SENTRO

JULY 9, 2015

NOTES ON THE
ASIA-PACIFIC
ECONOMIC
COOPERATION
(APEC), 1989-2015:
A CONFUSED
NEOLIBERALISM

WORKERS HOUSE

WHY IMMEDIATELY
SAY NEOLIBERAL?

Trubek (2009) outlines varying economic conceptions:

Classical Developmentalism
Neoliberal Reaction
Northeast Asian Exceptionalism
More importantly, globalization as we experience it today is
defined by time-space compression (Harvey) and speedspace (Virilio). The most often main result of this is enforced
social and political uniformity which is problematic
considering how vastly-varying societies are.
APEC, AS WE SHALL ILLUSTRATE LATER, IS
DEMONSTRATIVE OF THIS AGENDA.

BASIC HISTORY
Brainchild of then-Prime Minister of Australia Bob Hawke during a
speech in Seoul, Korea on 31 January 1989. Later that year, 12 AsiaPacific countries established the platform: Australia, Brunei
Darussalam, Canada, Indonesia, Japan, Korea, Malaysia, New
Zealand, the Philippines, Singapore, Thailand and the United States.
These countries were later joined in 1991 by China, Hong Kong, and
Taiwan. Mexico and Papua New Guinea participated starting 1993.
while Chile hopped on board in 1994. By 1998, APEC gains 21
member-nations with Peru, Russia and Vietnam joining.
Between 1989 and 1992, APEC met as an informal senior official and
Ministerial level dialogueuntil 1993, when then-U.S. President Bill
Clinton institutionalized annual APEC Economic Leaders' Meeting.
The APEC has 3 formal observers: the Association of Southeast Asian
Nations (ASEAN), the Pacific Economic Cooperation Council (PECC),
and the Pacific Islands Forum (PIF) Secretariat.

THREE PILLARS OF
APEC'S AGENDA
1. Trade and Investment Liberalization collaboration guided by
APEC's Regional Economic Integration agenda, includes the
advancement of bilateral and regional trade agreements, and the
long-term goal of a Free Trade Area of the Asia-Pacific (FTAAP).
2. Business Facilitation pursuit of measures to reduce the time, cost
and uncertainty of doing business in the region and open new
economic opportunities including for small firms, women and youth.
3. Economic and Technical Cooperation (ECOTECH) - builds the
technical capacity of APEC's diverse members to promote trade,
investment and robust, secure and sustainable economic growth;
done via strengthening anti-corruption, cross-border education and
skills training, emergency preparedness, energy security,
environmental protection, defense against pandemics and
infrastructure development, among others.

POLICY
DEVELOPMENT
There are 4 annual APEC meetings:
APEC Economic Leaders' Meeting all declarations from these meetings set
the policy agenda for APEC.
APEC Ministerial Meeting annual event for foreign and economic/trade
ministers held immediately prior to APEC Economic Leaders' Meetings.
Ministers consider the year's activities and provide recommendations for APEC
Economic Leaders' consideration.
Sectoral Ministerial Meetings the regular meetings cover areas such as
education, energy, environment and sustainable development, finance, human
resource development, regional science and technology cooperation, small and
medium enterprises, telecommunications and information industry, tourism,
trade, transportation and women's affairs. Recommendations from these
meetings are also provided to APEC Economic Leaders for their consideration.
APEC Business Advisory Council (ABAC) assembled 4 times a year, it
provides APEC Economic Leaders with a business perspective on APEC
issues through an annual meeting and a formal report. An ABAC representative
attends Ministerial Meetings.

THE BOGOR GOALS

THE BOGOR GOALS

BOGOR
GOALS
FOR PH

OSAKA ACTION
AGENDA
The Osaka Action Agenda of 1995 provides a framework for meeting the
Bogor Goals through trade and investment liberalisation, business facilitation
and sectoral activities, underpinned by policy dialogues and economic and
technical cooperation.
General Principles:
1. Comprehensiveness
2. WTO-consistency
3. Comparability
4. Non-discrimination
5. Transparency
6. Standstill
7. Simultaneous start, continuous process and differentiated timetables
8. Flexibility
9. Cooperation

WHAT HAS THE PHILIPPINES

COMMITTED TO APEC?
Villacorta et. al. (2001) noted policies the Phil. Gov. pursued to achieve its
commitments to APEC since:
1. Retail Trade: RA 1180, or the Retail Trade Nationalization Act, was replaced
by RA 8762, or the Retail Trade Liberalization Act of 2000.
2. Banking: The General Banking Law of 2000 (RA 8791) allows the Monetary
Board to authorize a foreign bank to acquire up to 100% of the voting stock of
only one domestic bank.
3. Insurance: Under Department Order Nos. 100-94 and 100-94A issued by the
Department of Finance on 24 October and 18 November 1994, respectively,
foreign insurance or re-insurance companies, which would operate as a
branch or where foreign equity in said company or intermediary is more than
40%, should be allowed entry within two years from the effectivity of the order.
4. Investment Companies (including mutual fund companies): House Bill No.
12094, entitled "Investment Companies Act of 2000, amended Republic Act
No. 2629 to allow foreign nationals members of the Board of Directors of
Filipino companies.

