Policy Notes for Development Studies

Philippine Institute Policy Notes for Development Studies December 2000 No. 2000-18 nization to keep pace with the demands and expectations Strengthening placed on it. APEC's Institutions In this regard, the organization’s institutions and processes should progress further. Indeed, APEC must advance towards a higher stage of institutional development to cope with the demands. At present, its institutional evolution is proceeding slowly. There still exists a considerable distrust of bureaucratic structures and contractual arrangements that prevents it from moving towards more definite rules and procedures. John Lawrence V. Avila* Given this aversion to formalism, how can greater institution-building be encouraged in the region? How should APEC move from this stage to the next level of institutionalization? What particular structures and processes within the association should be reformed or strengthened? Institution-building in APEC: a historical review fter more than ten years of existence, the Asia- Interestingly, the state of institutional underdevelop- Pacific Economic Cooperation (APEC) is still very ment in APEC is entirely deliberate. In defining the grouping’s much in the formative phase of institution- A vision, the APEC Eminent Persons Group (EPG) cautioned building. The organization has consciously fol- against “over-institutionalization and over- bureaucratiza- lowed a path of an informal and looser form of institutional tion." By design, APEC is a voluntary, non-binding arrange- set-up, purposely avoiding the European model of economic ment with emphasis on informality, consensus-building and integration and rejecting any emphasis on legalism, formal ad hoc problem-solving. agreements and binding contracts. Meanwhile, APEC’s activities have multiplied and its PIDS Policy Notes are observations/analyses written by PIDS researchers on certain policy issues. The treatise is holistic in approach scope has broadened to include more countries as mem- and aims to provide useful inputs for decisionmaking. bers. Yet, the level of its institutional development has gen- This Notes is an excerpt of the paper entitled "APEC and ASEM: erally lagged behind, thereby making it difficult for its orga- An Institutionalist Perspective" by the same author completed in 1999 under the auspices of the Philippine APEC Study Center Network __________ (PASCN). The views expressed are those of the author and do not *The author is a political economist at the Center for Research and necessarily reflect those of PIDS or PASCN or any of the study's spon- Communication Foundation and Lecturer in International Political sors. Economy at the University of Asia and the Pacific. 2 December 2000 In fact, there has been no real consensus among its elements of a regime. After the first three years of meeting, members on exactly what form or structure the organization officials agreed to establish a permanent mechanism to should have. While APEC’s agenda continue to expand, there support, finance and coordinate its various activities (Hirano is no collective view on how it should proceed with the ‘deep- 1996). Consequently, a set of common principles, objec- ening’ of cooperation. Overall, the development of the orga- tives and a supporting organizational structure has gradu- nization has been a slow and deliberate process which placed ally taken shape as seen in Table 1. no formal obligations on the APEC members. The 1991 Seoul Declaration is the closest that APEC At its initial stages, APEC has followed a minimalist has reached in formally defining the structural form and approach to institution-building stressing confidence- build- principles of the organization. The declaration is significant ing and mutual understanding rather than formal organiza- for being the first official document that prescribed the tional structure as its primary objectives. Over the past ten association’s principles, objectives, scope of activity and years, however, the association has begun to have some mode of operation. In said document, the members agreed Table 1. APEC’s institutional milestones Meeting Outcome Canberra 1989 Set out basic principles of Asia-Pacific economic cooperation; Identified specific elements of work program. Singapore 1990 Identified broad areas of cooperation to include economic studies, trade liberalization, investment, technology transfer and human resource development and sectoral cooperation. Seoul 1991 Issued declaration laying down APEC’s principles, objectives, scope of activity, and mode of operation. Bangkok 1992 Established permanent secretariat based in Singapore; Appointed an Eminent Persons Group (EPG) to chart vision for APEC. Seattle-Blake Island 1993 Initiated an annual leaders’ meeting and issued a vision statement; Approved trade and investment framework; Established the Pacific Business Forum; Called for the convening of meeting of APEC finance ministers; Established a Budget and Administrative Committee. Bogor 1994 Declared goal of free and open trade and investment in the Asia Pacific by 2010 for industrialized economies and by 2020 for developing economies; Established three pillars of cooperation, namely: (1) trade and investment liberalization, (2) trade and investment facilitation, and (3) economic and technical cooperation (ECOTECH). Osaka 1995 Defined Action Agenda; Defined fundamental principles of liberalization and facilitation; Identified specific areas of ECOTECH;a Set up APEC Business Advisory Council replacing the EPG; Established voluntary consultative dispute mediation service. Manila-Subic 1996 Laid down individual and collective initiatives under the Manila Action Plan for APEC; Defined framework of principles for economic cooperation and development. Vancouver 1997 Endorsed early voluntary liberalization in 15 sectors; Established an ECOTECH Sub-committee; Defined criteria on membership. Kuala Lumpur 1998 Began review of APEC process. Auckland 1999 Adopted nonbinding APEC Principles to Enhance Competition and Regulatory Reform. aThese are human resources development, industrial science and technology, small and medium enterprises, economic infrastructure, transportation, energy, telecommunication and information technology, tourism, trade and investment data, trade promotion, marine resource conservation, fisheries, and agricultural technology. Policy Notes 3 No. 2000-18 to such principles as cooperation based on mutual benefit of fact, none of these declarations and joint statements and respect, commitment to open dialogue and consensus- has binding force in international law (Hirano 1996). building, and consultation and exchange of views. The document also formalized the holding of annual ministerial meet- APEC’s institutional structure revolves around annual ings supported by senior officials' meetings and working ministerial meetings chaired by each member on a rotating groups. basis. Supported by the senior officials’ meetings (SOM), a secretariat and several working groups, these ministers Subsequent meetings saw the further definition of a shape the direction and nature of the organization’s activi- number of norms and principles in APEC. After articulating ties. Over the years, these various meetings broadened the their principal objective of “deepening our spirit of commu- range of participation—from the sole involvement of trade nity” at the Blake Island summit and announcing the “Dec- and foreign ministries to include agencies with responsibili- laration of Common Resolve” at Bogor, APEC ministers laid ties for finance, transportation, the environment, science down more specifically a set of fundamental principles in and technology, small and medium enterprises and, lately, trade and investment liberalization and facilitation.1 This was even one for gender issues. followed by the formulation of similar guiding principles gov- erning economic and technical cooperation under the Dec- However, some have observed that APEC’s special- laration on an APEC Framework for Strengthening Economic ized working groups develop largely their own sets of agenda, Cooperation and Development at the Manila meeting.2 In often operate largely in an uncoordinated manner, and act Auckland, members adopted the APEC Principles to Enhance quite independently of the broader APEC process (Rudner Competition and Regulatory Reform, reinforcing their com- 1995; Aggarwal and Morrison 1998). Much of their work mitment to nondiscrimination, comprehensiveness, trans- had been confined to information exchanges, inventories parency and accountability. and surveys, and seminars for officials. In fact, the appar- ent result of this plethora of meetings is duplication, over- However, the emphasis on voluntary and nonbinding lap and over-bureaucratization. The structural concentration principles has given rise to uncertainties on whether APEC of APEC activities under Foreign and Trade agencies of gov- can actually achieve anything substantial other than diplo- ernment also brings about the narrow focus on trade and matic niceties and nice-sounding grand visions. The Osaka trade-related issues. principles, for example, guarantee its members with enough flexibility to depart from their obligations. Thus, Asian mem- Since 1993, the heads of government have become bers pressed for voluntary targets to allow them to decide the ultimate authority to decide on the direction of APEC. for themselves the pace at which they would implement The initiation of APEC summitry helped develop a regular- market-opening measures. Principles

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