Chapter 3 - Structure and membership of APEC
Introduction
3.1
APEC is a fairly informal organisation with a
small secretariat based in Singapore. It operates at several levels: Leaders, Ministers, Senior
Officials, committees and working groups. The chairmanship of APEC rotates
annually among members with an ASEAN member of APEC chairing APEC in alternate
years. The member economy chairing the organisation hosts the Ministerial and
Leaders' meetings. An organisational chart of APEC is shown in Figure 3.1.
Leaders'
meetings
3.2
At the apex of the organisation is the Leaders’
meeting, which has been held annually since 1993, when President
Clinton hosted the inaugural
meeting at Blake Island, near Seattle, USA. At these
meetings, the Leaders focus on APEC’s goals, strategies for achieving them and
other key economic issues affecting the Asia Pacific region.
3.3
With the annual rotation of Chairs, each Chair
has striven to put his or her imprint on the direction taken by APEC at the
Leaders’ meeting. This has not only given considerable impetus to maintaining
momentum for APEC’s reform agenda but also has enabled the consideration of new
ideas and approaches. It has, however, as detailed elsewhere in this report,
resulted in some initiatives being downgraded or discarded once the Chair moves
on to the next incumbent.
3.4
The importance of the Leaders’ meetings cannot
be overstated as without the Leaders’ input in the development of the
organisation, much less would have been achieved. Their personal approval of
APEC’s direction and program has given credibility to the ambitious goals
embraced by APEC over a series of annual meetings. As APEC members have agreed
voluntarily to APEC’s long-term goals, implementation of measures to achieve
them depends on the goodwill of member economies in fulfilling their
responsibilities to APEC. The presentation annually of updated Individual
Action Plans is keeping the focus on the progress being made by all members
towards APEC’s long-term goals. Although peer pressure among the Leaders may
not always succeed in keeping all economies on the track of trade and
investment reform, it should do much to assist the process. For these reasons,
the personal involvement of the Leaders through attendance at the annual
Leaders’ meeting is an important element in keeping momentum for reform going
within APEC.
APEC
ABAC= APEC Business Advisory
Council
BMC = Budget and Management
Committee
ESC = Ecotech Sub–committee
SOM = Senior Officials
Meeting
3.5
The more informal nature of Leaders’ meetings
enables Leaders to discuss sensitive issues in a more relaxed atmosphere
without the expectation of specific outcomes often associated with bilateral
summits. This allows individual Leaders greater flexibility in their
negotiating positions than would be possible in bilateral meetings or in
multilateral negotiations towards legally-binding outcomes. APEC Leaders would
be more likely to achieve consensus on issues on which organisations like the
WTO would have great difficulty in reaching agreement.
3.6
The Leaders’ meeting also gives Leaders of all
APEC countries, irrespective of size or economic development, an opportunity to
meet and discuss regional economic matters with key economic Leaders. This
opportunity is not available in any other multilateral economic forum.
Consequently, this facility is attractive to non-members within the region, and
has been the inspiration for some membership aspirations on the part of
non-members.
3.7
Apart from the ‘formal’ business of Leaders’
meetings, the presence of so many Leaders in one place enables informal
business to be conducted in the margins of the meeting. For example,
negotiations towards the establishment of a United Nations force to restore
peace in East Timor after the ravages of pro-Indonesian militias were
facilitated by the presence of regional Leaders.
3.8
In recent years, however, APEC’s importance as a
regional institution has declined. Since the failure of the EVSL reforms in
1998, it is difficult to see any programs which APEC has embarked upon that
warrant holding an annual Leaders’ meeting. If APEC does not regain the
significant role it played in the early to mid 1990s, it is conceivable that
its annual leaders’ meetings will cease.
Ministerial
meetings
3.9
Ministerial meetings of APEC members, which are
generally attended by foreign and trade Ministers, have been held annually
since the first meeting in Canberra in 1989. This annual meeting ‘approves
APEC’s work program and budget, makes decisions on policy questions such as
APEC’s institutional structure and membership, and sets out directions for the
year ahead’.[1]
The meeting is held shortly before the Leaders’ meeting each year.
3.10
Meetings of other portfolio Ministers have also
been held, including Ministers responsible for education, energy, environment
and sustainable development, finance, human resources development, regional
science and technology cooperation, small and medium-sized enterprises,
telecommunications and information industry, trade, and transportation.
