The Future of APEC and Its Core Agenda
by C. Fred Bergsten, Peterson Institute for International Economics
Keynote speech delivered to the APEC 2010 Symposium, Tokyo, Japan
December 9, 2009
It's a great pleasure to be with you today. I'm delighted that Japan is hosting this APEC 2010 symposium, particularly so quickly after the most recent Leaders' Meeting in Singapore and to get an early start on the APEC program for the next year, 2010. I greatly appreciate the opportunity to offer these remarks. I apologize for not being able to be with you personally, but my own board of directors is meeting on exactly this date, and that's one conflict that I could not resolve in your favor.
It's nevertheless been a great pleasure and privilege—just in the recent weeks and months—to meet with Vice Minister Hiroyuki Ishige here in Washington and with the Director General for Trade Policy, Hidehiko Nishiyama, when I was in Tokyo just a few weeks ago and talk about APEC at some length. I'm also delighted that my colleague and senior fellow from our institute, Jeff Schott, is with you at the conference. He can clear up any mistakes that I make in my remarks and answer questions and elaborate on what I'm hoping to contribute to the discussion through my comments today.
I've been asked to cover several topics: the future vision for APEC; the core agenda for APEC, particularly in 2010; proposals for action over the coming year with Japan as the chair; and probably most important, how we can get back on track to meet the Bogor goals and move toward a Free Trade Area of the Asia Pacific.
I think there is one common answer to all these questions, which I hope APEC will pursue under Japanese leadership in 2010 and beyond that under US chairmanship in 2011.
The strategy for APEC in the period ahead is to move as quickly as possible, as comprehensively as possible—in terms of both country participation and issue coverage—to negotiate and implement a Trans-Pacific Partnership as the first and major step toward a Free Trade Area of the Asia Pacific and thereby achieve the Bogor goals—maybe not so far from the original target date of 2020 that was set 15 years ago.
As we look back over APEC's 20-year history—this year is the 20th anniversary of APEC—it has been defined in terms of success or failure in its efforts on trade liberalization. That's been its focus. The world's impression of APEC—though it has done other valuable things—has really turned on its success or failure in promoting trade liberalization. My reading is that APEC was very successful in that regard during its first five years or so. It set out the Bogor targets to achieve free trade in the area. It thereby pushed the Uruguay Round in the GATT—now the WTO—to successful conclusion. It achieved success in negotiating the ITA (Information Technology Agreement), freeing up half a trillion dollars of international goods and services. It made a promising start on early voluntary sectoral liberalization. So it had a very good five years, and we should not despair at the prospects for the future.
That record, however, has not been as good in the period since. APEC chose to put all its weight behind the Doha Round but in fact did very little to promote the Round. And since that effort in the WTO has itself floundered, APEC's own trade agenda has floundered. However, APEC now has an opportunity to get back on track with the Trans-Pacific Partnership and the prospects that it has for success over the next few years. I think great credit is due to the four smaller countries, Brunei, Singapore, New Zealand, and Chile, that have launched the P4 or the Trans-Pacific Partnership. Great credit also goes to other counties in the region: Australia, Peru, and Vietnam, which are now participating actively in the process to turn the Trans-Pacific Partnership into a bigger and more meaningful occasion.
But what now really gives it an opportunity for major success is President Obama's commitment in Tokyo during his recent visit for the United States to engage directly and actively in the Trans-Pacific Partnership process. I can testify here from Washington that the engagement is serious, it's deep-seated, and it's a firm commitment. Our administration is now consulting with the Congress, consulting with all its advisory committees, and going through the full statutory requirement of our legislation to pave the way for active US engagement in the Trans-Pacific Partnership. And that of course could give the whole initiative a much greater impetus.
Our friends in other countries may not realize how important this initiative by the Obama administration is to begin engaging actively in the Trans-Pacific Partnership. This is the first positive initiative on trade that the Obama administration has taken in any area. It is clearly driven by the administration's emphasis and priority on Asia, its recognition of the need to engage actively and constructively with Asia on trade and economic issues—partly because that's the most dynamic area in the world economy and partly because it recognizes Asia is moving toward its own arrangements that would otherwise discriminate against the United States and hurt US trade interests.
