Introduction
Within the Asia Pacific region institutionalized relations are dominated by the Asia Pacific Economic Cooperation (APEC) forum. Even though the EU and its member states are not represented in it, this body is nonetheless important for bilateral relations with Japan for several reasons. APEC has functioned as a model for other institutions in which Japan and the EU member states all participate, and ASEM, too, has mirrored its loose association. Thus, ASEM structures promote the same ‘open regionalism’ tenets that APEC established and supports the latter’s ‘concerted unilateral liberalization’ measures. The adoption of APEC as a model also provides newer institutions with precedents for their own actions, and the longer-established forum becomes the benchmark for defining regional cooperation in other institutions. In this way, new structures can be judged according to how well they replicate existing and apparently successful institutions.
Historical Background
APEC is a forum of 21 Asia-Pacific countries. The first forum was organized in 1989 by the Australian Prime Minister, Bob Hawke. On 31 January 1989 at a luncheon hosted by the Korean Business Association in Seoul, Robert Hawke (the then Prime Minister of Australia) presented a proposal for regional economic intergovernmental cooperation in the Asia-Pacific region, which led to the idea known as APECAustralia decided to take the initiative in promoting APEC mainly because it strongly feared being excluded from new economic blocs that were in the process of developing (APEC 1994). The European Community was pursuing the establishment of monetary union and the United States was in the process of concluding the North American Free Trade Agreement (NAFTA) (Palan and Abbott 1996). In Australia there was a strong feeling of isolation from the global economy at this time. Hence, Australia advocated APEC as a regional group to which it could belong. At the same time, however, it made efforts to apply the brakes on expansion of regionalism with the slogan that ‘APEC was outward-looking and did not aim to form a trading bloc’ (APEC Ministerial Meeting 1990: paragraph 6). This was because Australia itself took a position against bloc economy, and, in addition, because it had to conciliate ASEAN countries that had a skeptical attitude towards forming a group (Clarke 1995).
Attitudes of Asian Countries towards APEC
At the beginning, most ASEAN countries hesitated over the Australian proposal. They were concerned that the creation of a regional arrangement would increase opportunities for the large players in the Asia-Pacific, such as Japan, China and the United States, to intervene in their affairs. Conversely, they also feared that failure to join such an arrangement would leave them isolated and vulnerable. ASEAN countries, which by undertaking to establish a ‘world production base’ had put themselves on the path to rapid economic expansion, were beginning to be incorporated into global market economy (Plummer, 1998). They thought that APEC would be useful in terms of expanding export markets and promoting foreign direct investments. After careful consideration of the pros and cons, the ASEAN countries decided to participate in APEC about six months after the original concept had been proposed. One of the most important influences on this decision was the position adopted by Australia and Japan, the two main initiators of APEC, which guaranteed that the ASEAN countries would be core to the institution and that APEC would maintain the non-binding nature of any principles agreed. These promises to ASEAN significantly shaped the evolution of APEC. As a result, APEC was launched as a consultative forum to discuss the region’s economic development with no organizational framework (APEC 1994).
In order to coordinate APEC activities and facilitate communication among its members, a permanent secretariat was established in Singapore in January 1993. At the same time, the Committee on Trade and Investment (CTI) was promoted from an informal group to the first standing committee. Further progress was made in November 1993, when the first Leaders Meeting was held at Blake Island and the agreement to regularize it was reached. This significant event dramatically changed the characteristics of APEC (Dicken, 1998). Western members such as the United States, Canada and Australia have an interest in promoting the institutionalization of APEC. They consider APEC not only as a forum to discuss economic policies among its members, but also as an organization with specific goals of trade and investment liberalization in the Asia-Pacific region (Ravenhill, 2001). They believe that the evolution of APEC’s institutional structures and procedures will strengthen its effectiveness for reaching consensus and the implementation of meaningful work programs. As such, reinforcement of institutional structure and binding agreements are regarded as indispensable means of enforcing member economies to commit themselves on liberalization of trade and investment (Clarke 1995).
