APEC Quo Vadis

APEC Quo Vadis?
Author(s): David K. Linnan

Source: The American Journal of International Law, Vol. 89, No. 4 (Oct., 1995), pp. 824-834
Published by: American Society of International Law
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824 THE AMERICAN JOURNAL OF INTERNATIONAL LAW [Vol. 89
states that could not accept being bound provisionally regarding one specific aspect
without a clear statement of the general rule.
States and entities for which the Agreement is not in force may continue to participate
as members of the Authority on a provisional basis, under two conditions. First, if the
Agreement enters into force before November 16, 1996, these states are entitled to
continue their participation upon notification to the depositary until November 16,
1996, or until it enters into force together with the Convention for such members. Only
the Council of the Authority can authorize a further extension. Second, if the Agreement
enters into force after November 15, 1996, the Council upon request can grant continued
provisional membership in the Authority but not beyond November 16, 1998. Under
Article 7, paragraph 3 of the Agreement, the provisional application shall terminate on
November 16, 1998, if the Agreement has not already entered into force in accordance
with Article 6.
CONCLUDING REMARKS
If the majority of industrialized states does not become party to both the Convention
and the Agreement within the next four years, the coexistence of a dual regime will
pose a real threat. A practice will nevertheless develop in accordance with the terms of
the Agreement, which will then make it impossible for states to apply the regime in Part
XI of the Convention. The following results may therefore be expected: (1) the
Agreement will have achieved what all industrialized countries had envisaged, that is,
prevention of the implementation of the Convention's seabed regime; (2) the regime
applicable to pioneer investors, which had developed efficiently and pragmatically within
the Preparatory Commission, will continue to develop within the Authority; and (3) the
latter regime will thus benefit from the participation of other industrialized countries
belonging to the group of potential investors, such as the United States, which, by virtue
of the Agreement, will legally be able to become explorers of the deep seabed.
ANNICK DE MARFFY-MANTUANO*
*
Senior Law of the Sea Officer, United Nations. The opinions expressed in this paper are those of the
author and do not necessarily reflect those of the United Nations.
APEC Quo VADIS?
What do we mean by Asia-Pacific Economic Cooperation (APEC)? In a world of trade
law populated by international organizations such as the General Agreement on Tariffs
and Trade/World Trade Organization (GATT/WTO), the North American Free Trade
Agreement (NAFTA) and the European Union (EU), the term APEC suggests yet another
international organization. But one would look in vain for an international agreement
creating APEC or for the usual organs that an international organization possesses, al-
though it has an active secretariat and coordinates production of a large quantity of
research materials. All three Chinas (the People's Republic, Hong Kong and Taiwan)
participate in its activities, a practice that would be unacceptable to at least one of them
if APEC were a normal international organization. Indeed, uncertainty about the nature
of Pacific economic cooperation has suggested at least four distinct institutional models:
(1) an integrated supranational community originally modeled on the European Eco-
nomic Community (a 1960s Japanese scholarly proposal);' (2) a looser organization
'
See, e.g., Bernard K Gordon, Japan and the Pacific Basin Proposal, KoREA & WORLD AFF., Summer 1981, at
268, 270; Peter Drysdale, An Organization for Pacific Trade, Aid and Development: Regional Arrangements and the
Resource Trade, in MINERAL RESOURCES IN THE PACIFIC AREA 611, 613-14 (Lawrence Krause & Hugh Patrick
1995] CURRENT DEVELOPMENTS 825
modeled on the Organisation for Economic Co-operation and Development, or OECD
(a similar 1970s scholarly proposal) ;2 (3) a full-scale regional trade area within the mean-
ing of GATT Article XXIV, intended seemingly as an alternative to GATT multilateralism
(a 1980s concept originally modeled on the Canada-United States Free Trade Agreement
and later involving the possible extension of NAFYA to include Asian countries) ;3 and (4)
an open economic area, also referred to as "open regionalism" (the latest proposal).
The last, as commonly understood, rejects any formal regional trade area in favor of
trade liberalization across the region-with nuances lying in the treatment of non-APEC
members and reliance on continuing unilateral liberalization.4
APEC's precursors enjoyed a relatively long history, albeit an inconclusive one.5 Official
U.S. interest in Pacific economic cooperation dates to congressional inquiries in the late
1970s and 1980s;6 these were colored by country-specific bilateral trade concerns, and,
in the 1980s, by ideas for regional free trade area alternatives if the Uruguay Round of
GATT negotiations should fail. Active interest by other countries started as early as the
1960s with the exploration byJapan of its role in Asia, and continued in the 1970s with
efforts at commercial diplomacy byJapan and Australia, which were rooted in concerns
about European protectionism and relations with major trading partners.7 Developing
countries initially were drawn into the process in the early 1980s, largely through Japa-
eds., 1978). Japanese academic economists promoting regional economic integration came together in the
Japan Economic Research Center founded in the early 1960s. In 1965 Professor Kioushi Kojima presented a
concrete proposal for a Pacific Free Trade Area to include the United States, Japan, Canada, Australia and
New Zealand. This interest was then institutionalized in a series of regional international conferences, the
Pacific Trade and Development Conferences (PAFTAD), which continue to this day.
