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The Asia-Pacific Economic Cooperation held its 23rd Summit in Manila on the third week of November, with 18 heads of state in attendance. As in previous meetings, the affair was more glitz than substance, with the assembled leaders in the boringly familiar APEC pose: side by side, each donned in the host country’s national dress, this time the Philippines’ finely woven Barong Tagalog.
The question on the minds of many bemused observers was, how does this grouping of countries manage to stay alive.
Still “Four Adjectives in Search of a Noun”
APEC was once derided as “four adjectives in search of a noun.” That noun continues to elude APEC. It is not an institution. It is not an association. It is not even an agreement. Yet it meets…and meets. Indeed, it is simply a process, one that is, however, sustained by dozens of sub-ministerial and ministerial meetings leading to the summit in November of each year.
Pushed by the Clinton administration, the original plan for APEC was super-ambitious: it would bring countries bordering the Eastern and Western Pacific into the world’s largest free trade area. At the time of the first summit in Seattle in 1993, APEC was one of two of the United States’ complementary alternatives for a free trade area in the event the negotiations for the World Trade Organization fell through. The other was the so-called “Free Trade Area of the Americas” (FTAA) extending from Alaska to Tierra del Fuego.
At its genesis, APEC was seen by its Washington-based promoters as the main engine of corporate-driven globalization that would prove to the world that prosperity lay in the “borderless” world marked by no or low tariffs preached by the ascendant neoliberal ideology, of which the Democratic “Third Way” Clinton administration became a champion. At the APEC Summit in Osaka in1995, however, the American blueprint, backed mainly by Australia, was rejected by an informal alliance of Asian countries led by Japan, which supported free trade rhetorically but were able to ram through a declaration that whatever liberalization of trade would take place would be carried out "voluntarily, flexibly, and in a non-binding fashion.”
Refusing to Go to Oblivion
With the free trade rationale defeated, APEC should have headed for oblivion, like the FTAA, which was scrapped after Latin American countries similarly rejected binding trade liberalization. But like a vampire, APEC would not die. Washington, its main promoter, found a new rationale for it, and that was to serve as a forum where the US could lobby Asian countries to liberalize their capital accounts to allow greater entry for foreign capital, a push that was then being spearheaded by the Washington-dominated International Monetary Fund (IMF).
However, with the Asian financial crisis of 1997-1998, which was seen widely as having been caused by financial liberalization, the IMF was forced to drop its project of having capital account liberalization be one of the its articles of association. Shorn of another function, some observers thought, APEC would likely fade away.
With 9/11, however, APEC got another lease on life, this time as an avenue where the United States could line up countries allies behind its “War on Terror.” The APEC Summit in Shanghai in November 2001, two months after 9/11 and in the midst of the invasion of Afghanistan, emphasized political instead of economic objectives, with APEC governments endorsing a US-crafted communiqué condemning the September 11 terrorist attacks and pledging "to strengthen international cooperation at all levels in combating terrorism in a comprehensive manner."
Especially critical to the US was the support of China, which was then battling Muslim separatists in the province of Xinjiang. Preoccupied with dealing with the Middle East, the Bush administration put on hold its original approach to define China as a “strategic competitor,” and APEC became the site of diplomatic initiatives against terrorism with Beijing and other Asian countries.
Clashing Visions
With the Obama administration a few years later, the US went back to the original containment of China policy that had been frozen by Bush, and now APEC became a forum where Washington could drum up support from its allies for the revived military strategy. During the APEC Summit in Honolulu in 2011, President Obama and Secretary of State Hillary Clinton unveiled the two prongs of the new approach. One was the “Pacific Pivot,” a strategic turn that would involve the redeployment to the area of much of the US’ military assets, including 60 per cent of the strength of the US Navy. Many saw this geopolitical shift as Obama’s ill-concealed effort to extricate the US from the mess in the Middle East that Bush had created and focus on a region more susceptible to management by US conventional power.
The other thrust of the Obama strategy was the “Trans-Pacific Partnership” (TPP). The TPP aimed to be a comprehensive agreement covering all the main pillars of a free trade agreement, including trade in goods, rules of origin, trade remedies, sanitary and phytosanitary standards , technical barriers to trade, trade in services, intellectual property, government procurement, and competition policy. It was what analysts described as "WTO-plus," meaning it hewed more stringently to free trade and intellectual property rules than the WTO. It would also provide corporations with the controversial “right” to sue states for alleged violations of investment contracts—the so-called “Investor-State Dispute Settlement” (ISDS) mechanism.
