Participants at this weekend’s annual summit of the Asia-Pacific Economic Co-operation forum in Hanoi must be privately grateful to Kim Jong-il. At least he has given them something serious to talk about. Without the North Korean dictator’s threats to blow up the world, leaders from Apec’s 21 members might have difficulty explaining why their journeys were necessary.
They will, of course, issue the usual pre-cooked summit declaration, doubtless calling for deeper Pacific Rim co-operation, closer policy alignment and rapid completion of the stricken Doha trade round. Judging by the 15 previous Apec summits, those noble aspirations will last as long as the leaders’ flights home.
In its 17 years of existence, Apec’s achievements have been so slender that even long-time supporters have begun to ask what purpose it serves. It has done little to promote regional integration, ostensibly its raison d’être. Twelve years ago, leaders endorsed an ambitious US-led drive to free all Pacific Rim trade and investment by 2020. After stalling in first gear, it has been quietly shunted off into a lay-by.
That the US should now be seeking to make Apec the vehicle for another grand plan, a free trade area embracing the Asia-Pacific, suggests either amnesia or incurable optimism. Nominally, the proposal is aimed at invigorating the Doha talks. However, it also reflects a US desire for a bigger role in Asian affairs and its fear that China’s rise will diminish its influence in the region. Its concerns are understandable. But this is not the way to meet them.
A less suitable basis for a cohesive economic bloc than Apec is hard to imagine. Its members are widely dispersed geographically and economically: output per head in the US, the richest, is almost 70 times that in Vietnam, the poorest. The grouping is beset by many of the policy conflicts and tensions that
have paralysed the Doha round.
In addition, Apec is hamstrung
by basic differences of approach.
The US, Australia and other “western” members favour
adversarial bargaining and hard outcomes. Asian governments instinctively prefer flexible process and non-binding agreements. As the majority, they have prevailed.
American officials find that approach frustrating. But it would be hard to argue that it has not served east Asia well, as its economies have grown steadily more integrated and wealthy through trade. The reason has not been intra-regional negotiations or treaties, but spontaneous unilateral government decisions to lower import barriers and let market forces do the rest. The opening of China’s economy is the most dramatic example of such reforms. The model is as much the product of circumstance as of choice. The deep mutual mistrust and suspicion that plague regional relations, along with jealous defence of sovereign prerogatives, have precluded common institutions and rules. But where diplomacy has failed, economic self-interest has increasingly filled the gap. Countries’ growing commercial interdependence is today Asia’s strongest guarantee of stability. A powerful motivation for Shinzo Abe’s visit to Beijing after he became Japan’s prime minister in September, was safeguarding his country’s trade and investment links with China.
But east Asia’s tradition of pragmatic mercantilism is approaching a crossroads. On the one hand, its growing stampede into politically motivated bilateral trade deals threatens to create as many market distortions as it demolishes. On the other, a yearning for a more cohesive regional identity is prompting talk of comprehensive and over-arching structures for Asian economic co-operation. Yet it is still far from clear that governments possess the commitment or will to establish them.
Amid those cross-currents, China’s gravitational pull will provide the strongest impulse for further east Asian integration. Its economic rise has in the past few years radically reshaped trade patterns and its appetite for imports has led to trade deficits with all its main regional trading partners. Beijing’s efforts to stimulate domestic demand, if they succeed, can only reinforce that trend.
Some in Washington worry that it will lead in time to a Sino-centric “Fortress Asia”, from which the US is locked out. That concern doubtless helped inspire its proposal for an Asia-Pacific trade area. But it is misplaced. Not only is east Asia politically incapable at present of building such a structure, fear of being drawn too deeply into China’s orbit gives many in the region a strong incentive to resist it.
They value the US not just as a valuable export market but as a guarantor of security and an essential political counterweight to China’s power. But the perception is widespread that Washington’s fixation with the Middle East and the war on terror has led it to neglect east Asia, while disdain for soft power has cost the US goodwill and squandered diplomatic opportunities in the region.
That America has lost influence in Asia is undeniable. But the reason is as much its own inattention as China’s rise. It is not too late to stem the decline. If the US is to do so, it needs soon to rebuild political links across the region and re-engage on far more levels than security and trade. If President George W. Bush were to start that process at the Apec summit, his weekend in Hanoi would be time well spent.
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