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APEC in a New Regional Architecture

Remarks by Ambassador Tran Trong Toan, Executive Director, APEC Secretariat Ha Noi, Viet Nam | 08 April 2006
Dear Mr. Charles Morrison, Chair of PECC
Ladies and gentlemen,
It gives me great honor to make some remarks at this important seminar attended by such a distinguished audience. It is very timely and meaningful that PECC has organized discussions on this very relevant issue as the title of the seminar suggests. I would like to highlight some salient features of the new regional architecture, the roles APEC can play as the most important regional structure in the Asia? Pacific and the necessity of reform so that APEC could successfully achieve its goals and vision.
New regional architecture
The current regional architecture is fundamentally different from that which existed when APEC was established in 1989. There are at least five key developments that could contribute to shaping the new regional architecture in the Asia-Pacific.
The most important development is the rise of China as a formidable economic and political force in the region. For the first time in the region's history post the 2nd World War, there exists the overwhelming trend of peace, stability and cooperation for development. Ensuring the balance among great powers such as US, China, Japan, Russia and possibly India and their commitment to regional cooperation and development is an essential factor for peace and prosperity in the Asia-Pacific.
The proliferation of FTAs/RTAs has become a phenomenon in the region. This proliferation has exerted a centrifugal effect on the multilateral trading system, and as a result has made it fundamentally fragmented. Economies that used to champion the multilateral trading system have now jumped onto the bandwagon of signing FTAs/RTAs of their own. While WTO has done little to deal with the situation, FTAs/RTAs have formed new institutions in the regional economic architecture.
The human security agenda in the region has, for the past few years, become burdened with emerging issues or non-traditional threats such as terrorism, epidemics and natural disasters. Due to their trans-boundary nature, no single country can deal with these threats alone, but must work with other countries and international institutions to cope with these new threats. While traditional security issues continue to be addressed in the existing frameworks such as the ASEAN Regional Forum (ARF) and the second non-governmental track Council for Security Cooperation in Asia-Pacific (CSCAP), the newly emerging issues need to be dealt with in certain regional arrangements. With the collapse of the bi-polar world, there has been a rise in regional institutions to deal with new changes. In addition to ASEAN, which was formed since the cold war period, a number of new important regional institutions and groupings such as APEC, ARF, Asia-Europe Meeting (ASEM), Asia Cooperation Dialogue (ACD) and most recently the East Asia Summit (EAS) have emerged. Although each institution and grouping has its own agenda and role to play in the regional set-up, there is some concern about the duplication of efforts and competitive pressures among these groupings.
One of the common and salient features of the important regional institutions is the trend of community building. ASEAN has come up with an ambitious roadmap to build a community with a Charter and based on the 3 pillars of security community, economic community and socio-cultural community. APEC long ago, since its First Leaders' Meeting in 1993, envisioned a regional community in the Asia-Pacific based on the common interests of stability, security and prosperity. And the newly formed East Asia Summit has also ardently promoted the building of a community in East Asia.
All these developments have contributed to the formation of multi-layered and interlocking structures in the regional landscape and also created challenges for APEC in discharging its role as the premier regional cooperation framework.
APEC's roles in the new regional architecture
  1. A force for peace, stability and cooperation for development
    APEC has, over the past years, enjoyed rapid economic development. This is attributed largely to its successfully maintaining peace, stability and strengthening cooperation for development. APEC will continue to be a force for peace, stability and cooperation in the region not merely because APEC is the only regional forum that engages major powers such as US, China, Russia and Japan at the highest levels to promote peace, stability and cooperation, but also because this is the only way to achieve development and prosperity. Notwithstanding the rise of East Asia and any other regional institution in the future, APEC will continue to play a unique and indispensable role in promoting peace, stability and cooperation in the region.

    One could argue that ARF and CSCAP have the security mandate so they could play a better role in ensuring peace and security in the region. While not disputing this, I think the advantage of APEC is that although it does not deal directly with international security per se, it ensures international and regional security through greater economic and policy interactions among its members. By virtue of not being a security organization, it can avoid suspicion from outsiders and focus on handling the underlying causes of security threats; that is poverty and lack of development.
  2. A testing ground for new cooperative ideas in the future
    While some argue that the very principles of flexibility and non-binding agreements hinder APEC progress, I consider them as the unique strength of APEC. In the absence of binding rules, it is easier for APEC to play a creative and pioneering role in new areas of cooperation. The "best practices" and "path-finder" initiatives have proven to be useful instruments in promoting cooperation among member economies in the new areas. This is also an area in which APEC could supplement legally binding organizations such as the WTO. Following a loose and non-binding mode of operation, APEC could pioneer efforts in many difficult areas that the WTO can not. One example of such an effort is the model provisions for chapters in FTAs/RTAs. New ideas could be tested in APEC first and brought into the purview of the WTO later such as the case of the Information Technology Agreement (ITA) in 1996.
  3. A learning ground for developing member economies
    This looks set to be one of the key roles of APEC in the future given its increasing focus on capacity building and human resource development. More effective efforts in these areas will help improve APEC members? awareness and integration into the world economy and encourage them to venture into more difficult but important areas of trade and investment liberalization. The important objective is to help developing members to catch up with and derive benefits from the liberalization process.