2 The idea of an Organisation for Pacific Trade and Development (OPTAD) is usually credited to Sir
John
Crawford and Saburo Okita. See Saburo Okita, Pacific Regional Co-operation, in POLICYAND PRACTICE: EssAYS IN
HONOUR OF SIRJOHN CRAWFORD 122 (L. T. Evans &J. D. B. Miller eds., 1987). The OPTAD idea was pursued
in PAFTAD during the late 1970s, see note 1 supra, and eventually spawned PECC, see note 8 infra, as its own
seminar series.
3
See U.S. INT'L TRADE COMM'N, PUB. No. 2166, THE PROS AND CONS OF ENTERING INTO NEGOTIATIONS ON
FREE TRADE AREA AGREEMENTS WITH TAIWAN, THE REPUBLIC OF KOREA, AND ASEAN, OR THE PACIFIC RIM REGION
IN GENERAL (1989); PETER DRYSDALE & Ross GARNAUT, A PACIFIC FREE TRADE AREA? (Australia-Japan Research
Centre Pacific Econ. Paper No. 171, 1989).
4The exact meaning of "open regionalism" was an open question in the run-up to the Jakarta APEC
meetings, although its leading academic statement may be found in Ippei Yamazawa, On Pacific Economic
Integration, 102 ECON. J. 1519 (1992) (claiming that Pacific economic integration has resulted from market
forces and investment, rather than any formal obligations or structures; thus, it is argued that APEC would
best support the existing mechanisms of integration rather than rely on formal obligations like the Treaty of
Rome or NAFTA). The current discussion of open regionalism is commonly conducted in terms of disputes
concerning the 1994 EPG REPORT, infra note 12. See, e.g., AUSTRALIA-JAPAN
RESEARCH CENTRE, AUSTRALIAN,
INDONESIAN AND JAPANESE APPROACHES TOWARDS APEC 5-7 (1994); text at and notes 23-25 infra.
5 See, e.g., Hadi Soesastro, Pacific Economic Cooperation: A Historical Explanation, in INDONESIAN PERSPECTIVES
ON APEC AND REGIONAL COOPERATION IN ASIA PACIFIC 3 (Hadi Soesastro ed., 1994); Hadi Soesastro, Prospects
for Pacific-Asian Regional Trade Structures, in PACIFIC-ASIAN ECONOMIC POLICIES AND REGIONAL INTERDEPENDENCE
308 (Robert A. Scalapino et al. eds., 1988); MICHAEL W. OSBORNE & NICOLAS FOURT, PACIFIC BASIN ECONOMIC
COOPERATION 7-14 (OECD, 1983).
6 See CONGRESSIONAL RESEARCH SERVICE, LIBRARY OF CONGRESS, AN AsIAN PACIFIC REGIONAL ECONOMIC
ORGANIZATION: AN EXPLORATORY CONCEPT PAPER (1979) (prepared for the Senate Comm. on Foreign Rela-
tions), also available as PETER DRYSDALE & HUGH PATRICK, EVALUATION OF A PROPOSED ASIAN-PACIFIC REGIONAL
ECONOMIC ORGANIZATION (Australia-Japan Econ. Relations Research Project Paper No. 61, 1979); and sources
cited in note 3 supra. Of course, general U.S. interest reaches back to the beginning of the Cold War period,
but it seems reasonable to draw the line for economic cooperation following the Vietnam War.
7On a political level, the Japanese interest might date from 1960, when Diet member Morinosuke Kajima
suggested the creation- of a Marshall Plan-style Asia Development Fund (providing grants necessary for develop-
ment). He seems to have been inspired by a combination of pan-Asian ideas and his conception of Japan's
role in the region. See MORINOSUKE KAJIMA, THE ROAD TO PAN-ASIA (1973); Tessa Morris-Suzuki, Japan and
the Pacific Basin Community, 1981 WORLD TODAY454. Early on, the pan-Pacific economic integrationist sentiment
prevailed over the pan-Asian sentiment in Japan, but such basic issues are still recognizable today in ideas like
the proposal for an East Asian Economic Group, initially advanced by Prime Minister Matahir of Malaysia as
an APEC alternative. See note 23 infra.
nese-Australian efforts (in advancing a quasi-private group known as the Pacific Economic
Cooperation Council, or PECC, which continues to play a role8). APEC itself was
launched at a November 1989 ministerial meeting in Canberra, Australia, largely as a
forum grouping the ASEAN countries with Pacific Rim industrialized nations (Japan,
Australia, Canada and the United States).9 Looking forward, the question is: what path
for the future of APEC will emerge from the Osaka meeting of its political leaders in
November 1995? Will it evolve toward an OECD-style discussion and study forum, or will
it serve as a more active vehicle for accelerating expansion of the multilateral trading
system under the so-called new trade agenda?
APEC's DEVELOPMENT THROUGH ITS JAKARTA MEETING
Several seemingly unrelated characteristics promoted APEC's rapid rise. First, APEC
is technically a forum for economic cooperation but has shadow links to broader Pacific
Basin security issues (which pushes APEC's development collaterally as a post-Cold War
institution). Second, its birth during the Uruguay Round bears witness to the initial
character of APEC as a free trade pressure group and incipient regional alternative (in
case traditional GATT multilateral negotiations failed). Third, by 1991 APEC's member-
ship included the three Chinese economies. Outside GATT's institutional strictures,
APEC incorporated the developing world's success stories (newly industrialized econo-
mies, or NIEs, and other dynamic high-growth Asian economies, in World Bank parlance)
alongside its perceived future economic giant. Finally, APEC was promoted from eco-
nomic bureaucracy to high-level politics through the device of the informal political
leadership meeting (commencing with the 1993 Blake Island meeting convened on
President Clinton's invitation, established as a pattern for the foreseeable future by the
