The Value of APEC

Author: Ken Waller, immediate past Director, Australian APEC Study Centre

Looking at the historical process of institution building, it is easy to lose sight of the value of the process as we grapple with immediate issues on the current agenda. At this phase in APEC’s life, the focus, rightly in my view, is to reassess the agenda to meet the key challenges ahead.  

Goals and objectives seen as critical a few years ago become less problematic as the processes of strategy formulation,  policy analysis, research and  study, path-finding solutions and the formation of action plans to respond to them  become embedded.These processes in APEC which by their nature, rarely lead to an immediate conclusion, nonetheless involve a continuing search for policy enhancement. That journey is as important to regional development and integration as is the policy enhancement and outcomes.

It is important however that the process does not become moribund or static.  No institution will survive decay of that kind. Issues which for one reason or another can’t continue to be dealt with in a progressive and cooperative way should be removed from the “action” agenda, or dealt with in another way.     

APEC is presently going through a process of renewal. Consideration is being given to taking off the agenda those items that are not capable of further progressive action, and adding new critical issues, some of which are complex and where the ultimate outcomes are not easily identifiable. Despite the uncertainty of the end point these new items are highly relevant to a forum whose purpose is to advance the economic and social well being of its member economies through cooperation and consensus building. 

As a collegiate forum, APEC is bound to specific processes when a sufficient number of members agree the terms of engagement. So, by nature, APEC offers the opportunity for member economies to outline their preferences in the development of best practice principles and the strategies and objectives – the processes - to attain them, and to learn from others in doing so. 

Arguably, when that process is successfully completed, APEC is working at its best. Member economies choose, or choose not, to implement policy recommendations. The strength of APEC is this collegiate process.

APEC should not be judged to have failed if it does not go beyond that.  It is simply not set up to reach negotiated outcomes in a treaty format. Rather, it should be judged on the changes that have been effected in regional economies toward attaining the best practices and the outcomes achieved as a consequence of agreed processes. On this measure, APEC is remarkably successful as a forum for economic and social advancement – measured in growth of activity, trade, investment and financial stability.

Success has been achieved because of imaginative processes developed and agreed by APEC members. An important current discussion is about the processes best suited to renew APEC’s agenda. Relevant points that will need to be taken into account will be wide-ranging. They include, importantly,

• the reaffirmation of core objectives central to the rationale for the establishment of  APEC,
• assessing new regional and global challenges that will impact on  the attainment of core objectives, and
• the identification of technology and innovation issues that are shaping the drivers of business and economic interrelationships.

Taking these points in order, regional economic integration remains the key objective and to move toward this, processes that lead to trade in goods and services and investment flows moving freely between member economies continue to have primacy. Two important facilitators of this are processes that encourage economies to undertake structural reforms necessary to adjust to open trade and investment policies, and capacity building initiatives to enhance institutional policy making in regional agencies. Both are powerful contributors to APEC’s relevance and durability.

The emergence of a “national first” approach to economic relationships, as reflected in the current US administration, is perhaps the single most important contemporary challenge to the future of APEC as a regional group. The challenge to regional economic integration is that this may no longer remain a primary “shared objective” to which member economies, up until recently, freely subscribed. And as that shared objective is diminished, a key rationale for APEC is tested. Although the US has yet to clarify its new relationship with APEC, for other members, dealing with a non-supportive key member will ultimately lead to a questioning of the relevance of the US to APEC.    

There are a number of ways for other APEC members to respond to a non-supportive US position and two of them would be based on keeping open the relationship with the US. One is continue to develop processes which seek to further APEC’s agenda, involving the US as far as it wishes to be involved, seeking US advice and opinions but not allowing the US to influence the agenda and its processes. An inevitable consequence of such an approach would be the growing irrelevance of the US to APEC outcomes on major core issues.

A second approach could be to promote key pieces of work in APEC between those economies that wish to participate in developing positions on a “a like minded basis” and leaving it to the US to determine if it wished participate on specific issues on that basis. Under such an approach, the US would need to determine and demonstrate its willingness to work in a collegiate manner. However, both approaches inevitably challenge the value of APEC in attaining regional economic integration. 

The third issue that APEC must confront is how to respond to the digital age. Digitisation is here and now and is impacting in many ways on economic and financial relationships and on the ways in which business is conducted. The fourth industrial revolution has arrived and any economic grouping that seeks to further relationships centred around common shared prosperity and growth, the central ingredients of APEC’s agenda, must embrace the revolution with imaginative and progressive policies. A broadly based “negative list approach (listing and limiting policies where restrictions apply) would encourage a digital  agenda for growth and its impact on productivity growth should be pursued as a matter of priority. To widen the appeal of such an approach, APEC should foster adjustment policies that involve skills enhancement to promote labour mobility into digital processes.

APEC should also review its own internal processes. In particular the role that APEC Study Centres can play in promoting regional economic integration and in responding to contemporary relevant issues should become a central focus of APEC activity and concern in the immediate period ahead. Instead of being a by-product of APEC’s structure, Centres could take on a much greater role in the economies they represent. To facilitate this, each interested member government could consider creating a centre of excellence in the Centre located in its economy, where that Centre has demonstrated an expertise and prowess in a relevant subject matter. As a group, APEC should foster those centres by encouraging research and the organisation of research and capacity building initiatives in those centres on behalf of the region. This should become a concerted APEC approach with the aim of deepening the collegiate nature of the forum.