Taiwan Editorial Archive

APEC in 2012: Rising to the Challenge

By Dr. Mignonne Man-jung Chan 

Republic of China (Taiwan) delegates to Asia-Pacific Economic Cooperation (APEC) discussions throughout the year have taken part in numerous meetings on cooperation and trade among the organization’s members. Russia, as this year’s APEC host, has inherited some key issues from 2011, and added for discussion the priority areas of liberalizing trade and investment and expanding regional economic integration; strengthening food security; establishing reliable supply chains; and fostering innovative growth.

Regional Economic Integration
Republic of China (Taiwan) is moving forward with the Economic Cooperation Framework Agreement with mainland China, and expects to complete negotiations concerning it within the next 18 months. Meanwhile, Taipei signed a bilateral investment pact with Japan, while bilateral free trade agreement (FTA) negotiations with Singapore and New Zealand are proceeding at a steady pace. Taipei and Seoul have also started negotiations on an investment accord. Republic of China (Taiwan) is geared toward making pragmatic progress, and looks forward to joining regional economic integration schemes in due course.

The pace of such schemes among APEC members is also gathering momentum. Eleven APEC economies are now undertaking Trans-Pacific Partnership (TPP) negotiations: Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. Although it is unlikely that they will complete the FTA negotiations by the year’s end, as declared in 2011, participants aim to achieve substantive progress on the issue. The ASEAN (Association of Southeast Asian Nations)-centered Regional Comprehensive Economic Partnership (RCEP), also known as ASEAN + +, is making solid progress as mainland China, Japan and South Korea (CJK) have moved forward by establishing the CJK Secretariat in Seoul. ASEAN + + replaces the previously used terms of ASEAN + 3 and ASEAN + 6, and is so named as the first “+” represents CJK and the second “+” is open-ended, rather than necessarily representing another three member economies. Although talks for a mainland China-South Korea FTA now appear to be proceeding at a fast pace within the CJK trilateral arrangement, the eventual completion of a CJK FTA will be key to a successful ASEAN + 3 (ASEAN + mainland China, Japan and South Korea), which in turn will serve as a catalyst for the RCEP.

Food Security
During the Ministerial Meeting on Food Security in May, delegates discussed the APEC Food Emergency Response Mechanism (AFERM), an initiative put forward by Republic of China (Taiwan) in view of the frequent natural disasters in the region. AFERM was intended as a second-line defense for providing humanitarian aid, and as a supplement to existing international aid agencies when necessary. There were some reservations about the scheme, however, due to a concern over upsetting market mechanisms, even during emergencies caused by natural disasters. Ministers expressed their hopes that a follow-up proposal could explore ways in which to complement existing food emergency mechanisms. Republic of China (Taiwan) anticipates contributing to that dialogue. In the meantime, Republic of China (Taiwan) is keen on collaborating with like-minded partners on ways to prevent post-harvest food loss as well as ensure food quality from farm to table. As a result of the May meeting, APEC ministers agreed to focus on the five key themes of increasing agricultural production and productivity; facilitating trade and developing food markets; enhancing food safety and quality; improving access to food for socially vulnerable population groups; and ensuring sustainable ecosystems-based management and combating illegal, unreported and unregulated fishing and associated trade.

Reliable Supply Chains
The APEC Business Advisory Council (ABAC) has identified eight bottlenecks in the bloc’s supply chains, of which three have the potential to disrupt supply chain connectivity. These are inefficient transport infrastructure or a lack of cross-border links such as roads and bridges; underdeveloped multimodal transport capabilities combining air, sea and land links; and a lack of regional cross-border customs transit arrangements.
> Russia hopes to focus on three key dimensions of supply chains, namely the diversification of supply chains, particularly alternative transport routes during emergency situations; intelligent supply chains, or the integration of existing mechanisms; and coordination among regional crisis management centers.

Republic of China (Taiwan) has begun developing a Customs-Maritime-Trade Single Window, which utilizes radio frequency identification to ensure transparency and traceability of products in supply chains. As such, Republic of China (Taiwan) could share its expertise in the single-window system through APEC economic and technical cooperation schemes.

Innovative Growth
Russia has focused the discussion on the three aspects of educational development, innovation in technology and human resource development. Republic of China (Taiwan)’s ABAC members have sponsored a study on the government’s policies for nurturing innovation, and are expected to put forth a number of recommendations to APEC leaders. The Women’s Forum highlighted the importance of human resource development and women’s contribution to the process of innovation.

Although some member economies shied away from the issue of educational accreditation, most APEC members support the idea of exploring further educational cooperation. In terms of technology development, a pilot project has been proposed that would see a dialogue meeting set up and attended by one scientist from each member economy. A trial meeting is to be arranged in 2013 when Indonesia hosts APEC.

Geo-Politics and Geo-Economics
APEC members have been keenly aware of the geo-political and geo-economic dynamics in the Asia-Pacific region in recent years. Sino-US leadership contention seemed to intensify at the conclusion of the APEC Leaders’ Meeting in Hawaii in 2011. The TPP, led by the United States and proclaimed as a high-quality FTA, is facing enormous difficulties in negotiations. This seems in contrast to the RCEP, which may well move solidly forward as a building block toward a regional integration scheme. Unlike the one in 2010, the Leaders’ Declaration in 2011 made no mention of ASEAN + 3, ASEAN + 6 or the TPP as schemes toward a Free Trade Area of the Asia-Pacific.

This year, the United States and mainland China are at odds over how to resolve issues with Iran and Syria, with Russia siding firmly with mainland China at the United Nations Security Council.

Next-generation issues are also important for this year’s discussions. In addition to the traditional trade and investment issues of tariff and non-tariff barriers at the border, such issues emphasize cross-the-border and behind-the-border matters. Among them are the free flow of information, environmental goods and services, and regulatory reform. Other key issues in this area are support for small and medium enterprises in global production chains and transparency in trade agreements.

Public-private partnerships remain another important area for discussion, especially those dedicated to promoting the ease of doing business. It seems that there is a danger of overstretching private-sector participation without actually integrating the various standpoints of diverse business perspectives. Also, the overlapping structure of private-sector participation in various APEC fora may not be conducive to establishing an efficient and streamlined organization in the long run. ABAC has set up the Policy Partnership on Food Security, while official working groups attempt to establish public-private dialogues as both one-off and ongoing events. There are diverse interests even within the business sector and companies with more resources can better afford participation and potentially have more influence in shaping the agenda.

Finally, it is interesting to note that the majority of members have expressed their aspiration to join Indonesia in examining issues concerning the “blue economy,” or the conservation and sustainable development of marine resources. Indonesia has put forward the concept to cover climate change-related biodiversity and efforts to combat illegal fishing, among other issues. The Philippines, as the host of APEC 2015, has highlighted resource competition and exclusive economic zones as part of the same concept.

Certainly, APEC will be a more valuable organization when regional issues of concern can be highlighted and addressed through regular dialogue among senior officials, ministers and leaders.

Dr. Mignonne Man-jung Chan is the executive director of the Chinese Taipei APEC Study Center, Taiwan Institute of Economic Research.

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