1994 Jakarta and 1995 Osaka meetings).
Currendly, APEC exists as a process of regular intergovernmental meetings at four
levels. The lowest functional level involves an ad hoc working group structure composed
of two substantive committees (Trade and Investment, and Economic) plus ten subject
groups, through which outside work may be commissioned or accepted, or individual
countries may be asked to write research or policy papers or run projects such as trade
fairs.'0 One step up, meetings of senior officials (SOMs) are held three to five times
x Prior to APEC's creation as an intergovernmental forum, PECC's tripartite structure of government, busi-
ness and academic participants was loose enough to permit the study and discussion of issues under the cover
of nongovernmental status (government officials participated in their "private capacity"). For smaller countries
such as members of the Association of Southeast Asian Nations (ASEAN), academic participants are frequently
drawn from think tanks with close connections to, if not formal sponsorship of, their national governments.
Given that small countries may not have a substantial separate foreign trade policy apparatus within govern-
ment, the selfsame academic participants may be government policy advisers (which casts PECC in a special
light when considering it as a source of private-sector input). See also text at and notes 25, 27 infra.
'The mechanism to this end was the so-called 1990 Kuching Consensus under which, following APEC's
founding meeting in Canberra, the ASEAN countries set out their basis for participation in APEC: preserving
the identity and cohesion of ASEAN without diluting its cooperative relations with its dialogue partners and third
countries; basing APEC on principles of equality, equity and mutual benefit, taking into account differences in
stages of economic development and sociopolitical systems; avoiding formation of an inward-looking economic
or trading bloc, and seeking instead to strengthen the multilateral trading system; employing APEC as a
consultative forum on economic issues, rather than adopting mandatory directives for any participant to
undertake or implement; facilitating mutual cooperation to promote APEC members' common interests in
larger multilateral foruihs; and proceeding gradually and pragmatically with APEC rather than seeking rapid
institutionalization.
"' The committees grew out of working groups, and their broad subject areas reflect the problem that APEC
has grown like Topsy without setting priorities. The 10 current working groups consist of Trade Promotion,
Trade and Investment Data Review, Investment and Industrial Science and Technology, Human Resources
Development, Regional Energy Cooperation, Telecommunications, Fisheries, Marine Resource Conservation,
Transportation and Tourism. Outside the functional groups, the Budget and Administrative Committee enjoys
oversight over the APEC Secretariat's budget and disbursements, which is important as the funding mechanism
annually to review and direct all working groups from the different substantive areas.
Ministerial meetings for foreign-affairs and economics officials (involving the U.S. Secre-
taries of State and Commerce as well as the Trade Representative) are held annually to
direct and evaluate the SOMs' work product; at the same time, a pattern is developing
of separate ad hoc exploratory meetings of ministers for substantive areas such as the
environment and finance (seemingly a special variety of policy-level working groups).
Finally, since 1993 meetings of APEC's political leaders have aimed at providing direction
and further goals in capping the annual process." However, APEC's formal intergovern-
mental structure preserves aspects of the older mixed public-private character of Pacific
economic cooperation fora to the extent that it formally integrates an existing one
(PECC) down to the level of a SOM observer. Most recently, APEC has commissioned
nongovernmental commentary from the so-called Eminent Persons Group (EPG) 12 and
the Pacific Business Forum (PBF).13 Beyond PECC, PBF and the EPG, private-sector and
business commentary find their way into the APEC process informally at the working
group level.
Given its organization, the APEC process invites a yearlong dialogue in working group
meetings steered from the SOM level (concentrating on issues raised by the prior year's
ministerial and political leaders' meetings). Policy statements like the APEC political
leaders' final communique for their Indonesian meeting of November 14-15, 1994
(known as the Bogor Declaration'4) and the related Sixth Ministerial Meeting Joint
Statement (Jakarta Ministers' Statement)'5 straddle the prior and coming year's pro-
cess.'6 The appropriate starting point for evaluation of APEC's recent progress is to go
for working group projects. APEC SECRETARIAT, ASIA-PACIFIC ECONOMIC COOPERATION 3-7 (1994). In terms
of organizing the work flow, individual countries typically work up a variety of reports for successive consider-
ation by working groups and meetings of senior officials. Working group projects also include activity such
as organizing seminars, for example on customs standardization. The meetings of senior officials are also the
initial level of consideration for commissioned outside policy reports such as those of the Eminent Persons
Group and the Pacific Business Forum, as well as the high-level guidance of political leaders' "vision state-
ments."
"The acknowledged problem with APEC's organizational structure lies in choosing priorities under the
open-ended rubric of Pacific economic cooperation. It has been addressed thus far largely by delegating
control of meeting agendas to the host country for its year's round of talks, as well as, more recently, drafting
responsibility for the political leaders' vision statement (to the United States in 1993, Indonesia in 1994 and
Japan in 1995). However, this results in continuing ambiguity under differing economic perspectives and
invites the injection of the host country's views into the APEC process itself. This peculiar aspect represents
a conscious choice and strength in many ways. Nonetheless, it complicates matters to the extent the organiza-
tional tiller swings around from year to year. More generally, proposals have been made to consolidate
burgeoning working groups to impose order on the process, e.g., APEC: A New Vision, Korea-Canada Joint
Paper on the Future Structure of APEC, Agenda Item 9, Fifth Ministerial Meeting (Nov. 1993), but no
significant action has been taken.