Senior
Officials' meetings
3.11
As APEC does not have permanent missions
assigned to a headquarters site, meetings of Senior Officials of APEC members,
generally at head or deputy-head of government department level, are held
regularly ‘to implement ministerial decisions and prepare recommendations for
future meetings. The Senior Officials also provide guidance to subsidiary
committees/groups’.[2]
A Deputy Secretary in DFAT holds the appointment of Ambassador to APEC, who is
the Australian Senior Official.
Committees
3.12
The work programs approved by Ministers at their
annual meeting are carried out by three committees, sub-committees, an ad hoc
policy-level group, ten working groups and other APEC fora.
Committee on Trade and Investment
3.13
The Committee is guided by a framework
agreement, which was endorsed at the 1993 Ministerial Meeting. The Committee:
aims to create an APEC perspective on trade and investment
issues and to pursue liberalization and facilitation initiatives. The committee
is responsible to senior officials for coordinating and implementing the
liberalization and facilitation components of the Osaka Action Agenda,
including work on Tariffs, Non-tariff Measures, Services, Deregulation, Dispute
Mediation, Uruguay Round implementation, Investment, Customs Procedures,
Standards and Conformance, Mobility of Business People, Intellectual Property
Rights, Competition Policy, Government Procurement and Rules of Origin.[3]
3.14
The Committee was also responsible for
development of EVSL initiatives and for a ‘strengthening markets’ work program
in 2000.
3.15
Responsible to the Committee are various
sub-committees and expert groups, namely:
- Standards and Conformance Sub-Committee;
- Sub-Committee on Customs Procedures;
- Investment Experts Group;
- Government Procurement Experts Group;
- Intellectual Property Experts Group; and
- Group on Services.
Economic Committee
3.16
At the 1994 Ministerial Meeting, the Ad Hoc
Group on Economic Trends and Issues was replaced by the Economic Committee. The
Committee ‘serves as a forum for exchanging economic data and views about economic
developments within the region. It also provides analysis of economic trends
and issues for APEC Ministers, and supports other APEC projects’.[4] The Committee’s work program in
1999 included:
the impact of the 1997 financial crisis on growth, trade and
investment; assessment of trade liberalization and facilitation; economic
outlook; and knowledge-based industries. The 1999 Economic Outlook
reviewed economic developments and prospects in the APEC region in the wake of
the Asian Financial crisis, and discussed some key issues arising from it.[5]
Budget and Administrative Committee
3.17
The Committee advises ‘Senior Officials on
operational and administrative budget issues, financial management, and project
management relating to the APEC Work Program’.[6]
Ecotech Sub-Committee (ESC)
3.18
This sub-committee was established in 1998 to:
assist the SOM in co-ordinating and managing APEC’s ECOTECH
agenda and identifying value-added initiatives for co-operative action. The ESC
advances effective implementation of that objective by consulting with, and
integrating the efforts of, various APEC fora through a results-oriented
approach that benefits all members.[7]
3.19
The sub-committee will ‘oversee the
establishment of an ECOTECH Clearing House that will enhance information flows between
the identification of ECOTECH needs and the capacity to provide appropriate
expertise to meet these needs’. Among other things, it will ‘monitor the
implementation of the Guidance on Strengthening Management of APEC ECOTECH
Activities and the ECOTECH Weightings Matrix by APEC fora to ensure
that ECOTECH projects submitted for funding meet key objectives and have
focussed outcomes.[8]
3.20
In 1999, Ministers decided to reconstitute the
Infrastructure Workshop as an ad hoc forum under the ESC.
Policy Level Group on Small and
Medium Enterprises
3.21
This Group was established in 1995 and oversees
activities for SMEs across all APEC fora, as there is a consensus in APEC that
free trade and economic globalisation have implications, challenges and
opportunities for SMEs.
Working
groups
3.22
Ten working groups have been established to
carry out a ‘range of practical cooperation activities (preparation of
guidebooks, information networks, training courses, technology transfer,
implementation of electronic data interchange, information exchange and policy
discussions)’.[9]
The working groups report to the Senior Officials’ Meetings and Ministerial
Meetings.
