The Parliament of the Commonwealth of Australia AUSTRALIA AND APEC A Review of Asia Pacific Economic Cooperation REPORT OF THE SENATE FOREIGN AFFAIRS, DEFENCE AND TRADE REFERENCES COMMITTEE July 2000 © Commonwealth of Australia ISBN 0 642 71054 6 This document is produced from camera-ready copy by the Senate Foreign Affairs, Defence and Trade References Committee Secretariat, and printed by the Senate Printing Unit, Parliament House, Canberra ii MEMBERSHIP OF THE COMMITTEE Current Senator John Hogg, ALP, Qld (Chair) Members Senator Sandy Macdonald (NPA, NSW) (Deputy Chair) (from 9.5.00) Senator Vicki Bourne, AD, NSW (from 12.5.99) Senator Ross Lightfoot, LP, WA Senator John Quirke, ALP, SA Senator Sue West, ALP, NSW Current Senator the Hon Eric Abetz, LP, Tas Participating Members Senator the Hon Nick Bolkus, ALP, SA Senator the Hon Ron Boswell, NPA, Qld Senator Bob Brown, TG, Tas Senator Paul Calvert, LP, Tas (from 24.8.99) Senator Grant Chapman, LP, SA (from 24.8.99) Senator the Hon Peter Cook, ALP, WA (from 3.12.98) Senator Helen Coonan, LP, NSW (from 24.8.99) Senator Winston Crane, LP, WA (from 24.8.99) Senator Alan Eggleston, LP, WA (from 9.12.98) Senator the Hon John Faulkner, ALP, NSW Senator Alan Ferguson, LP, SA (from 24.8.99) Senator Jeannie Ferris, LP, SA (from 24.8.99) Senator Michael Forshaw, ALP, NSW Senator Brenda Gibbs, ALP, Qld (from 3.12.98) Senator the Hon Brian Gibson, LP, Tas (from 24.8.99) Senator Brian Harradine, Ind, Tas Senator Steve Hutchins, ALP, NSW (from 23 September 1999) Senator Susan Knowles, LP, WA (from 24.8.99) Senator Brett Mason, LP, Qld (from 24.8.99) Senator Julian McGauran, NPA, Vic (from 3.12.98) Senator Shayne Murphy, ALP, Tas (from 20.10.99) Senator the Hon Warwick Parer, LP, Qld (from 24.8.99) Senator Marise Payne, LP, NSW (from 24.8.99) Senator Tsebin Tchen, LP, Vic (from 24.8.99) Senator John Tierney, LP, NSW (from 24.8.99) Senator John Watson, LP, Tas (from 24.8.99) iii Former Senator the Hon David Brownhill, NPA, NSW Members (Deputy Chair 01.07.99 to 14.4.00) Senator Alan Eggleston, LP, WA (to 3.12.98) Senator Brenda Gibbs, ALP, Qld (to 3.12.98) Senator Sandy Macdonald, NPA, NSW (to 30.6.99) Senator John Woodley, AD, Qld (to 12.5.99) Former Senator the Hon David Brownhill, NPA, NSW (to 30.6.99) Participating Members Senator Mal Colston, Ind, Qld (to 30.6.99) Senator Dee Margetts, GWA, WA (to 30.6.99) Secretariat Mr Paul Barsdell, Secretary Dr Kathleen Dermody, Principal Research Officer Mr Robert King, Principal Research Officer Ms Loes Baker, Senior Research Officer Ms Pamela Corrigan, Research Officer Ms Laurie Cassidy, Executive Assistant The Senate Parliament House Canberra ACT 2600 iv TERMS OF REFERENCE On 26 June 1997 the Senate referred the following matter to the Committee for inquiry and report by 1 July 1998: Australia in relation to Asia Pacific Economic Cooperation (APEC) with particular reference to: (a) APEC's progress towards Australia's economic, trade and regional objectives and the domestic implications; (b) the benefits of 'open regionalisation' versus a free trade bloc; (c) the importance to APEC of subregional groupings including the Association of South East Asian Nations (ASEAN), North American Free Trade Area (NAFTA), Asia Europe Meeting (ASEM), East Asia Economic Caucus (EAEC) and Australia-New Zealand Closer Economic Relations Agreement (CER); and (d) future directions of APEC. v TABLE OF CONTENTS Membership of the Committee iii Secretariat iii Terms of reference v Table of contents vii Abbreviations and acronyms xi Recommendations xv CHAPTER 1 1 Introduction Establishment of the inquiry 1 Conduct of the inquiry 1 Scope of the inquiry 1 Asian economic crisis 2 Acknowledgements 3 CHAPTER 2 5 Asia Pacific Economic Cooperation: from idea to 2020 vision The concept of Asia Pacific cooperation 5 Canberra, 1989—APEC is born 9 1990—Reaffirmation of APEC’s general principles and objectives 10 1991—APEC: ‘an international personality’ 11 1992—in search of a vision 12 1993—the Leaders’ Summit and political horsepower 14 1994—the 2020 Vision: the Bogor Declaration 18 1995—drawing up the template: the Osaka Agenda 21 1996—the Manila Action Plan: APEC means business 25 1997—Vancouver: attempts to achieve Early Voluntary Sectoral Liberalisation (EVSL) 29 1998—year of opportunity postponed 33 1999—addressing practicalities 39 vii CHAPTER 3 43 Structure and membership of APEC Introduction 43 Leaders’ meetings 43 Ministerial meetings 45 Senior Officials’ meetings 46 Committees 46 Working groups 48 APEC secretariat 51 APEC Business Advisory Council 51 Eminent Persons Group 52 Membership of APEC 52 CHAPTER 4 61 Trade and investment liberalisation 61 Progress and implementation of Action Plans 65 Tariffs 71 Non-tariff barriers 76 Services 79 Investment 84 