We, who have worked hard on the Obama administration and with it to promote its taking positive trade initiatives, believe this could be a very important breakthrough and therefore hope that our friends in Asia will support, promote, and work with the United States in moving this initiative forward, just as rapidly and as comprehensively as possible.
The agenda for APEC in 2010 is to do everything possible to make this initiative succeed. That's of course up to the eight countries, including the United States, that have already indicated their participation in the negotiation. But I think it's equally important that other APEC countries seriously consider joining the enterprise as soon as possible.
I know some, like Canada, are thinking about that. I have every confidence—from a recent visit—that Korea would do so as well, once its free trade agreement with the United States has passed the parliaments in both countries. I would suggest that Japan—as part of its leadership of APEC in 2010—should itself directly engage in the Trans-Pacific Partnership talks. This would provide a critical mass to the whole exercise, make it very important in trade and economic terms, establish Japan's leadership in the entire APEC process, and put a whole additional cast on the Trans-Pacific Partnership initiative and what it will mean. It would broaden the geographic scope of the Trans-Pacific Partnership to cover all major components of the APEC region, which I think would be the best possible indication of Japanese leadership of APEC 2010.
There is a second critical reason why I think Japan particularly should take leadership by engaging in the Trans-Pacific Partnership in 2010. Japan has taken very active leadership within Asia to promote a new Asian economic architecture. Japan has proposed the ASEAN+6 variant and initiated the East Asian Summits, which is an alternative of course to the ASEAN+3—I don't judge how that should come out. But I think it is very important for everybody to recognize—most Asians of course do so—that a new East Asian architecture is in the process of formulation. Within the next few years we will have the equivalent of an East Asian trade agreement, probably an East Asian monetary agreement headed toward an Asian monetary fund, whether it is called that or not. And so, whatever the terminology, Asia is headed toward a regionwide economic compact that will in some sense amount to an Asian bloc.
APEC faces a major challenge in making sure that the Asian bloc that is developing not draw a new line down the middle of the Pacific—in the famous words of former Secretary of State James Baker. The purpose of APEC was of course to make sure that there was Trans-Pacific agreement, so as to avoid any possible disintegration of the Asia-Pacific area. The Trans-Pacific Partnership is a way to promote integration instead and that is the second major reason why I would hope Japan, as the chair, but the Asian countries more broadly would be willing to move simultaneously to forge new Trans-Pacific trade liberalization—at the same time they are moving toward economic integration within Asia itself.
It seems to me the way to move decisively in that direction is to embrace and develop the Trans-Pacific Partnership as quickly and as comprehensively as possible. That strikes me as the ideal vehicle now available to move the whole process. At the end of the day, the Trans-Pacific Partnership could provide a vital steppingstone toward achieving a Free Trade Area of the Asia Pacific, which in turn is nothing more than the original Bogor goals that the leaders of APEC decided 15 years ago.
A successful realization of the Trans-Pacific Partnership could thus put APEC back on the successful path of trade liberalization, restore the vitality of APEC, provide an institutional locus for Trans-Pacific agreement, and avoid any risk of a breakdown in relations between the two sides of the Pacific. It thereby would provide a favorable prospect for achieving the Bogor goals more or less on schedule by 2020.
My bottom line in thanking our Japanese host for asking me to speak today is to hope that Japan will lead that process in 2010. I hope Japan itself will join the Trans-Pacific Partnership initiative during the course of this year and thus give it further and decisive momentum. I would hope Japan and the United States would work closely to move the process forward in 2010 and perhaps bring it to a successful conclusion: a signing of the Trans-Pacific Partnership at the Honolulu Summit in the fall of 2011.
I wish you all the best of success in your conference on discussing APEC 2010. I hope these thoughts will be helpful in suggesting a way to move forward. I wish all of you and all our friends at APEC the best of success in getting back on the track of trade liberalization, moving toward a Trans-Pacific Partnership in the next year or two, and thereby restoring the promise of APEC that began 20 years ago.