Energy Working Group
3.23
This Group:
works to promote cooperation on energy issues in the APEC region
... [It] aims to maximise the energy sector's contribution to economic growth
and energy security in the region. It is broadening its work program to
encompass more fully regional energy and environmental policy issues, and to
achieve greater involvement of the region's business sector in its activities.
The group’s work is organised under four “theme”: supply and demand; energy and
the environment; energy efficiency and conservation; research, development,
technology transfer.[10]
Fisheries Working Group
3.24
The aims of this Group are to ‘develop
region-wide approaches towards fisheries conservation, development and
marketing’. It is doing this by determining the optimum use of, and ‘trade, in
fisheries resources based on sustainable fisheries management practices’. It is
also promoting awareness of the significance of the Pacific Ocean’s fisheries
resources.[11]
Human Resources Development Working Group
3.25
This Group ‘works on the development of a
skilled, flexible workforce in an effort to enhance the economic growth of APEC
members’. It manages HRD projects ‘under broad programs covering industrial
technology, business management, economic development management, and
education’.[12]
Industrial Science and Technology Working Group
3.26
This Group ‘works to increase understanding of
factors affecting the development of industrial science and technology
(IS&T) and technology transfer, and to develop appropriate recommendations
for ministers’.[13]
Marine Resource Conservation
Working Group
3.27
This Group:
deals with the marine environment and conservation of economically
and ecologically important marine resources which affect industries including
urban development, fisheries and tourism ... [It] is identifying problems and
control strategies (coastal pollution, harmful algal blooms, hazardous
substances, tainting of fish and other products, deterioration of beaches,
reefs, mangroves, seagrass beds) and opportunities in the region for integrated
coastal zone management and planning associated with settlement and population
growth along the coastlines and adjacent watersheds.[14]
Tourism Working Group
3.28
This Group ‘works to foster economic development
in the APEC region through sustainable tourism growth’. It identifies and seeks
to ‘remove impediments to regional tourism trade’; explores ‘linkages between
tourism and the economic development of the region’; explores ‘successful
management strategies for the sustainable development of tourism in
environmentally sensitive areas’; develops ‘ways of promoting human resource
development’; and facilitates 'information exchange among members’.[15]
Telecommunications Working Group
3.29
This Group ‘aims to expand telecommunications
services and encourage the adoption of new and compatible telecommunications
technologies in the region, including through further telecommunications trade
liberalisation and facilitation’. Work is organised under five ‘themes’: ‘data
compilation, electronic commerce, human resource development and
infrastructure’, as well as ‘standards’, which was a later addition. It is
developing ‘a model mutual recognition agreement on certification of
telecommunications terminal equipment, a regional framework for electromagnetic
compatibility, and regional competency standards for telecommunications
industry vocational training’. It is also assisting ‘small and medium enterprises
in the implementation of electronic commerce’.[16]
Trade Promotion Working Group
3.30
This Group is aiming to expand regional trade
through co-operation among trade promotion agencies and consultation with
business. It is helping business to gain access to APEC information and
encouraging business to participate in APEC policy making. The Group ‘has
established the “Asia Pacific Business Network” ... an informal business
grouping with a particular interest in networking among the region’s small and
medium sized enterprises, and conveying their views to APEC’.[17]
Trade and Investment Data Working Group
3.31
This Group ‘aims to increase the utility and
reliability of regional trade and investment data’. It is doing this by:
establishing a database of these statistics covering all APEC
economies and is encouraging member economies to collect statistics using
standard concepts and definitions developed by international organisations, to
harmonise data collection methods and practices, and to ensure that
construction of databases does not duplicate work in other international
organisations.[18]
3.32
The Group is also preparing ‘inventories and
data matricies by APEC partners on bilateral international trade in services
and direct investment statistics. Data availability by partners is seen as the
main limiting factor in developing comprehensive bilateral data matrices in
these fields of statistics’.[19]
Transportation Working Group
3.33
This Group aims to promote an ‘efficient and
integrated region-wide transportation system that will enhance regional growth
and economic inter-relationships for the common good of APEC economies’.[20]
APEC
Secretariat
3.34
The Secretariat, which is based in Singapore, is
headed by an Executive Director from the country chairing APEC. He or she
serves for one year. The Secretariat has 23 seconded professional staff from
member economies and a similar number of locally recruited support staff.
