1. Possible Reform of APEC
Special Lecture on the Occasion of
APEC Mock Meeting
November 3, 2004
Professor Sung-Hoon Park
Graduate School of International Studies
Korea University

2. Points of Discussion Main Features of APEC APEC’s Achievements?
APEC at a Crossroads
Alternative Long-term Scenarios for APEC

3. I. Main Features of APEC
APEC Stands for “Asia-Pacific Economic Cooperation”
Established in 1989 with 12 Member Economies
Membership Expanded Successively: Now 21 Members
APEC in the World Economy
Total Population: 2.6 Billion People
Total GDP: USD 19.2 Trillion (over 50% of World GDP)
Total Trade: Over 40% of World Trade
APEC and Korea
The First Regional Cooperation Body for Korea
Strong Economic Interactions with APEC Members
68.6% of Trade/77.4% of FDI Projects/62% of FDI Amount
APEC’s Contribution to Stability on Korean Peninsula
Regular Consultation with 4 Major Powers
First Ministerial Meeting held in Canberra in 1989 with no solid vision for how to build an Asia Pacific organization

4. I. Main Features of APEC Main Characteristics
WTO-Consistency: APEC’s Instruments have to be supportive to the multilateral trading system
Diversity: APEC incorporates a variety of cultures, religions, population sizes and political ideologies
Voluntarism and Consensus Building Approach: Members make concessions voluntarily, not relying on a bargaining process. Agreements are to be reached by consensus, rather than by majority voting
Non-Binding Arrangements: APEC tries to give Flexibility in Implementation. Also Defies Possibility of Legally Binding FTA.
Inter-regional Cooperation Framework: Cooperation between Asia and the Americas
“Open Regionalism” as a Main Vehicle of Cooperation: Forming a Counterforce Against Increasing Worldwide Regionalism
First Ministerial Meeting held in Canberra in 1989 with no solid vision for how to build an Asia Pacific organization

5. Open Regionalism of APEC
Adopted as a Strategic Approach of APEC to Counter the intensifying Regionalist Tendency in World Economy
EU’s Single European Market Program
US’ Reluctance to Trigger and to be Part of a Major Regionalism
Possible Contribution of APEC to Reconciliation between Multilateralism and Regionalism Anticipated
OR not defined properly yet, leading to Confusions with Long-term Goal of APEC
Definition of OR is Crucial to Determining and Pursuing Long-term Goal of APEC
Three Possible Interpretations/Modes of Implementation Available
Unconditional MFN
Global Liberalization
Trade Facilitation
Some Analysts (e.g. Park (1999)) Recommend to Abandon OR

6. II. APEC’s Main Achievements?
Having Started as a Ministerial Meeting, APEC soon was Upgraded to become a Summit Meeting (1993)
Each Summit Meeting Produces Cooperation Programs
A Series of Sequential Programs Adopted to Reach the Declared Goal of Establishing “Asia-Pacific Economic Community” via “Free Trade and Investment in the Region”
1993 (Seattle): First-ever Summit Meeting held
1994 (Bogor): Bogor Declaration
1995 (Osaka): Osaka Action Plan
1996 (Manila): Manila Action Plan for APEC
1997 (Vancouver): EVSL Adopted as a First Serious Attempt to Reach Bogor Goal
Fails in 1998 to be implemented (Asian Crisis)
1998 (Kuala Lumpur): Programs for Recovery from Asian Crisis Adopted
1999 (Auckland): Stocktaking the Implementation of TILF and Ecotech
2000 (Brunei): e-IAP Adopted as a Way to Achieving the Bogor Goal/Digital Divide Addressed
2001 (Shanghai): Shanghai Accord Adopted”Pathfinder” Approach
2002 (Los Cabos): Transparency/Digital EconomyTrade Facilitation Action Plan
2003 (Bangkok): Bangkok Declaration on Partnership for the Future
2004 (Chile): ????
2005 (Korea): ????????

7. III. APEC at a Crossroads
Interests of Members Still Conflicting
Failure of EVSL an Example
Key Agenda Swinging between TILF and Ecotech
Long-term Goal Still Undetermined
“Forum Fatigue” Already Apparent
Summit “Should Produce” Something Every YearMid- to Long-term Agenda Already Nearly Exhausted
Credibility Lost vis-à-vis Non-members
Difficulty in Implementing Open Regionalism
No Substantial Contribution to Multilateral Trading System as Hoped for
Relevance Lost Among Select Member Economies
Perceived Imbalance between TILF and Ecotech
Failed to Provide Immediate Assistance to Countries affected by the Asian Financial Crisis
APEC a Community Building Process?
”Identity Crisis” in many Asian APEC Member Economies
”Credibility Crisis” vis-à-vis non-APEC Countries

8. IV. Alternative Long-term Scenarios for APEC
The Status-Quo APEC
APEC develops into “OECD for Asia-Pacific”
APEC develops into an FTA (APFTA)
APEC takes Security Agenda next to Economics  APEC as an “OSCE in Asia-Pacific?”
Depends on Capacity and Will of Members
Korea has Some Role to Play as Presidency of 2005

9. Scenario 1: The Status-Quo APEC
How to Restore the Lost Credibility?
Successful Pursuit of 2010/2020 Bogor Goal?
Even 2015 Accelerated Liberalization Possible?
How to Restore the Lost Relevance?
Balancing between TILF and Ecotech Possible?
What Relationship to WTO’s MFN?
Making OR Work for both APEC and the WTO Crucial
Overcoming Diverging Interests of Member Economies a Crucial Factor

10. Scenario 2: APECOECD Closed Membership/Peer Pressure/Discipline
Membership of APEC to be Realigned
To Devise Proper Way of Disciplining/Peer Pressuring
Cooperation/Development
APEC’s Agenda to be Renegotiated (Ecotech/TILF not Enough)
Finance Needs Stronger Attention
Macroeconomic Policy Coordination at the Core of Cooperation
Policy Dialogue for the FuturePossibility Increases (or Decreases) with Increasing Networking of Intra-APEC FTAs
How to Mobilize Members
How to Effectively Avoid Duplication
How to Coordinate with “the OECD”

11. Scenario 3: APECOSCE(AP)
Addressing the Political/Security Instability for the Region Needed in One Form or Another
North Korea
Three-Chinas Issue
Security as an Additional Agenda Desirable/Possible?
Is There Any Venue that Can do this Job?
ARF?
ASEM?
Unilateral or Bilateral Resolution by the United States?
Then Why Not APEC?
Change the Agenda Setting?
Make the Membership More Comprehensive (EU?)?
Change the Name?

12. Scenario 4: APECAPFTA
Not an Easy Solution
Diverging Interests among Members
Two Major Regionalism Competing as a Result!
Open Regionalism Main Obstacle
If OR Interpreted in an Alternative Way, Why Not?
EU’s Way to Practice OR Indicative!
Practical Aspects
WTO New Rounds/Increasing Sub-regionalism within APEC Can Pave the Way for Further Liberalization
By 2015/2020 APEC Members Readier than Before
Go for It through Making Sub-regionalism increasingly Overlap
This has been Occuring in APEC for quite a while

13. Most Feasible Scenario?
Hybrid Scenario Most Feasible
Mid- to Long-term: “APFTA+OECD” Scenarios
Long-term: “OSCE in APEC” Scenario
What to Do?
Prepare a Concrete Roadmap to Long-term Goal
Prepare for New Membership
Prepare for New Agenda
A Responsibility Especially of Korea (2005 Presidency)

14. Thank you very much
for your Attention!!