THE Apec (Asia-Pacific Economic Cooperation) mechanism is very much part of the regional architecture. It was established in 1989 and is now 30 years old.

Malaysia will be the host economy for 2020. It had last hosted Apec in 1998.

The host economy would, of course, be responsible for hosting the Apec Leaders Meeting and related events in November as well as official and ministerial-level meetings and other Apec-related activities throughout the year. All these require a lot of preparation and hard work. It cannot be pulled off in one or two months, as some have suggested.

Malaysia’s theme for Apec under its chairmanship is ‘Optimising Human Potential Towards a Future of Shared Prosperity’. It is a good theme. As the prime minister had said at the launch of Malaysia Apec 2020 on Dec 4, Malaysia wants ‘Shared Prosperity’ to be the philosophy underpinning Apec’s work this year.

Malaysia would have the whole of this year to gain buy-in from the other economies.

Apec brings together 21 large and small economies in East Asia, Oceania, North America and South America, all bordering the vast Pacific Ocean.

The Apec region has a population of some 2.8 billion people and represents about 60 per cent of the world’s gross domestic product (GDP) and 50 per cent of world trade.

The three largest economies in the world — the US, China and Japan — are members of Apec. Seven out of the 10 Asean member states are part of Apec.

Apec’s success is largely owed to the nature of its existence as a multilateral economic and trade forum. It is not based on strict rules and legal commitments. Instead, Apec allows for commitments to be voluntary and non-binding. Member economies are free to take steps to implement measures and commitments jointly agreed by consensus.

According to the Apec Secretariat based in Singapore, real GDP has increased in the Asia Pacific from US$19 trillion in 1989 to US$42 trillion in 2015. Per capita income has risen 74 per cent. Average tariffs fell from 17 per cent in 1989 to 5.2 per cent in 2012.

The Apec economies trade more with one another than they do with the rest of the world. The region, for example, accounts for more than 80 per cent of Malaysia’s total trade.

While tariffs have generally fallen and more free trade agreements have helped to improve market access for goods and services, Apec still needs to improve in other areas.

Tariffs in agriculture are still high, non-tariff measures have increased in recent years affecting trade, and sectoral restrictions on foreign companies in services and investment remain.

Apec leaders adopted the Bogor Goals in 1994, essentially setting a target for the achievement of free and open trade and investment in the Asia Pacific by 2010 for industrialised economies and 2020 for developing economies. Come 2020, the Bogor Goals would have to be reviewed and renewed or replaced.

Apec needs to refresh and re-energise itself to move forward with its present and future agenda. Therefore, a new vision and set of goals for 2020 and beyond is required.

Malaysia takes over the helm of Apec following a very important development in the 30-year history of Apec; the cancellation of the Apec Leaders Meeting for 2019 in Chile is a first for Apec. How Malaysia handles the situation in 2020 could prove to be a crucial turning point.

While the ignominious end to Chile’s 2019 Apec chairmanship is largely due to the country’s domestic issues, it does reflect the problems and challenges faced by many Apec economies now and in the future. This gives Malaysia plenty to think about in stewarding Apec and working out the vision for 2020 and beyond.

Serious fissures within Apec have become quite evident since 2017, mainly due to competition between the US and China as well as their disagreement on a number of issues, trade being one of them. These carry both geopolitical and geoeconomic implications and ramifications.

The US-China feud clearly surfaced at Da Nang, Vietnam in November 2017 with President Donald Trump highlighting the Indo-Pacific and ‘America First’. On the other hand, China and President Xi Jinping were advocating free and open trade, multilateralism and globalisation.

The US-China rift was further played out in Port Moresby, Papua New Guinea, in 2018.

Vice-President Mike Pence criticised China’s “predatory” behaviour and “questionable” methods in pursuing its strategic and economic goals. Meanwhile, Xi was given a rousing welcome by the host government in a state visit just prior to the leaders’ summit and he continued to push for free and open trade and greater regional economic cooperation.

For the first time in Apec’s history, a Leaders’ Declaration could not be issued in 2018. Instead, the PNG prime minister issued a Chairman’s Statement outlining Apec’s work for 2018 and reflecting his understanding of the matters agreed by the economies. Hopefully, this will not become the new normal in Apec.

Malaysia thus assumes the chairmanship against this background as well as the fact that there is no declaration or statement for 2019. Malaysia must expect that the going will be tough.

The situation now is far different from when Apec adopted the Bogor Goals. There are two competing preponderant powers in Apec, which have divergent views about the regional and global order.

The general American commitment to Apec, their attitude and stand on a new Apec vision and the level of American representation in Kuala Lumpur this November will be key to the success of Apec 2020.

There are other points to note.

Globalisation is receiving mixed reactions now compared with an almost wholehearted embrace in the early 1990s.

Change and innovation brought about by digital technology has phenomenally transformed the region in terms of production, business, connectivity, trade and investment. There is increasing demand for inclusivity, equality and sustainability.

The threat of climate change cannot be ignored.

Apec’s and the global rules-based trading system is under increasing threat and urgent reform of the World Trade Organisation is needed.

The US-China trade war also inevitably has an impact on other Apec economies and could have consequences on further efforts at promoting regional economic cooperation and integration.

Given the geopolitical scenario, some people are predicting an uncertain future for Apec. The jury is out on this point. What is certain is that after 30 years, Apec needs a new vision.

The responsibility of producing the vision lies not only with Malaysia as chair for 2020, but also with all the other member economies.

If cracks and fissures continue to appear and competition escalates to bitter confrontation among members, Apec could be in real danger of stagnating and even backsliding on the current achievements, much less marching forward to face the enormous and existential challenges posed by new and emerging issues beyond 2020.

The achievement of regional shared prosperity that Malaysia is advocating cannot be a mere dream. Therefore, the big challenge for Malaysia is to exercise leadership in producing a clear and realistic vision for Apec beyond 2020.

A truly multi-stakeholder effort should be deployed for this purpose.

This article first appeared in the New Straits Times on January 6, 2020

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