3.35
The Secretariat’s operational plan comprises six
outputs and four services based on a Statement of Business, approved by member
economies. The Statement of Business comprises the following:
- The Secretariat is the core support mechanism for the APEC
process.
- The Secretariat provides advisory, operational and
logistic/technical services to member economies and APEC fora to coordinate and
facilitate conduct of the business of the organization.
- On behalf of member economies, it provides preparatory advice on
formulation of APEC projects, manages project funding and evaluates projects
funded from the APEC Operational and TILF accounts.
- The Secretariat produces a range of publications, liaises with
the media and maintains a website to provide information and public affairs
support on APEC’s role and activities, including specific outreach efforts to
business. It acts on behalf of APEC members as and when directed.
- The Secretariat maintains a capacity to support research and
analysis in collaboration with APEC Study Centres and PECC as required by APEC
fora.
- The Executive Director is responsible to APEC Senior Officials
through the SOM Chair and manages the Secretariat in line with priorities set
by SOM on behalf of Ministers.[21]
APEC
Business Advisory Council
3.36
At the inaugural Leaders Meeting in November
1993, it was agreed to set up a Pacific Business Forum to strengthen links
between APEC and the business community. The Forum provided the Leaders with
advice and recommendations on trade and investment liberalisation and on
business facilitation. In 1995, the Leaders replaced the Forum with the APEC
Business Advisory Council (ABAC), a permanent business advisory body.
3.37
Each member economy may appoint three
representatives to ABAC, one of whom must be from a small to medium-sized
enterprise. Australia’s current representatives on ABAC at the time of the
Committee’s hearings were Mr Michael Crouch AM, Chairman and Managing Director
of Zip Industries Australia; Mrs Imelda Roche AO, Co-Chairman of Nutri-Metics
International; and Mr Malcolm Kinnaird, Executive Chairman of Kinhill Engineers
Pty Ltd. Since then, Mrs Roche was replaced by Mr David Murray, Managing
Director of the Commonwealth Bank.
3.38
ABAC's main objectives are to:
- help APEC strengthen its links to the regional business
community;
- allow the business community to advise APEC on its priorities in
relation to the implementation of the Action Agenda;
- respond directly to requests from APEC for advice on business
reviews on specific issues.[22]
3.39
ABAC provides a report to the Ministerial and
Leaders’ meetings each year with advice on integrating and facilitating
business within the region. In 1996, in its capacity as APEC Chair, the
Philippines emphasised business activities:
President Ramos initiated the practice of ABAC representatives
meeting with APEC Leaders prior to the Leaders meeting itself and also
initiated a much larger APEC Business Forum in association with the
Ministerial/Leaders’ meetings, continuing the trend towards closer integration
of private sector networking in the region.[23]
Eminent
Persons Group
3.40
At the September 1992 Ministerial meeting in
Bangkok, it was agreed that an Eminent Persons Group be established ‘to
enunciate a vision for trade in the Asia-Pacific region to the year 2000,
identify constraints and issues which should be considered by APEC, and report
initially to the next Ministerial Meeting in the United States in 1993’.[24]
3.41
The Group made reports to the Ministerial and
Leaders’ meetings until it was wound up at the November 1995 meetings when ABAC
was established.
Membership
of APEC
Membership history
3.42
Twelve member economies attended the first APEC
Ministerial Meeting in Canberra in November 1989—Australia, Brunei Darussalam,
Canada, Indonesia, Japan, Republic of Korea, Malaysia, New Zealand, the
Philippines, Singapore, Thailand and the United States. It was clear, however,
even at this early stage in APEC’s development, that its membership would be
expanded.
3.43
In the Chairman’s Summary Statement, which was
issued at the end of the meeting:
Ministers have noted the importance of the People’s Republic of
China and the economies of Hong Kong and Taiwan to future prosperity of the Asia
pacific region. Taking into account the general principles of cooperation
identified above, and recognising that APEC is a non-formal forum for
consultations among high-level representatives of significant economies in the
Asia Pacific region, it has been agreed that it would be desirable to consider
the involvement of these three economies in the process of Asia Pacific
Economic Cooperation.
