[SCMP Column] Give APEC credit - it's far more than just a talking shop

November 06, 2014

The big APEC Party has begun. Beijing’s polluted skies have been cleared. The key hotels are bedecked with welcoming regalia. Security hovers discretely on nearby street corners. China’s leadership has injected huge energy into making the year a memorable one – conscious of this year’s anniversaries to be celebrated – APEC’s own 25th anniversary, and the 20th anniversary of the now-iconic “Bogor Goals” which set the 21-economy region on a course towards “free and open trade and investment” by 2020.

So has the year lived up to best hopes? The brutal simple answer must be no – though this is not for want of trying. And when the region’s leaders meet at the weekend – putting Putin, Abe, Obama and Xi Jinping together in one room – the frisson is going to be palpable. The global economy is still spluttering; Japan’s shock new “quantitative easing” has in particular rattled nerves over the state of Japan’s economy; China’s economy is growing at its slowest pace since 1990; Obama has just lost control of the US Senate and is staring lame duck status in the face; tensions over Ukraine make it unclear whose hand Putin will be willing to shake; and half a dozen APEC members are at loggerheads over inconsequential rocks in the south China Sea. Fair to say that APEC’s leaders have never previously met against such a conflicted backdrop.

When China took over chairmanship of the Asia Pacific Economic Cooperation Grouping from Indonesia at the beginning of the year, it set an ambitious three-pronged agenda worthy of the landmark anniversaries being celebrated: regional economic integration; economic reform and innovative development; and building infrastructure and regional connectivity.

From the outset, the centerpiece of the first prong – regional economic integration – was in jeopardy. China decided it wanted its main deliverable to be an APEC commitment to a Free Trade Area for the Asia Pacific – FTAAP – that would by 2025 embody the iconic “Bogor Goals” of free and open trade and investment in the region. It was a brave thing to shoot for. The US and others negotiating the Trans-Pacific Partnership have been adamant that no regional initiative should be allowed to put the TPP in jeopardy. They have blocked and tackled from day one on the FTAAP plan. Beijing’s cold dry air has literally crackled with static electricity as China and the US have arm-wrestled over the FTAAP.

Even days before the leaders meet, it is unclear what will be agreed. US hopes that a TPP deal could be cut by the time of the APEC Party have come to nothing, and hopes are not high that the US will commit to any ambitious FTAAP until the TPP is sealed. Quite how face will be saved on this issue is not clear.

On the infrastructure front China will claim significant progress. They won regional agreement on a new Asian Infrastructure Investment Bank (AIIB) that will work alongside the World Bank and the Asian Development Bank to improve investment flows into critically needed regional infrastructure.

They will declare victory too on the connectivity agenda. A fascinating and ambitious new “Connectivity Framework” has been forged which will cluster much APEC work into three key areas – Physical connectivity; institutional connectivity; and people-to-people connectivity. It will be left to the Philippines as APEC Chair in 2015 to put flesh on the bones of this framework, but this looks like providing a genuinely interesting new approach to regional integration.

Beijing will also claim credit for significant progress by Finance Ministers on the post-2008 efforts to build deeper and more transparent capital markets in Asia based on insights learned in the 2008 crash.

There have been numerous other markers of progress that no outsider will much care about – making our supply chains more efficient; liberalizing our services economies; cooperating on development of the “blue economy” – shipping, fishing, seabed mining, coastal tourism and so on; running uncountable numbers of capacity building courses and best-practice learning workshops for officials to learn how to put these glamorous headline initiatives into practice.

As someone who spends more than 80 days a year in unglamorous APEC meetings in unglamorous cities across the region throughout the year, it is mildly irritating to be here in Beijing and to recognize that for most people, the APEC party of the coming few days, with its funny-dress photo-ops, is the total sum of what APEC amounts to – an inconsequential talk-shop.

In truth, the real value of APEC sits elsewhere – in unsexy workshops where top officials learn from each other, and without the distraction of political theatre, help to train officials to implement the ambitious liberalization initiatives embodied in high-sounding “leaders’ declarations”. But this doesn’t make headlines. It does not get the pulse pumping in the way that putting Putin and Obama in the same room together will do. So I will go with the flow, dress appropriately smartly for the party, and hope Beijing’s pollution does not fog the show.

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