How Apec can help drive growth amid fresh optimism for Asia-Pacific cooperation

With Trump out of the frame and potentially strong New Zealand leadership of Apec, region-wide collaboration is once again high on the agenda
Given its position at the heart of the region’s most recent trade agreements, there is huge potential for Apec to liberalise and boost growth in the Asia-Pacific

David Dodwell

Published: 5:30am, 15 Feb 2021

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After more than 12 years supporting Hong Kong business input to the 21-member Asia-Pacific Economic Cooperation (Apec) forum, I am, with some sadness, stepping down this month.

It is a good time, then, to do a kind of audit of an organisation I have always admired and valued but has never been fashionable. International trade economists often joked that the name was no more than four adjectives in search of a noun. With no treaty-making power, it is regularly dismissed as nothing more than a talk shop.

Many say its only material achievement is the precious Apec Business Travel Card. It might not be very useful in the midst of the pandemic’s international travel lockdowns, but it has always been a source of deep envy for those travellers so frequently stuck in interminable airport immigration queues.

Ever the contrarian, I have always disagreed on Apec’s merits. The absence of treaty-making powers is a blessing, if for no other reason than that it clears lawyers from the room.

I am reminded of a meeting in the spring of 2011, when the US chaired Apec, and its motif for the year was “get stuff done”. Hong Kong’s then-Apec Business Advisory Council (Abac) member Anthony Nightingale flew in to the still-snowy Big Sky, Montana, just a stone’s throw from Yellowstone Park, to present a business-sector proposal for Apec to adopt a “non-binding investment principles” document.

01:58

What is Apec all about?

Within minutes of the discussion starting, lawyers joining the Australian delegation butted in, seeking to amend wording. The US chair called the lawyers to a halt, insisting the legal contribution was neither helpful nor welcome. “This is a ‘non-binding’ proposal. If a member does not want to adopt it, they don’t have to. Let’s be aspirational here,” he said in a very “get stuff done” tone.

Cutting a long story short, within two meetings, Apec officials had endorsed the succinct, three-page document. We in Abac emphasised that member economies were free to observe the principles or not, but as heads of many of the region’s most significant businesses, the message was clear – these are the factors that will encourage private-sector investment. Observe them, and your economy is likely to succeed in attracting investment. Ignore them, and investment flows will be meagre.

If such a proposal had been made in a treaty-making organisation, lawyers would have swarmed all over it. The negotiation process would have stretched for years. The document would have been 300 pages long, not three. Any organisation that can keep the lawyers at bay in this fashion definitely has my vote.

03:29

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In the absence of treaty-making activity, Apec has focused instead on distinct tasks that provide a marvellous complement to binding treaty-making organisations such as the Association of Southeast Asian Nations, the Pacific Alliance or even the World Trade Organization, as well as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Perhaps most distinct is Apec’s dedication to best-practice learning and capacity-building and its formal embrace of the business voice.

For example, workshops on how to build and fund an efficient waste management infrastructure or how to fund infrastructure such as ports and power plants would have members providing “show and tell” presentations alongside input from experts in global agencies such as the World Bank or Asian Development Bank.

There would be convergence around what the majority believed was best practice but no attempt to draft strict rules. Quietly, and without further external pressure, new rules on waste management infrastructure or financing “big infrastructure” would emerge, economy by economy.

The work was not sexy. It was technical and unpolitical. It did not grab any media headlines, but its value cannot be underestimated.

01:15

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Progress over the past four years has been disappointing. Former US president Donald Trump’s “America first” mantra was totally at odds with the core Apec principles of inclusive growth. Lip service to these core principles remained firm, but the unilateral spirit of the US administration made practical progress heavy going.

The clear and simple Apec aspiration towards “free and open trade and investment” in the region by 2020, agreed in Bogor in Indonesia in 1994, was self-evidently frustrated.

At the end of last year, under Malaysian chairmanship, members agreed to a new “Putrajaya vision” to 2040, committing to “free, open, fair, non-discriminatory, transparent and predictable trade and investment”, aimed at “strong, balanced, secure, sustainable and inclusive growth”. Let’s just say that the more adjectives they add, the more nervous I become.

With Trump and his zealots out of the frame and potentially strong New Zealand leadership throughout 2021, there is fresh optimism about material region-wide cooperation, even while travel bans and reliance on clunky virtual engagement are likely to hinder the process.

04:45

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Apec’s priorities are also comfortingly clear: breathe fresh life into multilateralism and multilateral institutions such as the WTO and the World Health Organization; facilitate regional cooperation tackling and suppressing the Covid-19 pandemic; develop a consensus vision on climate change in time for the UN conference in Glasgow in November; and work together to dig out of the pandemic recession.

For the long term, I still see huge potential in Apec’s informal potential to liberalise and drive growth in the Asia-Pacific, not least because of its pivotal position at the heart of all of the region’s most recent trade agreements.

The 11 members of the CPTPP are all Apec members. All but three of the members of the recently signed Regional Economic Partnership (RCEP) are also Apec members. The CPTPP and RCEP have seven members in common.

Within Apec, despite suggestions of rivalry between these groupings, there is optimism that all will provide foundations for the Free Trade Area of the Asia-Pacific, or as some business leaders in Abac are quietly calling it, the Asian Economic Community.

It is perhaps difficult, from the depths of the pandemic recession, to feel the lift these complementary regional groupings can provide across the Asia-Pacific. The impetus is there, though, and will be felt increasingly strongly in the coming years. I am sad I will not be part of it, but from afar I will certainly be cheering it on.

David Dodwell researches and writes about global, regional and Hong Kong challenges from a Hong Kong point of view