Given that the meeting coincided with the bombings, some Asian leaders complained that the summit agenda “had in effect been hijacked by US President George W Bush to galvanize support for his sagging military alliance against Iraq, while pressing economic issues were sidelined.” 

Rightly or wrongly, the meeting was indeed dominated by the question as to how security could be strengthened.  However, that the meeting failed to discuss how APEC could move forward, was not only because too much time was spent on security issues, but primarily because for a long time now, APEC has been seen more as an adjunct of the Association of South-East Asian Nations (ASEAN).

APEC, or the Asia Pacific Economic Cooperation Forum, was established with 12 founding countries at the end of the Cold War in 1989 with the objective to liberalise their markets. Today, it comprises of twenty-one countries. What is particularly unique about APEC is not that most of the members are from ASEAN countries but that these countries account for nearly half of the world’s merchandise trade, half of the global GNP, and approximately forty percent of the world’s population. APEC, according to the OECD, is also the “primary mechanism through which Asia-Pacific regional economic integration is being pursued.” (Hsu, 1996: 54)

According to Ramiro Pizarro, there are two major characteristics that make APEC stand out from other regionalizing economic processes. These are the fact that APEC is dynamic, as well as having an unstable trade structure. It is dynamic in the sense that “the region’s influence on world trade has grown steadily, representing more than half of the world trade in the 1990s ”; and it is unstable because of the influence of both Japan and the United States. These two countries’ role is significant because, whereas Japan has enabled APEC to enjoy a surplus, the United States, conversely, has triggered a “huge deficit”. The roles of these two countries in APEC, however, go beyond this (Pizarro, 1999: 20)

Whilst it is noteworthy that the US has played a key role in the region, its role, according to Pizarro, “has been decreasing” (ibid.). He adds that as a consequence, Japan’s surplus has grown notably in its trade relationship with East Asian countries. Though Pizarro is quick to argue “these tendencies are part and parcel of a regionalization process through production networks, whereby Japan remains the main supplier of capital goods, technology and intermediate products” , I believe that the implications are much more serious than that. (ibid.)

The biggest consequence of this development is that it will trigger the United States to bring pressure to bear on Japan to scale down its ostensibly expansionist policies. If this means “disciplining” Japan through an organisation like APEC, then it will do so . That being said, the weakness inherent in the APEC process as evidenced by the lack of binding decisions so far, will eventually weaken the United States’ position. It cannot be taken for granted that potential rivalry between these two huge economies will turn out in favour of the US. If there ever were to be a fallout, Japan would remain comfortable in the knowledge that it had the ASEAN countries behind it-after all, it is that country that has been instrumental in helping foster ASEAN regionalism to what it is today .

To understand how Japan, a non-ASEAN member, has been so critical in the development of ASEAN regionalism, as well as to obtain an insight into the genesis of Japan’s success, we must turn very briefly to Kevin G. Cai, who attributes Japan’s primary success to what has been known as the “flying geese pattern.” (Cai, 1999: 20)

According to Cai, the concept was initially the brainchild of Japanese economist Kaname Akamatsu in the 1930s and “is supposed to be a path of development for latecomers who follow the lead of an industrialized economy.” The principal idea behind this so-called “flying geese” model is that at a certain point in the life span of a given industry in an industrialized country, it is worth-in fact, it makes good economic sense-to opt out of the production and transfer it to other members of the “geese formation”. Cai continues that “in this vertical relationship, Japan follows the United States and Western Europe and tries to catch up, in stages, in the production first of simple consumer goods, then consumer durables, and eventually capital goods.” (see Cai, 1999: 19-21)

Acting somewhat like a chain involving production patterns, we see, for example, that at each stage, Japan first imports foreign products for its domestic market, and then starts domestic production to increasingly replace these imports in order that it can eventually penetrate foreign markets. Each new stage thus creates new imports of raw materials (from neighbouring countries ) and more advanced capital goods (from the US and the EU), as well as new exports of the goods that are now being produced domestically . Ultimately, there comes a time when the increasing domestic cost of production and competition from what Cai calls a “new entrant” to the region will force Japan to move gradually out of the product in question, reducing exports and starting to import again. Cai maintains that within such a framework, the newly industrialised economies (NIEs) follow the Japanese pattern, while China (and ASEAN) follow the NIEs (ibid.)

The long and the short of this clarification is that this particular configuration has helped put Japan in very good stead; or as Cai would put it: in a “superior position vis-à-vis its neighbouring economies.” To underscore how significant this development is, Cai makes an interesting claim-that over the post-war years, Japan has gradually replaced the United States as the number one economic hegemon in the region, and become the dominant economic power in almost all economic fields in Northeast Asian economies . This is a very significant claim of tectonically geo-political proportions (ibid.)

Seen through the filter of international politicking, this development is sufficient to prompt raised eyebrows in the White House as it monitors the region. According to Bernard K Gordon, the United States is the “principal FDI source in four of Asia’s economies, as Japan is in six.” (Gordon, 2001: 136). Clearly, this statistic, coupled with what one knows about Japan’s investments in the ASEAN region, is enough for one to arrive at the conclusion that Japan is a potential hegemon in the region-much more than the US could be. However, Gordon, a staunch critic of what he sees as the Bush administration’s lax attitude towards the formation of regional blocs that could hurt or frustrate the country’s attempts to maintain its status as dominant actor , tries to show that despite Japan’s role, America still is the greatest source of financing for the region: “the point of this comparison…is not to minimize or explain away Japan’s role. It is instead to show that US investment presence is also very large, quite comparable to Japan’s, and in terms of geography, widely-dispersed as well.” (Gordon 2001: 139). If even such an exponent of US policy like Gordon is beginning to be jittery over the role of Japan, it begs the question as to how the Bush administration is looking at the situation.