12 The EPG has thus far produced two reports, A VISION FOR APEC: TOwARDS AN ASIA PACIFIC ECONOMIC
COMMUNITY (1993) [hereinafter 1993 EPG REPORT], and ACHIEVING THE APEC VISION: FREE AND OPEN TRADE
IN THE ASIA PACIFIC (1994) [hereinafter 1994 EPG REPORT]. The EPG's membership overlaps somewhat with
both the academic and the business elements of PECC, see note 8 supra, the difference from the U.S. standpoint
being that PECC appears to be continuing in its traditional status as a more consensual group focused on
economic integration, while EPG has taken higher-profile positions in the area of,trade liberalization (especially
through its 1994 EPG Report).
13
Thus far, the PBF has produced one report, A BUSINESS BLUEPRINT FOR APEC: STRATEGIES FOR GRowrH
AND COMMON PROSPERITY (APEC 1994).
14
For the text, see APEC 'Economic Leaders' Declaration of Common Resolve" Issued Bogor, Indonesia; November
15, 1994, available in BNA, Daily Rep. for Executives 219 (Nov. 16, 1994), 34 ILM 758 (1995).
'5APEC Ministerial Meeting, Joint Statement (Nov. 11 -
12, 1994).
'6APEC member economies represented in Jakarta included Australia, Brunei Darussalam, Canada, the
People's Republic of China, Hong Kong, Indonesia, Japan, the Republic of Korea, Malaysia, Mexico, New
Zealand, Papua New Guinea, the Philippines, Singapore, Taiwan (Chinese Taipei in APEC parlance), Thailand
and the United States. Chile was also represented, as it formally joined APEC as part of the proceedings.
Official observer institutions, including the ASEAN Secretariat, PECC and the South Pacific Forum or SPF (as
828 THE AMERICAN JOURNAL OF INTERNATIONAL IAW [Vol. 89
back to the Fifth APEC Ministerial Meeting Joint Statement (Seattle Ministers' State-
ment)'7 and related first APEC Economic Leaders' Vision Statement (Seattle Leaders'
Declaration),"8 as well as the related preliminary work.
The 1993 EPG Report was formulated prior to the conclusion of the Uruguay Round.
Thus, its greatest emphasis lay in supporting the ongoing GATT negotiations (while
contemplating alternatives if they should fail). On the assumption that the Uruguay
Round would succeed, the report recommended an undertaking to launch a major new
round of multilateral trade liberalization by the end of 1995, including a tightening of
regional arrangements with annual reviews (volunteering to submit for such review APEC
itself and its own regional trade areas such as NAFTA and the ASEAN Free Trade Area,
however, with implicit importance for the EU as a regional trade grouping). 19
The further recommendations of the 1993 EPG Report may be divided into three
areas: trade liberalization, trade facilitation and technical cooperation. Its trade liberaliza-
tion goal of free trade within the region was phrased in terms of going beyond GAIT's
traditional coverage as necessary, with notable items including not only environmental
matters, but also competition policy and the full panoply of services, intellectual property,
foreign investment, state involvement in the economy, and goods. Distinguishing trade
facilitation from liberalization, the report also recommended adoption of an Asia Pacific
Investment Code (APIC) and dispute settlement process, macroeconomic coordination,
cooperation on competition policy with mutual recognition of product standards and
testing, and consultation on rules-of-origin issues as well as environmental matters and
their overlap with trade policies. Under technical cooperation, further recommendations
concerned development of public infrastructure (higher education, transportation and
telecommunication networks, and energy facilities).
The SOM preparatory to Seattle followed recommendations in the 1993 EPG Report
by incorporating several into working group agendas, while stressing market-based eco-
nomic integration as APEC's foundation. The SOM proposed soliciting private-sector
views through PECC and other mechanisms.20 The Seattle Ministers' Statement requested
elaboration of the EPG's ideas on trade liberalization for presentation in Jakarta, seeking
a separate study of investment flows within the Pacific Basin and the interrelationship
of trade liberalization and privatization (a request confirming both trade and investment
liberalization as APEC's cornerstone). On a programmatic level, alongside trade and
investment liberalization, the Ministers focused on relieving infrastructure bottlenecks,
developing human resources, and meeting environmental and energy resource chal-
lenges as top concerns. They agreed to a three-year moratorium on admitting new APEC
members, essentially postponing issues regarding participation pending a decision on
APEC's ultimate role.
By intention the Seattle Leaders' Declaration was a short document overlaying details
of the Seattle Ministers' Statement. The Leaders' Declaration placed consistent emphasis
well as the APEC Secretariat itself), were not formally represented at the political leaders' meeting but had
been present on November 11-12, 1994, at the Sixth APEC Ministerial Meeting, which segued into it.
17
4 U.S. DEP'T ST. DISPATCH 828 (1993).
'8
Id. at 833.
9 The suggestion in the 1993 EPG REPORT, supra note 12, to accelerate a new round of multilateral trade
talks was acted upon onry by the United States (outside the APEC framework, when President Clinton's Group
of Seven Open Trade 2000 proposal was quickly rejected by Europe).