WHAT HAS THE PHILIPPINES

COMMITTED TO APEC?
5. Investment Houses: Republic Act No. 8366, which was passed on 21 October
1997, liberalized the investment house industry by increasing foreign, equity
participation to a maximum of 60% of the voting stock of such enterprises, and by
allowing foreign nationals to become members of the board of directors to the extent
of their equity.
6. Financing Companies: Under Republic Act No. 8556 (Financing Company Act of
1998), which was approved on 26 February 1998, foreign nationals are allowed to
own a maximum of 60% of the voting stock of a financing company, provided the
country of which the foreign investor is a national, accords the same reciprocal rights
to Filipinos in the ownership of financing companies or their counterpart entities.
7. Early Voluntary Sectoral Liberalization: The Philippines maintains tariff quotas for
sensitive agricultural products, the quantitative restrictions of which were lifted and
tariffied pursuant to the WTO Agreement on Agriculture. RA 8178, dated March 1996,
lifted the quantitative restrictions on sensitive agricultural products except rice.
8. Natural Rubber: Nominal tariff on natural rubber decreased from 20% in 1992 to 3%
in 1998. This was a result of the TRP implemented under Executive Orders 470
(effective 24 August 1991), 264 (effective 15 January 1996), and 466 (effective 22
January 1998).

WHAT HAS THE PHILIPPINES

COMMITTED TO APEC?
9. Food: The EVSL proposal for food tariff liberalization covers only fresh and slightly
processed fruit and vegetables (28 commodities), selected processed foods (19
products),and non-alcoholic and alcoholic beverages and barley malt (11 products).
Most of the food products proposed for EVSL have tariff rates of 10%and 20%.
10. Forest Products: The nominal tariff rate on imported logs stood at 10% in 1992
and was reduced to 3% in 1995. This was consequently reduced to zero under the
ASEAN Common Effective Preferential Tariff arrangement. For pulpwood and waste
paper, the nominal tariff rate had been at 3% from 1991 to 1998. For plywood, the
nominal tariff rate stood at 15%in 1991, was reduced to 11.50%in 1995, only to be
raised to 14.33% in 1996 and then reduced to 13.20% and 11% in 1997 and 1998,
respectively.
11. Fish and Fish Products: Eliminating tariffs on the above products not later than 25
December 2005, converting specific duties to ad valorem rates, and abolishing
compound rates which started last 1 January 1999. Products with 20% duty or less
would be phased out quickly. As for non-tariff measures, these would be eliminated
not later than 31 December 2007. Fish products with subsidies and are subject to
sanitary and phytosanitary measures that are inconsistent with the WTO agreement
should be removed by 31 December 2003.

OF COURSE, IT WAS EASIER

SAID THAN DONE.
It must not be assumed that APECs agenda has been
uncritically accepted by all its member-states, considering
how 1) the Bogor Goals themselves are adjustable
depending on the economic interest of the state, and 2) Asian
economic conditions are at a disadvantage in APECs agenda
(Wade 2007):
As long as the East Asian system operates on the basis of
longterm relationships, patient capital and government
guarantees, Anglo-American capital is at a disadvantage in
these markets. On the other hand, US and UK financial firms
know they can beat all comers in an institutional context of
arms-length relations, stock markets, open capital accounts
and new financial instruments. Therefore the Asian system
must be changed to more closely resemble theirs.

APEC ALSO
FORGETS THAT
DEVELOPMENT IS
UNPLANNED
(RIGG 2012).

