that it was non-binding. And the Chinese supported them. So basically there has been this struggle between a loose forum and a tight free-trading area.

MM: Has the United States maintained the upper hand in APEC?

Bello: The Osaka Summit, held last year, was a setback from the American agenda in moving right along to a free trade area.

The Japanese cleverly maneuvered to get the summit to make a declaration that basically said that liberalization would be flexible, nonbinding and voluntary.

Osaka was a retreat from Bogor, then, in the view of the United States and the free trade lobby. But these forces understand that Osaka is not the last word in APEC's evolution. They hope to get the free trade agenda back on track at the Manila summit this November.

MM: What accounts for the division between the United States and the Asian countries over the issue of free trade?

Bello: There is a sense that a free trade regime will benefit U.S. corporations, which have tremendous resources and technological advantages, and benefit from economies of scale.

The view of the the trade bureaucracy in Washington, and of course from U.S. corporations, is that U.S. corporations are disadvantaged in Asia because of protectionism and because of all the other ways in which the state intervenes in production, controls markets, provides credit, favors locally owned companies and that sort of thing. APEC is seen as a means by which the United States can go beyond just limited trade liberalization concessions and get its Asian trading partners to move on cutting subsidies and, more generally, on deregulating their economies and diminishing the role of government in those economies.

The competitiveness of the corporations of other countries is said to be an artificial competitiveness that is endowed by support from the state. In fact, governments have played a central role -- through targeted research and development, industrial planning, clever use of trade policy and other means -- to promote industrial deepening.

MM: How would APEC dismantle the state beyond what the GATT/World Trade Organization would do?

Bello: The 18 APEC countries agreed to prepare Individual Action Plans for liberalization prior to the Manila summit. If you look at the 15 areas that are covered, you find that they go beyond tariffs and non-tariff barriers to looking at competition policy, deregulation, investment, services, enforcement of intellectual property, government procurement policies -- a whole range of non-formally trade measures. What you are coming at is reducing state intervention in practically all areas of the economy.

Through APEC, the Americans want to get government out of the way in order for business to be able to do business. This is almost a direct quote from U.S. Undersecretary of State Joan Spero.

Multilateralism, unilateralism and regional trade agreements are the three pillars of U.S. trade diplomacy. The idea is that what concessions in terms of free trade you could not get out of GATT, and what concessions you cannot get out of the exercise of unilateral trade diplomacy, you could probably get through a smaller grouping of countries that are your neighbors and trading partners -- through APEC and NAFTA.

MM: Given the Japanese and some other Asian countries' economic strength, why do they not also favor free trade arrangements?

Bello: I think there are a number of apprehensions. One is that they fear APEC could become another forum to push U.S. trading interests, beyond what the United States does bilaterally. They are particularly concerned, I think, by the United States' very flexible definition of trade barriers. The United States is now complaining about Japan's invisible trade barriers, so-called structural impediments to trade. These are means by which Japanese firms collaborate with one another to shut out competitors. The fear is that the United States will try to introduce in APEC an expansive version of what constitutes a trade barrier.

The Koreans are united with this. When the Koreans tried to launch a campaign that would encourage their citizens to buy Korean products -- purely a moral-political appeal -- the United States Trade Representative's Office said such campaigns amounted to unfair trade barriers.

Second, the Japanese government is really being pressured by Japanese farmers, in alliance with consumers, over the agriculture and food security issue. The U.S. Department of Agriculture says it wants the Asian Pacific region to absorb 60 percent of U.S. agricultural exports by the year 2000, up from 40 percent at present. The ones they have really targeted are Korea, Japan and Taiwan. And they want more than just the concessions that these countries made in GATT, which is minimum access. That would provoke a crisis in farming communities in those countries.

There are also real fears in Japan about food security. Those fears are intensified by the U.S. position, explicitly stated by John Block, former assistant secretary of agriculture, that the idea of countries feeding themselves is outmoded. It would be much better if they just relied on the United States to feed them, Block said.

Third, the Japanese have been able to regionalize their economy and create a de facto investment and trade bloc in the Pacific without free trade agreements. They went into all these countries and adjusted themselves to the rules of the game. So being against APEC in a way preserves their advantages against U.S. firms.

The Japanese and the American way of doing business are different. The Japanese look at what the constraints are, and then they operate around those. The United States, in contrast, wants countries to revise their trade and investment laws.

The United States knows this. Part of the U.S. strategic mission in building a free trade area in the Asia Pacific is to dismantle the Japanese de facto trade and investment bloc, and to reassert the United States as a major trade and investment strategy in the region.

MM: Why do Japan and the other Asian countries not oppose the U.S. agenda more adamantly, if it will so clearly harm their interests?

