APEC, the United States and free trade

The Asian and Pacific Economic Co-operation forum (APEC) was founded in 1989 with more or less the same objectives as those of the WTO, i.e., to promote free trade. It came into being as a result of the long-felt desire of the Pacific Rim countries to have a forum in which all the Pacific states could " advance common interests and attempt to resolve conflicts". At present APEC has got 21 members, some of whom are very powerful while others are not. Canada, Japan, the United States, China, Taiwan, Hong Kong, Singapore, Malaysia, Brunei, Thailand, Vietnam, Indonesia, Papua New Guinea, the Philippines, Australia, New Zealand, Mexico, Chile and other members constitute some 2.5 billion people and account for approximately half of world's economic production and trade. Although its primary objective is to promote regional free trade, it is also committed to reducing trade barriers with other countries so that world is not divided into hostile trading blocs. The permanent offices of the organisation are located in Singapore. APEC holds an annual meeting of the heads of government of member nations.

The American president George W. Bush came to this year's APEC meeting with a set agenda, which was dominated more by security concerns than by economic issues. Since APEC was constituted as an economic co-operation forum, the American stance on terrorism created conflicts and deep divisions among the member nations. Bush tried hard to rally APEC members to do more to help him on his global crusade against so-called Islamic terrorism. As expected, Australia's prime minister John Howard, who has often been dubbed in the international media as Bush's deputy sheriff, wholeheartedly supported Bush's strategy to tackle terrorism by military means alone. (According to some reports, negotiations are well under way to establish new American bases in Australia, Vietnam and other south-east Asian countries. It is difficult for me to understand how the leaders of these countries can be so naive as to allow the establishment of American bases on their countries' soil, given the fact that Bush's America insists on the doctrine of pre-emptive strikes and regime changes in the conduct of its foreign policy.) There were others who recognised that there was indeed a problem but it had to be dealt with by addressing the root causes of terrorism, such as poverty and the West's double standards.

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Malaysia's prime minister Mahathir bin Mohamad flatly refused to be dragged into this controversy. "We do not agree with taking away economic matters into security, military or politics, which are not really for APEC", he said. Mexico also sided with Malaysia in this controversy. But once again the final communique reflected the hegemonic position of the US in the world, which clearly dominated the agenda. The summit urged the members to "eliminate the severe and growing danger posed by the proliferation of weapons of mass destruction" and to "dismantle fully and without delay transnational terrorist groups that threaten the APEC economies". While the summit was in progress, Israeli army's American-supplied F-16 jetfighters and Apache helicopters were busy killing innocent civilians and even medical staff -- who were trying to cure the injured -- in the refugee camps of the occupied territories of Palestine .Of course, no mention was made of these continuous acts of state terrorism. No wonder, American prestige is so low and anti-Americanism is so high all across the Muslim world.

Bush was not so successful on the North Korean issue. He had come to the meeting to persuade the APEC leaders to support him in imposing economic sanctions on North Korea and even in taking military action against this country if it did not dismantle its nuclear programme. Instead, the summit insisted on a peaceful solution through multilateral talks. No specific mention was made of the perceived North Korean nuclear threat nor of any sanctions.

The next item on Bush's agenda was economic. He wanted APEC to put pressure on China to re-value its currency because according to some American economists hundreds of thousands of jobs had been lost in the US because of the low value of the Chinese currency. The APEC members refused to be bullied by Bush to put pressure on China. In this context it should be mentioned that before coming to Bangkok, Bush visited Tokyo to persuade Japan to let the yen rise, when Prime Minister Koizumi himself is fighting for his own political survival. Currently Japan is trying to come out of a deflationary situation and its economy is basically an export-oriented one. In both cases (Japan and China) Bush was told that the US domestic economic policies like enormous tax-cuts and reckless spending were more responsible for its economic woes like rising unemployment, runaway trade and budget deficits and rising debt burdens (Bush should thank his lucky stars that his country's ballooning foreign debt is in its own currency, i.e., the US dollar.) than the low Chinese and Japanese currencies.

On the issue of freer trade, although Bush wanted his Asian colleagues to give further market access for US products, he was more sympathetic to the grievances put forward by the developing countries. His team was perfectly aware that US and EU domestic subsidies to agriculture were primarily responsible for the failure of last month's talks, held under the auspices of WTO in Cancun. The US Secretary of State Colin Powell signalled a change in the US policy on farm subsidies by indicating that the US might be willing to make concessions on this thorny issue. The APEC summit urged the world leaders to resume trade negotiations, "using as a starting point a proposed agreement rejected last month by developing countries". The reason why this document should be considered as a starting point was because if one wanted to start from scratch, it would, according to the rich industrialised countries, push back the negotiations by two years.

Brazil and India who led the alliance of G-23 (under intense American pressure Colombia, Costa Rica, Ecuador, Guatemala, Peru and several other countries have since defected from this group. According to some reports, the group has now shrunk to only 12) in Cancun and who are not members of APEC may not agree to this recommendation and may subscribe to the views of the Malaysian prime minister who, at the beginning of the summit said that the Cancun text represented the Western agenda and the talks should restart with a text prepared by the developing countries. Such a text would no doubt insist on not only the abolition of agricultural subsidies in the US and the EU but also on opening the European and US markets for their agricultural products and low-tech manufactured products like textiles. The APEC leaders did make a firm statement on agricultural subsidies, "We agreed to work toward the abolition of all forms of agricultural export subsidies, unjustifiable export prohibitions and restrictions".

The next meeting of World Trade Organisation (WTO) will be held in Geneva on or before December 15, 2003. Its primary objective will be to heal the wounds and overcome the sense of frustration created by the sudden collapse of last month's talks in Cancun between the industrialised North and developing South, whose economies are based primarily on agriculture. Now that the original G-23 has been reduced to G-12, the US may expect less resistance from the developing countries on the issue of agricultural subsidies in the industrialised North. But in my opinion, since important countries like Brazil, China, India, South Africa are still members of this alliance and these countries have not relented, the United States will not have an easy ride at the December WTO meeting in Geneva. On the contrary, in the recently signed "Buenos Aires Consensus", Brazil and Argentina pledged "to resist efforts by the United States to undermine their unity in regional and global trade talks." If the United States wants the negotiations to move forward, in other words, if it wants the Doha Round to be successful, it will have no other alternative but to put emphasis on the Doha Round's central objective, i.e. development. In order to achieve this objective, it will gradually have to dismantle unfair trade practices such as farm subsidies and high tariffs on low-tech manufactured products from the developing countries. It must realise that this shameful policy of giving billions of dollars of agricultural subsidies to wealthy domestic farmers (which inevitably leads to dumping on the international markets) destroys the livelihood of millions of poor farmers in the developing countries of the South.