THIS HAS LED TO PROBLEMATIC

RESULTS OVER THE YEARS.
Okamoto, 2004: [T]he Early Voluntary Sectoral Liberalization (EVSL)
consultations [were] one of the main APEC agenda items between 1997 and
1999. Trade liberalization in the region has been one of the main objectives of
APEC since its establishment. In the early stages, nevertheless, it did not have
any concrete measures or goals. Rather, APEC members will for regional trade
liberalization was used as a lever to encourage the promotion of the Uruguay
Round. It was around the same period as the conclusion of the Uruguay Round
(December 1993) that APEC turned more substantively to regional trade
liberalization. After the inaugural Leaders Meeting in November 1993, trade
liberalization under APEC looked to be going well for several years. In 1994, the
Bogor Declaration set a target of realizing free and open trade and investment
in the region by 2010 for developed members and 2020 for developing ones. In
1995, the modality for APEC liberalization was set in the Osaka Action Agenda
and, in 1996, the first Individual and Collective Action Plans were compiled as
the Manila Action Plan for APEC. However, the subsequent EVSL consultations
ended in failure. [T]he APEC consensus on regional trade liberalization has
never been shared by its members.

PHILIPPINE EXPORTS (AS OF

2012, FROM OEC, MIT)

PHILIPPINE IMPORTS (AS OF

2012, FROM OEC, MIT)

OBSERVATIONS

The Philippines participated in APEC in the hope that it will be able

to participate in global trade competitively something which the
Philippine Institute of Development Studies has warned it cannot do
at the time (Austria 1998).

Noticeably, our primary exports are no longer our original

comparative advantages (agricultural, fisheries and forest products),
but primarily machinery parts. This would not be a problem if those
former comparative advantages are still accessible to us, but it
appears were importing those as well.

The makeup of our exports/imports pretty much illustrates why we

have the economic setup/directions our government pursues:
rapidly-urbanizing, raw-material exporting, but hardly
innovating/manufacturing our own products.

In brief, our participation in APEC has led to 1) rapid urbanization, 2)

our rural economies unable to compete, 3) continuing privatization
and foreign ownership, 4) subsequent imposition of labor and
management practices outside the remit of Philippine law.

THERE HAVE BEEN NO LACK OF

CRITIQUE OVER THE YEARS.
Bello (2011) has pointed how:
The Philippines participation in APECs liberalization policies has
led to its catastrophic slump during the 1997 Asian financial crisis;
APECs becoming a conduit of the U.S. War on Terror has led to
worse peace and order conditions in Mindanao from 2001-2013;
The U.S. network built by APEC has allowed for the establishment
of the Trans-Pacific Partnership (TPP), which is a comprehensive
agreement covering all the main pillars of a free trade agreement,
including trade in goods, rules of origin, trade remedies, sanitary
and phytosanitary standards , technical barriers to trade, trade in
services, intellectual property, government procurement, and
competition policy which is likely to compound on the current
situation of the Philippine economy.

WHAT DO WE LOOK FORWARD

TO IN APEC 2015?
As the Philippines will be the host economy of APEC, it supposedly
framed the event along the following priorities:
INVESTING IN HUMAN CAPITAL DEVELOPMENT

Promoting knowledge-based economies;

Promoting science & technology education and innovation in APEC;
Developing job skills needed by APEC business in the 21st century; and
Internationalization of education/cross-border education to develop
APEC-wide skills.
FOSTERING SMEs PARTICIPATION IN REGIONAL AND GLOBAL
MARKETS
Removing barriers to SMEs, including entry to markets;
Promoting inclusive growth through sustainable and resilient SMEs; and
Advocating modernization and standard conformance among SMEs.

WHAT DO WE LOOK FORWARD

TO IN APEC 2015?

BUILDING SUSTAINABLE AND RESILIENT COMMUNITIES

Creating and promoting risk reduction and management in APEC economies;
Building resilient infrastructure;
Fostering business continuity;
Building SMEs resilience to disaster;
Enhancing food security and the Blue Economy in the APEC region; and
Promoting coastal management and marine conservation.
ENHANCING THE REGIONAL ECONOMIC INTEGRATION AGENDA
Strengthening regional economic integration through the Bogor Goals4;
Promoting connectivity through Trade in Services, which will focus on the
people-to-people and institutional connectivity within the region;
Advancing financial markets aimed at creating stronger financial institutions
within the region to better respond to prospective economic shocks; and
Strengthening global supply chain/global value chains in the APEC region.

WE HAVE TO BE
WARY OF
RHETORIC VS.
ACTUAL POLICY
PROPOSALS.

PERHAPS BEESON
(2009) SAYS IT BEST:
For an organization that began with such
high hopes, APEC has achieved
surprisingly little. The failure of APECs
architects to take due cognizance of this
possibility has been at the heart of the
organizations inability to institutionalize
meaningful reform or to fulfill the
frequently conflicting and contradictory
hopes of its founders.