21
Report
of the Fifth Senior Officials Meeting for the Fifth APEC Ministerial Meeting, Seattle, Washington
(1993). The formation of PBF in Seattle's wake reflected a shadow debate on "private sector" APEC participa-
tion. PECC (an accredited Apec observer) was viewed as academically rather than business oriented, see note
8 supra, while the most logical candidate for private-sector input arguably should have been an existing business
organization (the Pacific basin Economic Council, an applicant for APEC observer status, Tan Kim Song,
Business grouping to seek Apec observer status, STRAITS TIMES, May 26, 1994, at 38, whose membership largely consists
on bringing the Uruguay Round to a close. However, it stressed economic interdepen-
dence within APEC, with the corresponding goal of reducing trade and investment
barriers to permit free movement of "goods, services, capital and investment flow."
Beyond stressing APEC's market orientation, the leaders called for a meeting of Finance
Ministers to be convened on issues of macroeconomic policy and development as well
as capital flows (overlapping export-led development concepts traditionally linked to
foreign direct investment with market-oriented development funded through private
capital in both portfolio and direct investment form).2' By way of concrete projects, the
Leaders' Declaration advanced the idea of APEC educational cooperation, development
of small and medium-sized enterprises (SME) and formation of the PBF to enhance
private-sector involvement in the APEC process.
The Seattle Ministers' request for further particulars on trade liberalization would
seem to cast the 1994 EPG Report, circulated in late summer of 1994, in a special light.
However, the 1994 report's content, while more detailed, differed significantly from that
of its predecessor in only two major respects.22 First, it adopted the much-publicized
2020 deadline for full trade liberalization, while allowing for a multispeed liberalization
process (faster for industrialized countries than for others, apparendy distinguishing
both NIEs and developing countries). Second, under its U.S. chairman's leadership, it
advanced an idea of trade liberalization that would permit individual APEC members
to determine whether to extend the benefits of APEC-motivated trade liberalization to
non-APEC member countries (preserving room for the traditional GATT pattern of
negotiated mutual concessions, which encountered sharp opposition from proponents
of unilateral liberalization).
Notwithstanding its limited further measures, the 1994 EPG Report triggered debate
at both the intergovernmental (ASEAN) and the private (PECC) levels. Unusually, prior
to the Jakarta APEC meetings substantial signs of APEC-related discord became apparent
within ASEAN. A polite level of dissonance was already visible in connection with the
treatment of Malaysia's proposal for an East Asian Economic Group (EAEG), coupled
with the EPG's embrace of a 2020 liberalization deadline.23 In the run-up to the ASEAN
of developed-country multinational enterprises doing business in Asia). Developing countries' ambivalence is
clearest in the parallelism between the small and medium-sized enterprise (SME) initiative and the idea that
each nation would be represented in the new PBF by one "big" and one "small" businessman (despite
admitting through the SME initiative that they were not deeply engaged in international trade).
21 The initial Honolulu APEC Finance Ministers' meeting of March 1994 was recently succeeded by a meeting
on April 16, 1995, in Bali; alongside investment flows, the topic of currency exchange rates in the form of
questions about recent yen appreciation predominated. See,
e.g.,
KT. Arasu, APECMinisters Begin Talks Shadowed
by
Yen Turmoil, Reuters, Apr. 16, 1995, available in LEXIS, News Library, Curnws File.
22 The 1994 EPG REPORT,
supra
note 12, proposed that APEC adopt a comprehensive program at Jakarta
in the form of a long-term goal of free and open trade and investment in the region, with implementation
of trade liberalization to begin by 2000 and be completed by 2020. Vigorous pursuit of trade facilitation and
technical cooperation programs was advised. However, the report appeared to move backwards in certain
areas, such as by (1) proposing a focus on antidumping and restrictive practices, while delaying examination
of broader competition policy questions to an indefinite future; and (2) specifying that a gradual convergence
of environmental standards as part of broader product harmonization was desirable, while suggesting that
APEC press for broad international acceptance of the "polluter pays principle" (though counseling against
its adoption within APEC as potentially disadvantageous in international trade on cost grounds, absent general
agreement by other countries).
23 The East Asian Economic Group (EAEG) proposal, later repackaged as the East Asian Economic Caucus
(EAEC) within APEC, stemmed from a Malaysian proposal of the early 1990s for a group consisting of Asian
countries (notably excluding APEC members such as Australia, New Zealand and the United States). The
original Malaysian "non-paper" for the proposal included as its rationales cooperation in advancing the
Uruguay Round negotiations, the need for a cohesive voice in trade matters, the usefulness of a counterweight
to growing trade groupings outside Asia, the need to meet political-economic challenges in Europe and the
Americas threatening to divert investment from the ASEAN region, and the desire to ease "pressures by OECD
countries on ASEAN to move towards premature membership in that organisation, . . .
affinity withJapan within
Foreign Ministers' meeting in Chieng Mai in September 1994, the absence of a coordi-
nated ASEAN position on the 2020 liberalization effort became clear. The publicized
result of the Chieng Mai meeting was a suggestion that the EPG cease its work.24 Under
the circumstances and in view of the subsequent extension of the EPG's mandate in the
Bogor Declaration, the kill-the-messenger nature of the Chieng Mai response seems clear.
PECC's meeting in Kuala Lumpur in March 1994 prominently featured an EPG-
oriented academic debate over whether APEC's future lay in unilateral trade liberaliza-
tion open to the world at large rather than in a regional trade grouping.25 Following
the issuance of the 1994 EPG Report, the debate was cast in terms of a (shadow U.S.)
position that APEC members must be free to refuse APEGmotivated trade liberalization
to non-APEC members as a negotiating tactic to compel offsetting concessions from
them (following time-honored GATT negotiating strategy, perceived as directed against
Europe), versus the opinion that discrimination against non-APEC members would entail
either an undesired formal regional trading arrangement within the meaning of GATT
Article XXIV or violation of GATT's most-favored-nation principle. Here the relevant
insight is that the core of current APEC disputes was portrayed as lying in trade liberaliza-
tion in relation to GATT.