The literature has so far suggested that the Bush administration is not atypical to most republican administrations - they are fundamentally realists, seeing the international system as predicated on anarchy. This is one of the reasons why the United States is so keen to assert itself on the world stage in every sphere-from political to economic. The Pavlovian response for people like Bernard K Gordon, who stress the primacy of the United States as a global superpower through the exercise of its formidable realist ambitions (read: military industrial complex), is that a quintessentially realist-minded American government should not encourage regionalism. This is because, as Andrew Hurrell argues, if states are deemed to exist in a state of anarchy, it is virtually impossible for them to cooperate (Fawcett & Hurrell, 1999: 46). If co-operation does take place, as evidenced by the ASEAN and ECOWAS regionalisms, then as Nguyen Vu Tung maintains, “ideology is a weak cause and balancing power (or common external threat) is the main reason.” (Tung, 2002: 108)This is perhaps one of the reasons why analysing the role of the United States and its influence over the ASEAN region through APEC is particularly noteworthy. According to two sources, the US has used APEC as a means to fulfil its own end once before.

The first source is Hurrell himself. He argues how the power-political pressure on the United States in the 1980s that saw its competitiveness decline, thus triggering her to look towards economic regionalism as a response to this decline, as well as its relative loss of economic power vis-à-vis Europe and Japan, and a negotiating ploy enabled the United States to do two major things. The first was to use NAFTA as a ‘stick’ to increase pressure on Japan to open its markets; and APEC as a means of applying pressure on the European Union in the final stages of the negotiations on what was then GATT’s Uruguay Round (UR). (fawcett & Hurrell, 1999: 148-9)

Secondly, Jeff Atkinson corroborates Hurrell’s argument when he contends that when in the late 80s, negotiations “appeared to be bogged down and there were serious doubts that an agreement would ever be reached, the USA began looking to regional trade agreements as a fall-back option.” (Atkinson, 1995: 34). Atkinson maintains that according to the US, if it could not obtain trade liberalisation at the multilateral level, then it was hell-bent on achieving it at a global level, “perhaps it could be achieved at the regional level.” (ibid.). For Atkinson, the role of the United States in APEC is unequivocal: it is “largely indifferent to the trade facilitation aspects of APEC, and opposed to an increased emphasis on economic cooperation.” (ibid.). Atkinson maintains that the US’s sole interest in APEC is “as a mechanism for the liberalisation of trade and investment.” (ibid.)

Small wonder, therefore, that the ASEAN region itself is fearful of APEC. That in 1990, according to Shaun Narine, ASEAN laid out principles to guide its participation in APEC urging ASEAN to “remain a coherent, independent body within APEC [with the need for] APEC to be a non-binding, consultative body which could not impinge on the sovereignty of its members, would respect economic and political differences, and would promote international trade” , is sufficient testimony of the distrust that the ASEAN bloc has for APEC (Narine, 1999: 364). Furthermore, there is the primary issue of ASEAN’s free trade are, called AFTA.

Established in 1992, the ASEAN states agreed to create a free trade area they would call ASEAN Free-Trade Area, or AFTA. According to Narine, if fully implemented, “AFTA will necessarily transform ASEAN from a loosely-knit organisation to an institutionalised economic regime.” (ibid.). Although the primary objective of AFTA is to increase intra-ASEAN trade, Narine maintains that it is not the only reason. He argues that instead, “ASEAN hopes that AFTA will attract more foreign investment to Southeast Asia to take advantage of the regional economies of scale.” (Narine, 1999: 369). To this end, the ASEAN states hope that AFTA can make ASEAN products more competitive internationally. However, as long as there is promotion of a rules-based APEC at the expense of AFTA, this would not only be foolhardy for the ten-member grouping to pursue, but more significantly, it would put a serious spanner into the works of ASEAN economic cooperation, triggering unwittingly a bigger hegemonic role for the United States.

References

Atkinson, Jeff. 'APEC-Winners & Losers.' Australian Council For Overseas Aid (ACFOA). Development Dossier #34. October 1995.

Cai, Kevin. G. 'The Political Economy of Economic Regionalism in North East Asia: A Unique and Dynamic Pattern' in East Asia, vol.17, n°2, 1999.

Fawcett, Louise & Andrew Hurrell, Regionalism in World Politics. Oxford University Press. 1997.

Gordon, Bernard.K. America’s Trade Follies. London and New York. Routledge. 2001

Hsu, Paul. S.P. Regional Integration : The Asia-Pacific Experience IN Regionalism and its Place in the Multilateral Trading System. OECD.  Paris, France. 1996. p.54.

Narine, Shaun. 'ASEAN  into the twenty-first century.' in The Pacific Review Volume 12. No.3. 1999

Pizarro, Ramiro. 'Comparative Analysis of Regionalism in Latin America and Asia-Pacific.  Economic Commission of Latin America (ECLAC)'. International Trade & Development Finance Division. Santiago, Chile. 1999.

Tung, Nguyen Vu. 'Vietnam - ASEAN Cooperation after the Cold War and the Continued Search for a Theoretical Framework' in Contemporary Southeast Asia. Volume 24. Number 1. April 2002.