3.44
At the 1991 Ministerial Meeting, APEC became the
first international organisation to include the ‘three Chinas’—Peoples’
Republic of China, Taiwan and Hong Kong. According to DFAT:
The task of drawing them into the process was a difficult one,
requiring agreement both on the nomenclature of Chinese Taipei and Hong Kong
after its handover, and on arrangements for Chinese Taipei’s representation at
Ministerial meetings.[25]
3.45
At the 1991 Ministerial Meeting, the Ministers
also declared that:
Participation in APEC will be open, in principle, to those
economies in the Asia-Pacific region which:
- have strong economic linkages in the Asia-Pacific
region; and
- accept the
objectives and principles of APEC as embodied in this Declaration.
Decisions regarding future participation
in APEC will be made on the basis of a consensus of all existing participants.[26]
3.46
At the September 1992 Ministerial Meeting in
Bangkok, the APEC Ministers reiterated the membership declaration made at the
previous meeting and ‘expressed the view that APEC was entering a phase when
consolidation and effectiveness should be the primary considerations, and that
decisions on further participation required careful consideration in regard to
the mutual benefits to both APEC and prospective participants’. The Ministers
noted, however, ‘the emerging reality of an integrated North American economy
and the growing linkages between that North American economy and the rest of
the Asia-Pacific region’ and asked officials to examine the case for Mexico’s
membership. Mexico and Papua New Guinea were both admitted in 1993, and Chile’s
participation was agreed at the 1993 Ministerial Meeting, to take effect at the
1994 Ministerial Meeting. At the same meeting, the Ministers decided to defer
any further applications for membership for three years while officials
considered membership issues.
Russia’s participation in APEC
3.47
At the Ministerial Meeting in November 1997, it
was decided that three further economies—Peru, Russia and Vietnam—would take
their places in APEC in November 1998. It was also agreed to institute a
ten-year moratorium on any further increase in membership.
3.48
The decision in November 1997 to extend
membership to Russia to take effect in November 1998 was unexpected. Although
Russia has a Pacific Ocean seaboard, that region is underdeveloped compared
with many other parts of the nation. In most respects, Russia is firmly
oriented towards Europe rather than Asia Pacific. Although its Pacific
territory offers development prospects, it has languished, and there is no
evidence to suggest early rejuvenation of this area. It is difficult,
therefore, to understand the logic of the decision in the light of the APEC
membership criterion that an economy ‘have strong economic linkages in the
Asia-Pacific region’. Although Russia may accept the objectives and principles
of APEC’, the ability of Russia to meet APEC objectives and obligations is
highly questionable. At this stage, it is facing huge economic and political
problems in transforming its old communist-structured economy into a modern
market economy. The decision has all the hallmarks of one that was made for
global strategic reasons rather than for Asia Pacific regional economic
co-operation. The Federal Opposition disagreed with APEC’s decision to include
Russia in APEC.
3.49
Professor Drysdale told the Committee that there
are both costs and benefits in Russia’s admittance. Russia’s close association
with the major players in the region will have the potential benefit of
providing the region with greater political security and stability in the
longer term.[27]
Inevitably, over time, the APEC economies will have to deal with Russia in a
political sense. By being part of APEC, relations between Russia and the other
APEC economies might be managed in a more beneficial way. The main question
mark in the near future is the role Russia might play in pursuit of the APEC
economic agenda and the management of economic crises, such as the current East
Asian financial crisis.
3.50
It is unlikely that Russia’s admittance will
improve the cohesiveness of APEC. Dr Elek drew attention to the fact that
Russia’s trade with Europe is larger than that with APEC economies and the
potential difficulties for APEC as Russia becomes more integrated into the
European economy:
we are going to need to think through some kind of guiding
principles so that Russia does not by default, or without really thinking it
through, enter into more relationships with Europe which actually discriminate
against the rest of its APEC partners, which is the way Europe usually enters
into trading arrangements.[28]
3.51
The decision has, of course, already been made.