Shortly before the Jakarta APEC meeting itself, the PBF weighed in with its private-
sector report in effect commissioned by the Seattle Leaders' Statement. Anticlimactically,
the report accelerated the EPG's trade liberalization deadline to 2002 for developed,
and 2010 for developing, economies. PBF weighed in strongly on the need for an APIC
and complementary trade and investment liberalization measures.26
On November 8-10, 1994, the SOM kicking off the Jakarta APEC meetings promi-
nently approved a draft APIC,27 despite an initial U.S. position that insufficient attention
had been given to rights of establishment. The U.S. concerns were softened by the idea
an economic group could help in easing off that pressure." HADI SOESASTRO, THE EAST ASIAN ECONOMIC GROUP
(EAEG) PROPOSAL AND EAST ASIAN CONCEPTS OF THE PACIFIC BASIN 8 (Indonesia Centre for Strategic & Int'l
Studies No. M51/91, 1991). The subsequent development of the EAEG/EAEC proposal is a running history of
resistance to formation of the group by Japan, which saw it as conflicting with Japanese national interests in
maintaining close relations with the United States (which strenuously opposed EAEG). Taking the stated
initial rationales at face value, EAEG/EAEC aims at limiting liberalization in connection with the Japanese
model of development. See also note 31 infra.
24
See ASEAN Ministers Fail to Resolve Rift on APEC,
11
Int'l Trade Rep. (BNA) 1494 (Sept. 28, 1994).
25
Initially, a general debate emerged at the meeting (more generally cast in terms of disagreement with
U.S. positions linking trade with political objectives or advocating a formal regional trade area). The specific
debate on the structure of APEC trade liberalization involved U.S. economist and EPG Chair, C. Fred Bergsten,
and Australian economist Ross Garnaut, who disagreed on the concept of "open regionalism." See Barry Wain,
Clinton's Policies on Trade in Asia are Criticized, ASIAN WALL ST. J., May 9, 1994, at 2 (Ross Garnaut interview).
The debate continued in Jakarta parallel to the APEC meetings themselves. See C. Fred Bergsten, Towards
Free Trade in the Pacific, delivered at a conference sponsored by Indonesia Nat'l Comm. for Pacific Econ.
Cooperation & Centre for Strategic & Int'l Studies (Nov. 14) (defending 1994 EPG Report approach); Ross
Garnaut, The Bogor Declaration on Asian Pacific Trade Liberalisation, id. (asserting "open regionalism" in
PECC sense inconsistent with suggested selective discrimination against non-APEC members).
26 Recommendations in the report, supra note 13, called for specific undertakings to heighten transparency
in regulatory and administrative regimes, liberalization of customs and business visas, protection of intellectual
property, and attention to business ethics in opposition to problems of corruption in government; these were
linked with a variety of human resources and business development policies. Almost simultaneously, Indonesia
sponsored the World Infrastructure Forum, which focused on financing infrastructure through nongovernmen-
tal sources to assist development. It appeared to verge on a public SOM, given the prominence of the subject
matter on the 1994 APEC agenda and heavy government participation in a nominally private conference.
27 For the APIC, see APEC, Report of the Fourth Senior Officials Meeting for the Sixth APEC Ministerial
Meeting, Ann. 4 (Nov. 8-10, 1994), as affirmed, id., para. 13, and Jakarta Ministers' Statement, supra note 15,
para. 14. While different in some details, the APIC seemingly was based upon a PECC draft code. See PECC
TRADE POLICY FORUM, ENCOURAGING INTERNATIONAL INVESTMENT IN THE ASIA PACIFIC REGION: A DRAFr ASIA
PACIFIC INVESTMENT CODE (n.d.). See also NEW DIRECTIONS IN REGIONAL TRADE LIBERALIZATION AND INVESTMENT
COOPERATION: A TRIPARTITE APPROACH, SELECTED PAPERS FOR SEVENTH PECC TRADE POLICY FORUM (Gili Yen
ed., 1993).
that the APIC could undergo future refinement and acknowledgment of the increasing
importance of capital flows within the region.28 Investment issues raised their head in
another guise in connection with concerns surrounding short-term capital flows (focus-
ing on the difference between portfolio and direct investment; these exist as a byproduct
of the overlap between financial deregulation and direct foreign investment, which drives
later-stage export-led development strategies). Commitments were repeated in favor of
cooperation on SME undertakings and infrastructure development (the latter commit-
ments now phrased also in bilateral project terms, introducing financing concerns di-
rectly). Finally, a possible direction for APEC's 1995 Osaka meeting was foreshadowed
in reviewing progress on- a long-running Japanese policy paper examining linkages
among energy usage, the environment and economic growth (3Es).
