International Herald Tribune
APEC's last chance to matter
Wednesday, November 15, 2006

The summit meeting this week in Hanoi of the Asia Pacific Economic Cooperation group may be the last opportunity for the 21-member organization to rescue itself from irrelevance. It may also be the last chance for its leaders to generate momentum for completion of the current round of global trade negotiations before President George W. Bush's fast-track negotiating authority expires in mid-2007.

The omens are not good, however. The meeting appears set on focusing on a strategic issue - North Korea's nuclear program - that is beyond APEC's purpose and competence.

For sure, there will be a star-studded cast in Hanoi, headed by Bush, Presidents Hu Jintao of China and Vladimir Putin of Russian, Prime Minister Shinzo Abe of Japan and the leaders of South Korea, Australia, Indonesia and Mexico.

North Korea provides an easy way out for drafters of resolutions looking for common ground. All five participants in the talks with Pyongyang are APEC members, but as they are in constant dialogue on handling the North it is unlikely that the Hanoi meeting can help. The North Korean issue has little to do with APEC's intended role of reducing trade barriers and facilitating economic and business cooperation.

For sure, the meeting will discuss the trade round. It will make a resounding appeal for urgent revival of the negotiations. These are now doubly urgent now that the U.S. midterm elections have made it certain that there will be no renewal of Bush's fast-track authority and that there will be increased pressure for measures against too-successful trading partners, notably China.

But trade deserves more than pious statements. There were similar statements at the Group of 8 summit meeting in Russia in July. The outcome? Global trade talks collapsed.

It is also ironic that trade gets second place on the agenda just as Vietnam has finally been formally invited to join the World Trade Organization and Russia appears at last to have the green light from the United States to do so.

APEC must produce action not words. If its meetings are to have any function beyond providing photo opportunities, the Hanoi meeting must do two things.

The leading members must commit to specific concessions on difficult issues to ensure the trade round's success. Each major player knows what those are and what is needed to persuade the key non-APEC members of WTO - the European Union members, India and Brazil - to make their own concessions. Trade concessions are politically difficult. But summits are supposed to enable the leaders to make deals that go beyond what their trade officials can offer.

Second, APEC members must vow to stop talking free trade while signing up bilateral agreements, some with non- members, which are discriminatory against other members. America and China have been particularly guilty of pressing these deals, both for political reasons and because big countries almost invariably come out on top in bilateral negotiations with smaller ones.

The idea of APEC as a giant free-trade area remains on the table. Although supported in principle by the United States, and more enthusiastically by small economies like Singapore, Chile and New Zealand, it is generally not favored by China or most of the Association of Southeast Asian Nations. It may have to remain an unattainable vision for the time being. Politics, as much as economics, is in the way.

But APEC can still have an important role in harmonizing trade agreements so that they all operate under the same rules of origin and other key provisions. It can be a force for voluntary liberalization on the basis of economic self-interest rather than horse trading.

To achieve this, however, requires political backing at the highest level from leaders who really care about the trade issues and do not dilute APEC to irrelevance by focusing on security issues that are beyond the group's remit, such as terrorism, drugs or North Korea's nuclear weapons.