Many Asian voices have expressed the desire to create a new kind of community in the wake of US military reduction within, or possible withdrawal from, the region. America’s apparent loss of interest in the region has at the very least provoked support for other forums to be formed in conjunction with APEC. As a result, not only does the APEC forum influence relations by providing an arena in which the US maintains its promise of open and free regional trading, but, in quantifying the US commitment to the Asia Pacific region, it also creates the need for Japan and the EU to take collective action in other forums to address the vacuum left by a diminishing US presence there (Dicken, 1998). Also, criticisms of US-dominated IMF and APEC responses to the 1997 Asian crises have prompted calls for Asian-only solutions to regional affairs through closer intraregional cooperation in Asia. In addition, there are signs, particularly from the Chinese, that cooperation with a greater economically visible EU after 1 January 1999 might offer an alternative channel for cooperation As far as the EU is concerned, and despite being excluded from APEC, the forum’s open regionalism is welcomed as a way of promoting MFN status to non-members, and cooperation with the Asia Pacific region is included in its strategies for the Asian region. In the Hague Declaration, too, involvement in this region was emphasized for the promotion of ‘peace, stability and prosperity. The increasing overlap of issues within and among the various forums has broken down many of the divisions between the types of issues each forum deals with (Scollay and Gilbert 2001).
Correlation of APEC to Global Business
The general finding of international trade theory that free trade in goods enhances economic welfare has strong support from international economists and international institutions such as the WTO whose very brief is to progress trade liberalisation. Large trading blocs, such as the North American Free Trade Agreement (NAFTA), the European Union and the Asia-Pacific Economic Cooperation forum have been established for the very purpose of encouraging greater cross-border trade in goods and services by dismantling impediments to trade, such as import tariffs (Clarke 1995).
On the regional level, however, the scene within Asia is quite different. To be sure, discussions at the 1998 APEC forum in Malaysia stalled, with no agreement on fast-tracking trade liberalization discussion in strategic sectors. At the same time, Malaysia imposed currency controls in order to reduce the impact of the crisis, thereby challenging the neoliberal orthodoxy. Unfortunately this move was overshadowed by the gross violation of human rights symbolized in the arrest and prosecution of Anwar Ibrahim (Dicken, 1998). There are also powerful forces promoting neoliberal solutions to the crisis: ‘The deep meaning of the Asian crisis therefore lies in the American attempt to bring down the curtain on “late” development of the Japanese-Korean type, and the likelihood that they will be successful However, there is a specific regional dynamic that we must correctly assess to understand developments in Asia. The development of regionalism is the most recent manifestation of the crisis of globalization (APEC 1994).
Challenges of APEC
Whether an Asian bloc forms in the immediate future or not, it seems that we are living in an era in which regionalism is a significant manifestation or reflection of the international rivalry of competitive capital. While in some cases, such as the Free Trade Area of the Americas (FTAA) and APEC, regionalism is given a ‘free trade’ hue with the ‘open regionalism’ approach, the fact remains that the tendency towards regionalism is a significant step towards a world of economic blocs, an order which will pose new challenges. To be able to respond to these challenges it will be important how opposition to the free trade agenda is articulated. If, as suspected, neo-liberalism is in effect masking what is in effect an intensified rivalry in international capital and the formation of regional trading blocs, then this will require a more developed criticism of ‘free trade’ than has hitherto been the case. It will require an understanding of neo-mercantilism as well as a better or clearer articulation of managed trade (Dicken, 1998).
Today, two challenges for action are presented, with gradations and variations in each position. Some activists oppose free trade and investment agreements and confine their actions to continued opposition to all proposed and existing trade and investment agreements (Scollay and Gilbert 2001). Others see the most promising political route as one which establishes strong social, labour and green clauses in the trade and investment agreements themselves It is a position that can quite easily lead to despair, particularly as the ‘inevitability’ of trade liberalization and deregulation seems to accelerate. An analysis which shows the dangers in the new conditions will lead to despair if the alternatives to it are not sufficiently compelling (APEC 1994).
Bringing about international institutions to control capital and to permit economic pluralism requires not only long-term planning and concerted organizational effort, but it will also need a strategy to confront the full might of corporate power. Establishing a strategy in an international context is exceedingly difficult. While large international gatherings have been (and continue to be) important in raising the level of consciousness about the implications of globalization and in consolidating genuine political action in specific regions where they are held, they are rarely places where genuine debate about strategy occurs. At the Vancouver Peoples’ Summit on APEC, the focus on generating information about APEC and then crafting a collective response to the threats it posed meant that the real issues about strategies became buried under the need to present solidarity among the people at the conference through a unity statement. A similar side-stepping of issues of strategies occurred at the Asia Pacific Peoples’ Assembly in Kuala Lumpur in November 1998 (Dunning, 1993).