The Jakarta Ministers' Statement of November 12, 1994, related that the meeting's
purpose was to support economic cooperation on human resource development, SME
and infrastructure improvements, as well as private- and business-sector involvement
more generally in the APEC process (controversial trade liberalization was thus left to
the leaders' meeting). Beyond endorsing APIC as adopted by the SOM, it affirmed full
implementation of GATT byJanuary 1, 1995 (recalling that U.S. congressional approval
had been delayed) and expressed strong support for the entry of non-GATT members
(China) on the basis of "substantive and commercially meaningful commitments."29
The Ministers approved for the run-up to Osaka a 1995 work plan involving problem
study and potential development of proposals at the SOM and working group level, to
include 3Es work, links between privatization and trade liberalization, regional trends,
foreign direct investment, and industrial and technical linkages, with study of the effects
of exchange rate movements on trade and investment. The 1994 EPG Report was ac-
cepted, but the PBF Report's concrete proposals seemed to find a more receptive audi-
ence (affirming long-standing proposals to create an ongoing business and private-sector
advisory group for APEC).
References to the Bogor Declaration are usually to its 2020 deadline for free flows of
goods, services and capital among APEC member economies (it is admittedly only a
declaration of political will, rather than a legal undertaking). However, under Indonesian
penmanship, the Bogor Declaration was a development document as much as one on
trade liberalization (calling for technical cooperation on human resource development,
technology transfer, SMEs and infrastructure as well as environmental issues, in the
name of development). Together with economic cooperation, it invokes the. pillars of
sustainable growth, equitable development and national stability, distinguishing among
developing, NIE and developed economies. However, its multitrack liberalization scheme
provides only two dates: a 2010 deadline for the full liberalization of developed econo-
mies and a 2020 deadline for the full liberalization of developing economies.
What is the significance of the Bogor Declaration's three country categories as against
two liberalization deadlines? In essence, it fudged the NIEs' economic status (i.e.,
whether they should stand alone as developed countries, or whether they still should
receive favored developing-country treatment under international regimes).30 This tactic
28See
Official Says
U.S. Backed Down in APEC Investment Code Dispute, 11 Int'l Trade Rep. (BNA) 1803 (Nov.
23, 1994).
29Jakarta Ministers' Statement, supra note 15, para. 18.
30
See Press Conference of the President, Jakarta Hilton (Nov. 15, 1994). As regards reports that China and
South Korea were not obliged to meet free trade objectives until 2020, President Clinton stated:
First of all, whether China and South Korea have to meet this objective by 2020 or 2010 depends upon
their own rate of growth. That is, there was no definition today of industrialized countries that excluded
them in 2010. Indeed, I think most of the people who were in that room today thought that, given South
permitted APEC to reach apparent consensus in the face of a much broader issue
inherent in GATT's special provision for developing countries: when the successful East
Asian economies "graduate" to undifferentiated developed status.3'
The Bogor Declaration yielded a further link to GATT in desiring to strengthen the
open, multilateral trading system both by enhancing trade and investment liberalization
in the Asia-Pacific region and by accelerating implementation of the Uruguay Round
commitments alongside a continuing commitment to unilateral liberalization. It did not
take a formal position on whether APEGinduced trade liberalization should be available
generally to non-APEC members. Instead, in the name of support for multilateral trade,
it (1) rejected the idea of an inward-looking regional trade bloc producing trade diver-
sion on a global basis (an economic rather than a legal concept32); (2) undertook special
treatment for non-APEC developing countries so that they could benefit from APEC's
trade and investment liberalization (the avoidance of an express stand on non-APEC
developed countries was significant to the extent retention of the traditional reciprocal
concession approach to GATT multilateral liberalization was understood as aimed chiefly
at Europe); and (3) stressed GATT consistency (avoiding underlying legal issues concern-
ing most-favored-nation treatment and traditionally loose interpretations of GATT Article
XXIV). Nonetheless, a tug-of-war remained visible with the U.S. position, which since
the Jakarta meetings has found support or tolerance in several industrialized APEC
members,33 while continuing to encounter apparent opposition from APEC East Asian
member economies.
The Bogor Declaration contained two more items of overriding significance. First, in
support of trade liberalization, it emphasized trade facilitation in a fashion that recalled
the PBF Report. Trade facilitation problems, however, may simply be nontariff barriers
under another name, since their focus lies in such mundane matters as customs practice,
product standards, investment principles and administrative barriers to market access.
APEC political leaders called upon ministers and senior officials to submit trade facilita-
tion proposals as a way to expand commercial intercourse beyond the promise of future
trade liberalization. Second, in the name of accelerating the APEC process, the Bogor
Declaration provided that "APEC economies that are ready to initiate and implement
a cooperative arrangement may proceed to do so while those that are not yet ready to
participate may join at a later date."34 This ambiguous proviso was understood to apply
Korea's growth, they might well meet that and, in fact, might be expected to meet it before 2010, and
that the Chinese could meet it, depending on whether they're able to sustain a certain level of growth.
South Korea's decision to pursue OECD membership, see, e.g., Alastair Macdonald, South Korea Applies to Rich
Nations Club OECD, Reuter Eur. Bus. Rep., Mar. 29, 1995, available in LEXIS, News Library, Curnws File, raises
the issue even more pointedly. See also Results of the APEC Meeting in Indonesia, Fed. News Serv., Nov. 22, 1994,
available in LEXIS, News Library, Curnws File (discussing China's accession to GATI).
3' From the ASEAN perspective within APEC, this determination linked to liberalization requirements argua-
bly appears to be a driving force in terms of the EAEG/EAEC. See note 23 supra.