The important thing now is to ensure that potential problems associated with
Russia’s membership are managed in such a way as to enhance the APEC concept
and its trade liberalisation goals. Ms Fayle told the Committee in March 1998
that:
There was a consensus in the leaders meeting to admit three new
members. Australia has signed on to that consensus and we are enthusiastic
about working with the new members, including Russia, to ensure that they make
the transition into APEC in as effective and efficient way as possible. We are,
for example, sending an expert on IAPs and sectoral liberalisation to Russia to
assist them at the technical level with some of that work. We are making a
conscious effort to ensure that the new membership does not involve too much
greater time consuming effort on the part of APEC and that it does not hold up
making progress in some of these areas that are important to us.[29]
3.52
The Committee believes that APEC should
encourage Russia not only to play a constructive role in APEC but also to
develop economic links within the Asia Pacific region through the development
of the economy of its Pacific territories.
Future membership policy
3.53
Membership has been a sensitive issue for APEC
as a number of economies on both sides of the Pacific have sought to become members,
including some, such as India, which are not Pacific-littoral economies.
3.54
Two questions in particular have exercised the
minds of APEC economies in relation to membership: the size and the actual
composition of APEC.
3.55
It is always difficult to decide on the optimum
size of an organisation, particularly when there is pressure from potential
members to allow their membership aspirations to be realised. In any
organisation, it becomes more difficult to achieve consensus as membership
increases, even when there is a general homogeneity among members. The great
diversity of political systems, population sizes, stages in economic
development and cultures among APEC economies makes decision-making more
difficult. This has been offset by adopting a policy of lack of prescription,
which has made it easier for members to agree on long-term goals and work
programs. But, as membership and therefore the diversity of interests increase,
unanimity will be more difficult to achieve. This, in turn, may slow the pace
of reform.
3.56
Fred Bergsten, the former Chairman of the APEC
EPG drew attention to the tension between deepening and broadening any
international institution:
It is clearly more difficult for any international institution
to deepen its substantive links if it has more members and it must divert part
of its time to the process of expansion. Europe has always resolved the dilemma
by completing its next stage of integration (deepening) before accepting new
members (broadening).[30]
He went on to advocate APEC following a similar course on
membership to the one taken by the European Union. He warned that the
participation of any large country, which had not yet got far down the track of
liberalisation, might complicate APEC’s ability to achieve progress.
3.57
In October 1997 (before the most recent increase
in membership), the Australian Ambassador to APEC, Mr Grey, told the Committee
that there was an upper limit on membership from a practical point of view. He
went on to say that ‘we have not reached that now, and it may well be that a
couple of new additions would not change that dramatically but it should, in
our view, be kept as small as possible–in some respects, the smaller the
better’.[31]
3.58
At DFAT’s second public hearing on 30 March
1998, Ms Fayle, First Assistant Secretary, Market Development Division, said
that:
Australia has always opposed excessive expansion of APEC
membership. We had a well-known position that we did not think that APEC should
expand too quickly simply because that did make things unwieldy and difficult.
We felt there was already a large enough agenda and a large enough membership
to bite off the sorts of things we had on our plate ... It was simply that we
were keen to ensure that the pace of membership expansion was an appropriate
one.[32]
3.59
In view of the nature of its membership, APEC
has made remarkable progress in agreeing to long-term goals and a framework for
achieving them. These goals include sensitive areas that have so far defied all
other attempts at resolution. There is still much to be done, not only in APEC
but also in other related fora, such as the WTO, before these goals are reached
within APEC’s 2010 and 2020 deadlines. Keeping APEC to a manageable size will
facilitate trade and investment liberalisation and facilitation objectives. The
ten-year moratorium is evidence of APEC’s realisation that a larger
organisation might jeopardise achievement of these objectives. The Committee
believes that a membership of more than 21 economies would not be helpful in
attaining APEC’s goals.
3.60
It is inevitable that other economies will seek
to join APEC before the expiry of the moratorium. The Committee believes that
pressure to break the moratorium should be resisted, unless significant changes
in circumstances dictate a change in membership policy. For instance, before
the end of the ten-year period, and however unlikely that might seem at the
moment, APEC and WTO might achieve important breakthroughs in sensitive areas,
bringing the Bogor goals well within APEC’s grasp. A further small enlargement
of APEC’s membership at that time might not be considered to hinder completion
of APEC’s work program.
3.61
Unlike preferential free trade blocs,
non-members are not discriminated against in their trade and investment links
with APEC members. The adoption of open regionalism extends liberalisation and
facilitation benefits on a most favoured nation basis to all non-members. APEC
processes are also open to scrutiny outside the organisation; outcomes of
meetings are published, as are details of Individual Action Plans.
