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Issue #1665      November 19, 2014

APEC pursuing integrated Asia-Pacific

While the Australian media were focused on the Prime Minister making a fool of himself, an important meeting was taking place in Beijing. It was the 22nd Leaders Summit of APEC (See box below). The original intent of APEC when proposed by Australia (on the US’s behalf) was an Asian Pacific regional group under US domination. The Summit was significant in a number of ways.

Chinese President Xi Jinping (centre) hosts and addresses the 22nd Asia-Pacific Economic Cooperation (APEC) Economic Leaders’ Meeting in Beijing, China, November 11, 2014. (Photo: Xinhua/Pang Xinglei)

China and the US announced a secretly negotiated agreement between the two countries on climate change and emission reductions. (See page 1)

PM Tony Abbott was caught by surprise, after all his mate had not forewarned him despite Australia being the US’s most loyal and subservient ally. Not exactly a public expression of trust or respect.

Chinese President Xi Jinping and US President Obama have also agreed on a military accord designed to avert clashes between Chinese and American planes and warships in the waters off the Chinese coast. They are also cooperating on trade in hi tech goods and direct foreign investment.

There were interesting bilateral meetings between China and the US, China and Japan, the US and Russia, and Australia and Russia resulting in speculation about an easing of tensions. However, it seems clear that the dispute over islands between China and Japan has not been resolved.

The Australian media focused on the face-to-face public encounter between Abbott and Russian President Vladimir Putin. Not surprisingly, Abbott failed to carry out his threat to “shirt-front” Putin. We are told by Abbott’s team that he did tell Putin to pull out of Ukraine, apologise for the shooting down of the Malaysian aircraft and pay compensation to the families of the dead. Russia still denies any involvement in the shooting or the presence of Russian forces in the Ukraine. The investigation into the cause of the crash is still underway.

Based on cooperation

The Beijing Declaration, “Beijing Agenda for an Integrated, Innovative and Interconnected Asia-Pacific”, states, “Through its unique approach featuring voluntary action, consensus, flexibility and pragmatism, APEC has successfully established a sound regional economic cooperation framework among member economies with remarkable diversity and at different stages of development.

“Adhering to the spirit of unity, mutual respect and trust, mutual assistance and win-win cooperation, we have been working to narrow the development gap among ourselves and have consistently promoted the robust, sustainable, balanced, inclusive and secure growth in the Asia-Pacific region and beyond.

“After years of rapid development, the Asia-Pacific has become the most dynamic region of the world, and has never been as important as it is today in the global landscape …”

Regional integration

China used its position as host to advance the process towards concrete action on a Free Trade Area of the Asia Pacific (FTAAP).

The FTAAP includes China, unlike the US-driven Trans Pacific Partnership (TPP). It involves the 21 APEC economies as compared with the TPP’s 12. “Establishment of this Roadmap for APEC’s Contribution to the Realisation of the FTAAP represents an important concrete step towards greater regional economic integration.” (“The Beijing Roadmap for APEC’s Contribution to the Realisation of the FTAAP”, Annex A to Leaders’ Declaration)

While the US has a strong preference for its TPP, China made it clear that the FTAAP should not be pitted against the TPP. The Leaders Declaration describes it as “a major instrument to further APEC’s regional economic integration agenda which should be pursued as a comprehensive free trade agreement by developing and building on ongoing regional undertakings such as ASEAN+3, ASEAN+6, and the Trans-Pacific Partnership.”

“The FTAAP will be realised outside of APEC, parallel with the APEC process. APEC should maintain its non-binding, voluntary cooperation principles in its contributions to the realisation of the FTAAP. APEC will encourage more unilateral trade and investment liberalisation and reform, continue to play a role as incubator of the FTAAP and provide leadership and intellectual input to its realisation.”

The FTAAP has a unique approach, with significant differences in the principles of cooperation when compared with the approach of the WTO or TPP where the framework results in greater power of the stronger economies to exploit the weaker ones.

The APEC Leaders’ Declaration is underpinned by five pillars of cooperation*: Economic Reform; New Economy; Innovative Growth; Inclusive Support; and Urbanisation. Each of these pillars is spelt out in detail.

For example, the New Economy has three components: Internet Economy, Blue Economy and the Green Economy. Blue Economy relates to coastal and marine ecosystem conservation, disaster resilience; ocean-related food security and associated trade; and marine science, technology and innovation.

A statement on the 25th anniversary of APEC recapping its achievements states, “APEC has carried out practical cooperation in a wide range of areas, including structural reform; standards and conformance; women and the economy; health, education and labour; climate change; food security and food safety; energy security and sustainable energy development; green economy; blue economy; small and medium enterprises; information and communications technology; transport; infrastructure development and investment; forestry; mining; counter-terrorism; emergency preparedness; and, anti-corruption.”

Big business plays a role through APEC’s Business Advisory Council. While much of the agenda of APEC is based on free trade, tariff removals, opening up to foreign investment, unlike free trade agreements, adherence is on a voluntary basis. Not everything in the statement is to be applauded. For example, in Annex C it states: “We support the safe and efficient development of nuclear power, which functions as a base load power source, in interested economies.”

Looking ahead, the statement said, “We are committed to jointly building an open economy in the Asia-Pacific that is based on innovative development, interconnected growth, and shared interests.

* See full declaration, Annex C

Full coverage of G20 next issue.

Asia Pacific Economic Cooperation (APEC) The 21 member economies (not countries) are: Australia; Brunei Darussalam; Canada; Chile; People’s Republic of China; Hong Kong, China; Indonesia; Japan; Republic of Korea; Malaysia; Mexico; New Zealand; Papua New Guinea; Peru; The Philippines; Russia; Singapore; Chinese Taipei; Thailand; The United States; and Viet Nam.

The 21-member APEC involves a population of 2.8 billion, or 40 percent of the global total, and produces 57 percent of the global gross domestic product (GDP) and contributes 46 percent of global trade.

It was set up in 1989, an initiative of the Labor Hawke government, on behalf of the US. China is a member of APEC but is not included in the Trans Pacific Partnership. It is not a formal organisation, but a forum, with decisions based on consensus and their implementation is voluntary.

Next article – Death pressure mounts

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