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More form than substance at APEC

Good for a holiday, but other institutions are overtaking APEC as a useful diplomatic forum for Australian trade interests. EPA/Mast Irham

The Asia Pacific Economic Cooperation (APEC) forum concluded last night as leaders, foreign ministers and trade delegations wrapped up a week in Bali. You’d be forgiven for not noticing.

There are two types of people in the world: those that are aware of – even interested in – APEC, and the vast majority of the world’s inhabitants who have either never heard of it or have only the vaguest idea what it actually does.

Public awareness may not be the definitive measure of potential importance, but it does suggest that for an organisation that recently celebrated its twentieth birthday, it has a remarkable record of under-achievement.

It shouldn’t be this way. APEC is, after all, an organisation that claims to represent 40% of the world’s population in economies that generate more than half the world’s GDP.

And yet if the general public knows anything about APEC it is that world leaders are invariably photographed looking uncomfortable in some ethnically-themed outfit or other. All mildly amusing and good for relationship-building, no doubt, but hardly what APEC’s architects had in mind.

It’s worth remembering that when Bob Hawke originally argued in the late 1980s that the region needed a new organisation to promote trade liberalisation, APEC looked like an idea whose time had truly come.

At the time, Australia was concerned about being frozen out of increasingly important regional markets by countries with little history of, or enthusiasm for, economic liberalisation. Much has changed in the interim, but APEC’s agenda hasn’t.

Current APEC host Susilo Bambang Yuhoyono’s speech rehearsed a well-worn theme: APEC members must work to prevent protectionism and improve infrastructure to facilitate trade and investment. As motherhood statements go it was predictable enough, perhaps. It was also in implicit acknowledgement of the failure of APEC to drive a regional free trade agenda.

The key development during the twenty odd years of APEC’s existence has been the remarkable growth in bilateral trade agreements, rather than the sort of all-encompassing multilateral agreements APEC has championed to little effect.

Tony Abbott’s determination to secure bilateral free trade deals with China, Japan and Korea is indicative of this trend. It also chimes with a long-standing Coalition preference for two-way ties and an abiding suspicion of multilateral forums.

Given that there are other, potentially more powerful multilateral forums such as the World Trade Organisation seeking to do a similar sort of job, you’d be forgiven for asking what APEC’s current role actually is.

Significantly, for a part of the world that is supposedly unenthusiastic about transnational institutions and their potential impact on national sovereignty, there are no shortage of regional initiatives on offer.

As far as Australia’s trade relations are concerned, the key development is the proposed Trans Pacific Partnership (TPP). Risen from obscurity, it’s become a potentially pivotal part of the region’s burgeoning institutional architecture.

The TPP is another implicit acknowledgement of APEC’s failure and growing irrelevance. If APEC was working, no one would be looking to establish yet another major institution dedicated to promoting free trade.

More troubling from an Australian perspective, the TPP threatens to complicate further relations with China, which sees the TPP as part of an American strategy designed to marginalise it.

It is testimony to the potential of the TPP that it is engendering a good deal of debate – not a problem that has ever troubled APEC.

One of the primary justifications for APEC’s existence was that it actually brought the leaders of the key regional states together for a summit that offered real prospects for addressing key collective problems. Even this role has been diminished.

The decision to run APEC back-to-back with the East Asia Summit provides another reminder that there is now another organisation with a potentially wider, open-ended agenda that can perform this function.

The fact that Barrack Obama has failed to turn up for this APEC meeting is also a reminder that APEC – even the entire so-called ‘pivot’ to the region – takes second place to America’s domestic politics.

The US has always been lukewarm about APEC, and the decision to develop the TPP shows their priorities aren’t necessarily in accordance with Australia’s.

But perhaps we should take a lesson from our American allies and invest our limited diplomatic resources where they may have most impact. For a middle power like Australia, rule-based multilateral forums and agreements are unambiguously a good thing.

The question is, which ones can influence the behaviour of more powerful states in ways that serve Australia’s distinctive position and national interests? It probably won’t be APEC, an organisation whose time looks like it’s passed.

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