Bello: The United States is such an important player in the Pacific that to confront the United States frontally is very difficult. Malaysian Prime Minister Mohammad Mahathir has tried that -- in the last few years he has denounced APEC as an effort by the advanced Western countries to continue to direct the evolution of the Western Pacific. He has proposed a substitute to APEC, the East Asian Economic Caucus, an Asia for Asians type of arrangement. But few other countries are willing to express that sort of strong opposition, mainly because they maintain so many ties to the United States. The United States is a very important market, absorbing about 20 to 25 percent of their exports; and there are multiple security ties.

At the same time, the Japanese -- who had the original idea about creating an Asia Pacific forum -- articulated a different agenda at APEC. There are a number of elements to it.

First, they said that APEC should focus not just on liberalization, but also on trade facilitation, including things like harmonizing customs procedures, promoting mobility of people and easing the visa application process. They have also said that if you have liberalization in the context of the vast differences in development among the APEC countries, then you need aid to reduce the disparities.

Second, the Japanese have said all along that they are not really after a free trade area. They have been successful in winning over a number of Asian countries with that.

Thirdly, the Japanese have promoted the formulation that liberalization should be flexible, voluntary and nonbinding.

MM: Why are the other Asian countries more willing to be part of a Japan-dominated bloc than one in which the United States would be the major power?

Bello: I think there are various reasons for this. One is that they have really developed not so much in conflict with Japan but in a complimentary fashion. Korea, Taiwan, Indonesia have developed by serving Japanese capital and being very dependent on Japanese technological imports.

The second thing is that they found it more congenial to deal with an economic force that does not force you to change your trade and investment laws, but adjusts itself. This is something the United States doesn't get. The third thing is that they are more comfortable dealing with Japan because Japan does not have all the political and military power that accompanies the economic power of the United States.

Finally, I think the Japanese model, in which the state plays a very important role in production and the economy, is something which has been universalized in all of these countries, so there is this coming together not only to promote narrow economic interests, but to defend what they consider to be the very reasons for their success, which has been this creative mixing of the state and business. They feel that the United States wants to dismantle that.

MM: Is there any lingering resentment over World War II, or fear of a Japanese empire?

Bello: I think there is still the fear that Japanese economic power might at some point be translated into political and military power. And I shared that fear, just a few years ago. But that fear has diminished in recent years. There is a stronger sense there are very strong constraints in the Japanese public that have been built up over 50 years and a very strong restraint against a militarization drive. There is also a perception of Japan as in a few years going into demographic decline.

MM: Some of the formal APEC discussions have focused on sustainable development. How do you see these discussions unfolding?

Bello: I think that has been mainly a concession to pressure from environmentalists and some governments, like the Philippines, who are demanding that APEC not be just about trade liberalization. One of the working groups in APEC is on the environment, just like there is one on biotechnology and a number of other very urgent issues that do not really impact on the central APEC agenda.

At one APEC meeting, one of the U.S. initiatives was the Clean Pacific. The Philippines and Japan came up with Sustainable Cities. But where is that going? That is going nowhere.

These are attempts to give APEC a human face at the same time that the central consideration in APEC is trade liberalization. If you look at the Individual Action Plans, there is nothing about the environment or sustainable development there. It is purely trade, deregulation and competition policy.

You will find APEC meetings, fora and consultations on the environment -- they will even bring environmentalists in -- without those discussions affecting the central agenda.

The November summit in Manila will be a very good example of that. There will be no talk of the environment at all. It will be trade, trade, trade, trade.

MM: What is the appropriate response to APEC for non-governmental organizations (NGOs) and people's organizations?

Bello: NGOs are responding to APEC principally in terms of opposing it because it is an engine of liberalization that subordinates everything else to free trade. And along with that, we fear, come harmful consequences: terrible environmental impacts, growing inequality of income, the subjugation of agriculture and its destruction.

Now, what about APEC as an organization as it is now? Can we live with APEC as Mahathir proposes, as a consultative body that has no teeth? I myself would say fine; if APEC just remains as a forum where business meets, can discuss, not a solid organization leading to the creation of a free trade area, then open it up to NGOs, and then we can live with that sort of APEC.

There are others who say even that sort of APEC, which is mainly dominated by elite businessmen and state interests, so disadvantages NGO participation that it is not an organization that one can tolerate.

But both groups would say that we should move away from making APEC the principal mechanism for thinking about, articulating and implementing regional cooperation. APEC is so focused on trade and investment liberalization -- whether or not binding -- it is a sort of cocoon in which you cannot hatch something different that would transform it along the principles of equity and sustainable development. Rather than waste time trying to transform APEC, we should really be trying to create a transnational forum for regional cooperation that puts regional cooperation on a new basis, emphasizing sustainable development, labor rights, human rights. We could place trade under the control of the community, rather than allowing it to drive the community and determine the direction of the development of the Asia Pacific.

One positive thing about APEC is that opposition to it is bringing about a trans-Pacific network of NGOs. Regional cooperation is on the agenda; it can't be avoided. Unless we have our own vision, our own principles, then we yield the architecture of regional cooperation in the twenty-first century to the APEC vision.

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