APEC and World Trade

C. Fred Bergsten

From Foreign Affairs, May/June 1994

Article preview: first 500 of 2,990 words total.

Summary:  Housing a host of flourishing economies, the Asia-Pacific Economic Cooperation forum can serve as a laboratory to test and refine global trade negotiations.

C. Fred Bergsten is Director of the Institute for International Economics, Chairman of the Competitiveness Policy Council and Chairman of the APEC Eminent Persons Group.

Contrary to most expectations about regional economic organizations, the Asia-Pacific Economic Cooperation (APEC) forum is poised to become a driving force for worldwide trade liberalization. There is already strong evidence for this conclusion: the additional liberalization offers that APEC developed at its Seattle summit in November 1993 made an important contribution to the subsequent success of the Uruguay Round, as did the message to countries outside the Asia-Pacific region that APEC represented a feasible alternative to global progress if the GATT talks were to fail. This development may be the most important of several promising initiatives launched at Seattle.

As envisioned by its Eminent Persons Group (EPG), whose proposed vision for APEC was broadly endorsed at Seattle, APEC would become neither a customs union like the European Union nor a free trade area like that covered by the North American Free Trade Agreement (NAFTA). APEC would support every effort in the GATT, as it did to help achieve success in the Uruguay Round. But APEC would also try to achieve regional agreement on issues that could not yet be resolved at the global level. It would address both those that had been tried in the GATT but failed and those that had not yet found their way onto the global agenda. It would then offer to open its accords to other countries, hopefully the entire GATT membership, that were willing to accept their obligations. APEC is, in essence, considering a wholly new model of regional economic cooperation: a steady ratcheting up of trade liberalization between the regional and global levels that would confirm its dedication to "open regionalism."

The initiatives begun at Seattle, in addition to benefiting the Asia-Pacific region, could thus be the catalysts for new global trade negotiations to maintain the momentum of liberalization. This is crucial because extensive protectionist backsliding marked the lengthy hiatuses after completion of the earlier GATT rounds in the late 1960s and late 1970s. The recent success of the seven-year-long Uruguay Round avoided the devastation that its failure would have wreaked on world trade and the fragile world economy. But protectionist sentiments are still quite evident in many quarters and could bloom in a vacuum as they have done so often in the past.

APEC?s uniqueness as a regional economic organization and its potential leverage on the direction of world trade derive from the magnitude of economic activity in the region, the economic strategies of the participating nations and the attitudes of their leaders. A close look at APEC?s Seattle meetings and the strategic considerations of its member states? leaders illustrate these points.1

Both the Asian and North American members fear that further erosion of the global trading system could undermine their strategies of export-led growth. Both groups worry about inward-looking regionalism in Europe, and Asians worry about similar trends in the Western Hemisphere as NAFTA takes effect and considers expanding southward. Asians are concerned that American withdrawal from the region could trigger instability there, and the United States, having fought three ...

End of preview: first 500 of 2,990 words total.