3.62
There is no reason for an aspiring member not to
undertake the objectives and obligations of APEC members. This would include
the voluntary submission of an Individual Action Plan, updated annually, as is
the requirement for members. In the view of the Committee, unless an Asia
Pacific economy were to do this, it should not be considered for membership.
3.63
In view of the added difficulties involved in an
enlarged membership, economies that have demonstrated over time their
commitment to APEC goals should be in a much stronger position to have their
applications for membership approved than those which only give lip service to
those goals.
3.64
The interests of APEC economies will be served
if non-APEC economies could be encouraged to embrace APEC’s goals. Ultimate
membership of APEC is one incentive to do this. However, other ways of
accommodating the needs and aspirations of other Asia Pacific economies should
also be found without compromising the membership moratorium. One option is an
extension of observer status to non-member Asia Pacific economies that embrace
the APEC mission and all its obligations. APEC would need to satisfy itself
that a non-member is meeting its obligations and will continue to do so once
observer status is granted. This measure would be regarded as a preliminary
step towards membership.
3.65
A second option is greater representation of
non-member economies, which embrace APEC obligations, in the APEC work program.
There has been limited representation of non-APEC economies on APEC working
groups and project teams. The inclusion of additional relevant people from
these economies would help to give them a sense of inclusion in the APEC
process and reinforce their commitment to APEC goals.
Membership for Indian Ocean
littoral economies
3.66
The other membership question raised in the
inquiry was whether membership should include Indian Ocean littoral economies,
particularly India, which has sought membership of APEC. Professor Garnaut told
the Committee:
I would have thought that India’s claims were stronger than
Russia’s claims. I have thought that for some time. While holding that thought,
I did not think that it was crucial for India to be a member, so long as APEC
members, and APEC itself, were cognisant of the huge importance of the success
of the reforms in India that got under way in the 1990s.
Because trade liberalisation within APEC is within the framework
of open regionalism it does not cut India out. India could do with a lot of
liberalisation within that framework itself. I think it might be helpful to the
political economy of reform in India if particular APEC countries–and why not
Australia–engaged in rather active discussion with India of the advantages of
parallel liberalisation and, at the same time, deliberately built business
links to take advantage of the new opportunities that would emerge from that
process.
Open regionalism in South Asia alongside liberalisation within
an open regional context in APEC would be a very productive basis for regional
trade expansion in India, at the same time as opportunities were expanded for
links with the Asia-Pacific region. I would like to see us active in
discussions with India in those ways rather than talking of further dilution of
APEC.[33]
3.67
India is not being disadvantaged by not being a
member of APEC. The adoption by APEC of open regionalism as the basis for trade
liberalisation means that South Asian economies are not subject to
discrimination in trade with and investment in APEC economies. The Committee
believes that India and other South Asian economies, which have an interest in
joining APEC, have an opportunity during the moratorium to demonstrate their
credentials by fulfilling voluntarily the requirements of membership.
3.68
In the same way as Australia is helping Russia
with its Individual Action Plan, similar assistance should be extended to India
and other non-member Asia Pacific economies embarking on trade liberalisation,
should they wish to avail themselves of it. As Professor Garnaut intimated,
there may also be commercial spin-offs available to both sides from such
cooperation.
Conclusion
3.69
The moratorium gives APEC a breathing space to
concentrate on its three pillar agenda. With 21 disparate economies already
participating in its ambitious program, it will take all the ingenuity and
cooperation of members to reach those distant Bogor goals along a path strewn
with obstacles. The addition of new participants would only serve to make the
task more difficult to complete. However, in the longer term, it may be both
feasible and desirable that APEC membership be expanded to include the
participation of other Asia Pacific economies that meet the membership
criteria.
Recommendation
The Committee recommends that the
Australian Government work to have APEC adopt a position of:
- accepting new members only after they
have demonstrated their support for APEC policies and goals by voluntarily
complying with APEC obligations (including submission and annual updating of
Individual Action Plans) for two years;
- granting observer status to potential new
members which meet their APEC obligations;
- allowing greater participation in APEC’s
work program by potential new members; and
- providing assistance to potential new
members to adopt APEC policies, goals and obligations.
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