32 The GATT Article XXIV standard is rather that members in a
preferential
trade
arrangement
are
required
only to maintain an average level of goods tariffs vis-A-vis nonmembers that is no higher than it was before
the arrangement. GATS Article V's analogous, but arguably more generous, economic integration provisions
for services have not attracted attention in APEC-related debates, see, e.g., text at and note 25 supra, despite
the fact that for some-APEC members liberalization of services may be as significant as, or more so than,
goods. The issue in practice is the extent to which trade diversion is emerging as an effect of regionalism. See
JEFFREYA. FRANKEL, SHANG-JIN WEI & ERNESTO STEIN, APEC AND OTHER REGIONAL ECONOMIC ARRANGEMENTS
IN THE PACIFIC (Center for Pacific Basin Monetary & Econ. Studies, Fed. Reserve Bank of San Francisco,
Working Paper No. 94-04, 1994).
13
See, e.g., apec trade
benefits to all not practical: maclaren, Xinhua News Agency Item 0314200, Mar. 14, 1995,
available in LEXIS, News Library, Curnws File (Canada and Australia).
34 Bogor Declaration, supra note 14, para. 9.
to Malaysia (which expressed reservations about contemplated trade liberalization dead-
lines before and after the Jakarta meetings).
POTENTIAL DIRECTIONS AS THE APEC PROCESS MovEs TowARD OSAKA
A cursory examination of the recent APEC process reveals multiple threads. APEC is
perceived as an intergovernmental forum extending to issues outside or beyond tradi-
tional GATT concerns. APEC's consistent lowest common denominator is that its mea-
sures must be "GATT consistent" (ambiguous in application given past disagreement,
for example, over whether a variety of U.S. practices in bilateral trade disputes violated
the GATT alongside issues relating to the new GATS); but the rationale for this support
of multilateral free trade differs among countries. Nevertheless, in consistently advancing
the view that APEC is driven by market-based economic integration, APEC is advancing
more quickly than GATT along a path beyond its traditional tariff-based focus on trade in
goods (without contemplation of how the organization of production itself is changing).
Assuming that the APEC national markets will continue as distinct entities, this path
shifts the focus to nontariff barriers and what traditionally would be considered purely
domestic regulation. Marking the difference in approach is not mere formalism, since
post-Uruguay Round expansion of international trade in nontraditional areas such as
services and intellectual property is premised upon domestic regulatory reform and
change.35 Further, APEC's investment and development focus has put back international
monetary and finance concerns otherwise lost in traditionally strict divisions between
the activities of Bretton Woods international financial institutions (the World Bank and
IMF) and GATT-centered multilateral trading.
Potentially different views of APEC point in different directions in the run-up to its
November 1995 meeting in Osaka. A pure trade-liberalization focus favoring a regional
trading arrangement or, more broadly, employment of APEC as a trade policy sword
against nonmembers would slow it down (since East Asian developing countries perceive
this approach as against their national interests). If this view predominates, APEC would
at best develop in the direction of a low-budget OECD (a talking shop in the sense of
an intergovernmental consultative and study forum, which would raise doubts about its
superiority to the existing PECC). On the other hand, if more attention is paid to the
political economy of increasing economic integration, a focus on trade facilitation and
domestic deregulation would render APEC an advance forum for admittedly messy
economic integration issues now that GATT is expanding beyond merchandise trade.
The competition between the latestJapanese proposals for the oxymoronic "concerted
unilateralism"36 and U.S. ideas of negotiating regimes to implement the Bogor Declara-
tion through coordinated liberalization measures is best understood as the concrete
expression of a perceived tension between APEC members' differing national interests,
rather than the reflection, as often portrayed, of cultural differences opposing an "Asian
consensus-based approach" to "Western legalism."
The APEC process is also important for what it indicates about the direction and
perceived interests of developing East Asian economies. Their stake in free trade is
"
On how such matters represent new kinds of trade policy issues of the 1990s, see, e.g., PETER WINGLEE
ET AL., ISSUES AND DEVELOPMENTS IN INTERNATIONAL TRADE POLICY 64-86 (IMF World Econ. & Financial
Surveys, 1992); GEzA FEKETEKUTY, THE NEW TRADE AGENDA (Group of Thirty Occasional Papers No. 40, 1992)
(approaching issues under the rubric of globalization). See also OECD, TRADE AND COMPETITION POLICIES:
COMPARING OBJECTIVES AND METHODS (Trade Policy Issues No. 4, 1994).
36 See, e.g., Satoshi Isaka, Seeking Free Trade APEC Must Now Get Down to Details, NIKKEI WKLY., June 26, 1995,
at 1, available in LEXIS, News Library, Curnws File.
oriented toward export-led development strategies,37 but expressed interest in investment
flows and related matters stretches beyond trade policy. Given the enormous capital
needs in areas such as infrastructure, it seems significant that APEC is proceeding as a
forum of independent nations rather than involving multilateral institutions (such as
the IMF or the World Bank in the finance area, not to mention the United Nations
Conference on Trade and Ievelopment or other UN-affiliated development groupings).
Viewed optimistically, this choice may be a sign that the countries in question perceive
their own interests in market-based development involving private (often foreign) capital.
Attention within the APEC process to portfolio, alongside direct investment, macroeco-
nomic coordination issues and deregulation more generally, supports this idea.
DAVID K LINNAN*
37
See, e.g., INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT, EAST ASIA's TRADE AND INVEST-
MENT: REGIONAL AND GLOBAL GAINS FROM LIBERALIZATION (1994).
* Associate Professor, University of South Carolina School of Law. Support is gratefully acknowledged under
a Fulbright grant in Jakarta, Indonesia, and from the Australian National tJniversity in Canberra.

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