I suppose that the APEC forum shows that International economic integration undermines the ability of nation states to achieve balance between the needs of people and the demands of corporations. This fact, coupled with the knowledge of the destabilizing effects of globalization, is accelerating the demands for new forms of global governance. Core labor rights, environmental protection and the ability to maintain redistributive initiatives needs to be protected at the international level, particularly as more corporations which were regulated on these matters at the national level are evading this regulation through their international activities. Some popular sector groups have focused on international regulation through international trade and investment agreements (Scollay and Gilbert 2001). This is an inappropriate venue for meaningful initiatives to control international capital. Rather than trying to fit the control of capital into institutions which are expressly designed to deregulate national governments, these groups should focus on the establishment of new international structures which are independent from the trade and investment initiatives. Regulations by these new institutions should focus on the behaviour of international corporations, rather than on nations (Kurzer, 1993). National governments accept the responsibility for the well-being and protection of the people within the nation. The instruments of globalization have curtailed the ability of nations to be creative in designing economic and social systems to do this as a result of the features of international agreements which demand economic homogeneity among trading partners. At the same time that new international institutions need to be created to focus specifically on the behavior of international corporations, the rules of trade and investment need to be rethought to allow for the participation of distinct and different types of economic systems (Dunning, 1993).
Within this ‘institutionalized’ structure, APEC and Asian countries have begun to establish and make use of a repertoire of issues that their relationship is best equipped to address. Many of the relevant issues have become salient since the ending of the Cold War and are likely to dominate the agenda of international organizations at the start of the new millennium. This conclusion examines the ways in which their intensified bilateral dialogue is suited to deal with the imperatives of the complex environment in which it exists at the beginning of the twenty-first century (Scollay and Gilbert 2001). Firstly, it questions the role of bilateral dialogue in a multilateral world. Secondly, it examines the impact of institutionalization on the dialogue. Thirdly, it reassesses the potential to become global civilian partners (Kurzer, 1993).
Interaction also offers an important means of stabilizing relations within and between the two important regions of East Asia and Europe. Japan and the EU are thus able to balance the position of the US within bodies such as the WTO and the UN, and at a regional level, too, their relations provide a point of departure for the development of inter-regional initiatives, such as through the ASEM process. For these reasons, bilateral relations provide an important middle ground between Japanese and EU policymaking on the one hand, and international engagements on the other, and should be regarded as one part of the complex chain of interaction in which Japan and the EU participate. legitimacy than they could muster alone. The intensification of this bilateral dialogue could therefore serve to save time and resources as well as to enhance the position of the nation-states involved (Oman, 1994).
Conclusion
Regularized contact helps the bilateral partners to delimit the parameters of their mutual interaction, and to clarify channels for action when the nature of the decision-making process is fragmented, as is the case in Japan where no single government division deals with ‘regional’ European issues. At the important level of issue linkage, too, within the bilateral relationship itself the overarching structure created by the Hague Declaration means that issues of different natures (trade, environment, security) can be associated within one umbrella grouping (APEC and Asian countries relations). This consolidation of different issues within the bilateral framework has also been important in promoting APEC and Asian countries The discourse of civilian power provides APEC and Asian countries with a mutually comprehensible set of terms through which they are able increasingly to define and determine the contours of their own bilateral dialogue. Growing mutual Japanese and participation in overlapping multilateral forums may provide broader frameworks within which they could more fully exploit this status. This element will remain especially prominent as long as APEC and Asian countries relationship continues to be framed uniquely within a trilateral context in which it is invariably compared to its more significant (in realist terms).
Bibliography
Clarke, J. APEC as a Semi-Solution’, Orbis: A Journal of World Affairs, 39, 1 (1995) 81–95.
APEC. 1994, Non-Binding Investment Principles, Singapore: Asia-Pacific Economic Forum Secretariat.
Dicken, P. 1998, Global Shift: Transforming the World Economy, 3rd edn, London: Paul Chapman Dunning, J.H. 1993, Globalisation: The Challenge for National Economic Regimes, Dublin: Economic and Social Research Council.
Kurzer, P. 1993, Business and Banking: Political Change and Economic Integration in Western Europe,
Oman, C. 1994, Globalisation and Regionalisation: The Challenge for Developing Countries, Paris: OECD. Ithaca, NY: Cornell University Press.
Palan, R. and Abbott, J. 1996, State Strategies in the Global Political Economy, London: Pinter.
Plummer, M. 1998, ‘ASEAN and institutional nesting in the Asia-Pacific: leading from behind in APEC’, in V.K. Aggarwal and C.E. Morrison (eds), Asia-Pacific Crossroads: Regime Creation and the Future of APEC, London: Macmillan, 279-314.
Ravenhill, J. 2001, APEC and the Construction of Pacific Rim Regionalism, Cambridge: Cambridge University Press.
Scollay, R. and Gilbert, J.P. 2001, New Regional Trading Arrangements in the Asia Pacific?Washington: Institute for International Economics..