The TPP was, in effect, a resurrection of the original APEC Trans-Pacific free-trade plan, though with fewer members initially. Where it mainly differed from the original plan was its excluding China, which was no longer seen as the US “strategic partner” that the Clinton administration had defined it upon the launching of APEC in 1993.
Not surprisingly, China also discovered that APEC was a useful arena not only to counter the US strategy but to forward its own version of an economic alliance. The most prominent feature of the 22nd APEC Summit in Beijing last year was the US and China’s skirmishing to win over other APEC members to their respective geoeconomic proposals: Obama’s TPP versus Xie Jin Ping’s FTAAP (Free Trade Area of the Asia Pacific). The Chinese hoped to make the Beijing summit the springboard for the FTAAP, but US opposition in meetings prior to the summit consigned the proposal to a two-year period of study. Obviously, Washington did not want the Beijing initiative to eclipse the TPP, which was then entering the final stage of negotiations.
Beijing, however, is skillful at guerrilla diplomacy, and in the year before the Manila Summit, it signed up practically all Asia-Pacific members of APEC, except for Japan, Hong Kong, and Taiwan, as founding members of the Asia Infrastructure Investment Bank (AIIB), which was projected as a major source of development aid—and Chinese diplomatic influence—globally. The US angrily chastised some of its close allies for joining AIIB, but only Japan complied with Washington’s wishes owing to its intimate strategic partnership with Washington.
Nevertheless, Washington came to the Manila Summit in late November with a slight advantage: the TPP negotiations had been concluded less than two months earlier. While all of the Eastern Pacific participants in APEC, along with Australia and New Zealand, were in the TPP, only four of the 11 Asian countries were. Coming into the APEC summit, Washington was hoping to firm up the chosen five—Vietnam, Brunei, Malaysia, Singapore, and Japan—and eventually win over most of the rest to seek membership in the TPP, isolating China and institutionalizing the transpacific free trade regime that APEC had failed to achieve at the Osaka Summit two decades earlier.
Philippines: A Showcase for APEC?
Even before the latest summit began, the Philippines, the host country, already announced that once formalized into an agreement, it would apply for membership in the TPP. For US officials, this was a significant gain, for the Philippines was also one of the key pillars of the Pivot to Asia strategy, with its decision to open up the country to the large-scale presence of US troops and war materiel. The Philippines was likewise seen as an important showcase for the economic growth that the neoliberal TPP-APEC vision offered, in contrast to the “strong state” strategy associated with China and the newly industrializing countries of Northeast Asia. In the last few years, the Philippines, with its relatively deregulated and liberalized economy, has been growing at 6 to 7 percent and become the darling of the western business press.
To more skeptical eyes, the Philippines represented, on the contrary, what was wrong with the APEC-TPP neoliberal model. The Philippines had also hosted the fourth APEC summit in 1996, and in the two decades since then, critics pointed out, neoliberal reforms had crippled the economy. The elimination of import quotas led to the severe destabilization of vast sectors of Philippine agriculture, including the corn, meat and poultry, and vegetable sectors. Bringing down tariffs to five per cent and below severely de-industrialized the economy, with garment, textile, footwear, and other once vibrant industries now a shadow of their former selves. Only 20 of the 200 textile and garment firms the country had 40 years ago are still in existence.
“In other growing economies,” one paper pointed out, “growth in inequality has been mitigated by a reduction in poverty. This has not happened in the Philippines. The percentage of people living in poverty is 28 per cent, the same proportion as 20 years ago, and the rate inequality also remains unchanged, with the country’s gini coefficient [a measure of inequality] of 44 being one of the worst in East Asia. Yes, there has been growth, but that growth has a fragile base. It has been cornered by a few and thus led to greater inequality. It has not been felt at all by the vast majority of the Filipino people.
Not surprisingly, the document asserted, many Filipinos have departed as economic refugees, leading to a situation where 10 million Filipinos, some 10 per cent of the population, are either migrants or residents of other countries.
Not Likely to Disappear Soon
“Once trumpeted as ushering in a new world,” the paper concluded, “APEC is an organization whose time has passed, whose neoliberal premises have been left behind by reality. What we are witnessing in Manila is a time warp, the enactment of the diplomatic rituals that mask the fact that APEC now simply lurches from one summit to the next, with no clear direction.”
APEC, however, is not likely to be phased out soon. It may have little substance. It may be nothing but a process with no clear direction, but the US and Beijing find it a useful arena to neutralize each other and sell their visions of the future to the countries on both sides of the Pacific, where both are major players. This rivalry is likely to be played out again in the lead-up to the summit in Peru in November 2016, which Obama hopes to attend with a ratified TPP in tow.
teleSUR columnist Walden Bello is a specialist in Asia-Pacific economic and political matters.
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