    After many years of cooperation and thus appreciation of the benefits of free and open trade and investment, there is no longer a lack of political will to go ahead with many areas of trade and investment liberalization but rather there is a lack of institutional and human capacity to cope with them. The learning function of APEC is so important if APEC is to ensure the shift of issues from APEC to WTO for more effective implementation. APEC can not force issues onto the WTO Agenda unless it can ensure that its members possess adequate capacity to deal with these issues.
  4. A staunch supporter of the multilateral trading system
    As a beneficiary of the WTO, APEC has always played an important role in promoting the multilateral trading system through issuing political statements, fostering common positions on certain issues and WTO capacity building activities. The support of APEC is crucial for the success of the WTO since it is a grouping of 21 Member Economies, accounting for around 41% of the world's population, 56% of world GDP and 48% of world trade.
    In the time to come APEC will continue to support the WTO liberalization process through commitments of APEC Ministers Responsible for Trade, direct interactions with the WTO Director Generals, and the APEC Geneva Caucus. In the immediate future, it is a priority of APEC to push for the successful conclusion of the WTO DDA with ambitious and balanced outcomes by the end of 2006. APEC has also taken the lead in fostering high-quality FTAs/RTAs through common model provisions as a way to minimize adverse impacts of different FTAs/RTAs and ensure the integrity of the multilateral trading system. 
  5. A crucial factor in building a regional community in the Asia-Pacific
    Building an Asia-Pacific community is a long-term vision shared by APEC member economies. Other institutions such as ASEAN, PECC, ASEM and EAS also strive to contribute to building a regional community, but APEC as a region-wide institution has a crucial role to play in this process. There is absolutely no delusion that the path would be without difficulties and challenges as there still exist a number of outstanding issues and problems among countries in the region, including APEC members.

    Striving to realize the APEC vision of a regional community, APEC has exerted considerable and conscious efforts in this direction. The themes of APEC years have incorporated the element of community building such as "Connecting the APEC Community" (Canadian year 1997), "Delivering to the Community" (Brunei year 2000), "One Community, Our Future" (Chilean year 2004), "Towards One Community: Face the Challenge, Make the Change" (Korean year 2005) and now "Towards a Dynamic Community for Sustainable Development and Prosperity" (Viet Nam year 2006). In fact, all APEC's work to date has contributed significantly towards the goal of building a regional community and APEC will continue to strive for this.
Meeting the Challenges
APEC has been successfully playing its unique role as a premier institution in promoting development and prosperity in the Asia-Pacific. In the new regional and global environment, there are both demands and expectations that APEC maintains its relevance and continue to dynamically and effectively respond to the needs of its members and stakeholders. For this purpose, APEC has initiated its reform process, which picked up momentum in recent years, beginning in 2003, when APEC Leaders expressed the need to strengthen APEC as an institution. The process continued through 2004 and 2005. Those early efforts focused essentially on the internal working processes of APEC, the aim being to streamline operations and the decision-making process. A key outcome of reform efforts undertaken in 2005 was the decision on restructuring the SOM Steering Committee on Economic and Technical Cooperation (ECOTECH) and on implementation of measures to ensure the long-term financial sustainability of APEC from 2007 onwards.
APEC regards reform as a continuous process. With the endorsement of APEC SOM I in Hanoi (March 2006), the 2006 reform efforts would build up on decisions and works in the past years and aim towards enhancing the operational dynamism, operational linkages and overall operational efficiency of APEC. Member economies are now working on this and will come up with concrete proposals for implementation.
As a student of APEC, to my mind, there are 3 major areas, on which APEC may consider focusing its reform efforts, and there are a number of important issues to be addressed in each area:
  1. Organizational area:
  2. Restructuring its internal mechanism (review of TORs of all its fora such as committees/working groups/taskforces), strengthening the roles of Chairs/Lead shepherds in APEC cooperation;
  3. Creation/disbandment of fora;
  4. Reducing number of meetings with enhancement of inter-sessional works;Considering effectiveness of moratorium on new membership.
  5. Operational area:
  6. Strengthening coordination and cooperation among APEC fora, and with ABAC and the APEC Study Centre network;
  7. Improving decision-making process (bottom up/top down, increasing responsiveness, making APEC more efficient and result-oriented);Implementing prudence of project financing;
  8. Prudent expansion of scope of APEC activities and cooperation.
  9. External cooperation:
  10. Coordination with sectoral ministerial processes and promote public-private partnership;Coordination/cooperation in policy issues, research, capacity building with international organizations (IFIs, OECD, WTO, PECC, ASEAN, ASEM, EAS);
  11. Increasing participation of other economies and international institutions in the APEC activities at the WG levels;
  12. Raising APEC's profile through strengthening communication & outreach activities.
There are short-term and long-term issues, and I think all reform measures should aim to strengthen APEC's responsiveness to the needs of its people in this fast changing world through increasing dynamism in its identification, operation and solution of any emerging issues, which may affect the APEC's goals and well-being of its people. In this regard, the 2006 priority of "Reform APEC towards a Dynamic and Effective Community" set by Viet Nam host is highly significant.
To conclude, I would like to say that APEC is developing in the right direction. Over the past years since its inception, APEC has indisputably made important contributions to peace, stability and cooperation for development in the region. APEC has now entered its 17th year. The Vietnamese people have a saying: "A 17-year-old can break up the buffalo horn". I do believe that APEC has now reached its maturity and will, with its synergy and vitality, continue to play its important role as a factor for peace, stability and cooperation for development and prosperity in the Asia-Pacific region. As a key structure in the regional institutional architecture, APEC will work with other institutions in the region so as to realize the vision of building a regional community in the Asia-Pacific.
Thank you.

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