Subsidies 88 Summary 90 Open regionalism 91 CHAPTER 5 99 Trade liberalisation—the winners and losers 99 Making APEC work for the community: opening up debate 105 APEC parellel peoples fora 106 Conclusion 111 viii CHAPTER 6 113 Trade and investment facilitation—the costs of doing business Trade facilitation—second pillar of APEC’s agenda 113 The successes—small but significant steps 117 The difficult sectors—marking time 129 Expanding opportunities 137 CHAPTER 7 139 Trade and investment facilitation—challenges ahead for Australia and APEC Introduction 139 Recommendation 143 Trade and investment facilitation—a partnership between government and business 145 Australia’s role in trade facilitation 152 Trade facilitation—building a sense of community 155 Recommendation 155 CHAPTER 8 157 Development cooperation: side track or central to APEC’s future? Introduction 157 Why Ecotech is not aid 158 Development cooperation: future directions for APEC 158 Distilling the agendas: development cooperation under APEC 159 The evolution of Ecotech 162 ‘Designed to Deal with Diversity’: APEC after Subic 164 Building private/public sector partnerships through Ecotech 173 Australia’s foreign policy approaches to development cooperation under APEC 175 Conclusion 178 Recommendation 179 ix CHAPTER 9 181 Subregional groupings—stepping stones or stumbing blocks? Overview of regional trading groups 181 Regional trading groups—stumbling blocks? 183 APEC—part of the global trading system 186 Subregional groupings within APEC 192 SRTA linkages 208 Recommendation 219 Conclusion 219 CHAPTER 10 221 Australia and APEC Australia—not an isolated island 221 PBEC and PECC—the second track 229 Recommendations 233 Public education 234 APPENDICES Appendix 1 239 Submissions Appendix 2 243 Witnesses who appeared before the Committee at public hearings Appendix 3 249 APEC non-binding investment principles, Jakarta, November 1994 Appendix 4 253 Trade facilitation issues Appendix 5 255 Annex A: APEC trade facilitation achievements Appendix 6 257 The Asia Pacific Legal Metrology Forum, and The Asia Pacific Laboratory Accreditation Cooperation x ABBREVIATIONS AND ACRONYMS AEEMA Australian Electrical and Electronic Manufacturers Association ABAC APEC Business Advisory Council ACCI Australian Chamber of Commerce and Industry ACTU Australian Council of Trade Unions AFTA ASEAN Free Trade Area ANU Australian National University ANZCERTA Australia-New Zealand Closer Economic Relations Trade Agreement APEC Asia Pacific Economic Cooperation APLAC Asia Pacific Laboratory Accreditation Cooperation APLMF Asia Pacific Legal Metrology Forum ASEAN Association of South East Asian Nations ASEM Asia-Europe Meeting ATC Agricultural Technical Cooperation Experts Group ATIA Australian Telecommunications Industry Association AusAID Australian Agency for International Development AUSPECC Australian Pacific Economic Cooperation Committee CAP Collective Action Plan CEPT Common Effective Preferential Tariff CER Closer Economic Relations CSIRO Commonwealth Scientific and Industrial Research Organisation CTI Committee on Trade and Investment DFAT Australian Department of Foreign Affairs and Trade DPIE Australian Department of Primary Industries and Energy (now known as Department of Agriculture, Fisheries and Forestry) EAEC East Asian Economic Caucus ECOTECH Economic and Technical Cooperation EPG Eminent Persons Group ESC Ecotech Sub-Committee EVSL Early Voluntary Sectoral Liberalisation FDI Foreign direct investment FEEEP Food, Environment, Energy, Economic growth and Population FTAA Free Trade Area of the Americas GATT General Agreement on Tariffs and Trade GATS General Agreement on Trade in Services GDP Gross domestic product HRD Human resources development HRDWG Human Resource Development Working Group IAP Individual Action Plan ICFTU International Confederation of Free Trade Unions IEG Investment Experts Group ILO International Labour Organisation IMF International Monetary Fund IPR Intellectual property rights IS&T Industrial Science & Technology ITA Information Technology Agreement IVANS International Value-Added Network Service MAPA Manila Action Plan for APEC MFN Most favoured nation xii MRA Mutual recognition arrangement MTIA Australia’s Manufacturing, Engineering and Construction Industry Association NAFTA North American Free Trade Agreement NATA National Association of Testing Authorities Australia NBIP Non-Building Investment Principles NGO Non-government organisations NTB Non-tariff barrier NTM Non-tariff measure OAA Osaka Action Agenda ODA Official development assistance OECD Organisation for Economic Cooperation and Development PBEC Pacific Basin Economic Council PBF Pacific Business Forum PECC Pacific Economic Cooperation Council PEG Partners for Equitable Growth PFP Partners