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Hurdles Ahead for Japan as the APEC Chair

Pranamita Baruah is Research Assistant at Institute for Defence Studies and Analyses, New Delhi.
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  • February 25, 2010

    The APEC Symposium held in Tokyo on December 9-10, 2009, effectively marked the start of Japan’s chairmanship of the forum in 2010. The chairmanship has been formalized during the two-day long Senior Officials Meeting (SOM1) held in Hiroshima starting from February 22, 2010. In the SOM1, participants from 21 APEC member states gathered to discuss free trade and investment in the region. Throughout the year, Japan will host a series of APEC ministerial meetings to lay the groundwork for APEC leaders for the joint summit in November 2010 in Yokohama. Considering that in 2010 APEC has to meet certain significant economic goals when the world is yet to overcome the repercussions of the global financial crisis, Japan seems to have a very busy year ahead. The three areas that have received priority attention are: promoting regional economic integration, devising anew growth strategy and enhancing human security. It is unclear at the moment how Japan can achieve these desired goals. Undoubtedly, with APEC accounting for half the world’s global economic output and 44 per cent of its trade value, Japan’s role in creating a region wide free-trade zone and developing a strategy for economic growth of the Asia Pacific economy is expected to be decisive for the world economy.

    The Draft Statement released during the APEC Summit in Singapore on November 14-15, 2009 assigned Japan the task of identifying ways for the group to create a possible Free Trade Area of Asia Pacific (FTAAP). The idea of a FTAAP has been floated in recent years but so far has been seen as a long-term goal. The statement further said that the forum is to come out with a report card in Japan in 2010 on the progress of APEC’s more developed member economies. The report will asses the achievements of the member states in achieving their 2010 targets for trade and investment liberalization set under the Bogor goals. It is worth noting that the Bogor Goals were adopted by APEC leaders during their summit in Bogor (Indonesia) in 1994 and implemented under the Osaka Action Plan at their summit in Osaka in 1995. Bogor goals set liberalization targets for developed APEC member states by 2010 and for less developed members by 2020.

    While emphasizing the necessity of an ‘Asia-Pacific community’, the draft statement also mentioned the need for free and open trade and investment, promotion of growth, creation of jobs, reduction of business costs to achieve these goals. On the issue of tackling climate change, it expressed the hope that global emissions would need to peak over the next few years and be reduced to 50 per cent below 1990 levels by 2050. How far Japan is successful in achieving these goals in the current year remains to be seen.

    During the 2010 Tokyo Symposium, Katsuya Okada, Foreign Minister of Japan, assured the member states that Japan would take all possible measures to make APEC an effective forum that can strengthen cooperation within the Asia Pacific and further build a sense of solidarity among its members. While mentioning about theme “Change and Action” that Japan has adopted for APEC in 2010, Okada called upon the member states to ‘change’ current policies of APEC and put them into concrete ‘action’ so that the forum continues to play a leading role in the coming years. According to him, as chair of APEC 2010, it is Japan’s primary mission to advance the assessment process of the Bogor Goals with transparency and credibility in picturing the future APEC.

    Japan has assured that it would try and deepen discussions on how to sustain the energy coming out of the dynamic Asia-Pacific region with economic growth and how to harness or release this energy to further growth within the region. Japan would also listen carefully to the voices for a common recognition that aims at a free trade agreement (FTA) for the APEC region, and will exert leadership in “exploring a range of possible pathways to achieve economic integration of the Asia Pacific.” During his address, Okada also revealed Japan’s intention to make every effort to achieve concrete outcomes regarding human security in various fields, such as food security, disaster preparedness, and public health. Economic and Technical Cooperation should also be further enhanced to achieve equitable economic growth of the region.

    Okada’s address definitely offers a ray of hope for APEC, particularly when the forum is striving to remain relevant in the fast changing globalized world. However, Japan itself has to face real hurdles in making its tenure as the APEC chair a success. Both domestic as well as international factors will play a decisive role in it. At a time when the newly elected Hatoyama government is fast losing its popularity among the masses, it will be extremely difficult for the relatively untrained government to take any major economic decision even within Japan, let alone APEC. As the Japanese economy is yet to recover from the financial crisis, any wrong decision by the current DPJ government can have negative consequences. With election for Japan’s Upper House scheduled for July 2010, it seems unlikely that the Hatoyama government would take any sort of economic risk as far as APEC is concerned.

    Over the years, APEC itself has suffered from a number of significant limitations. Firstly, APEC being such a vast economic bloc, consensus has often eluded the forum. In the last few years, China has become highly cautious towards the United States establishing a strong foothold in Asia and has started favouring a tighter union consisting of Japan, China, South Korea and the 10-member ASEAN grouping. Secondly, there have been heated debates over which grouping would be the most suitable to deepen regional cooperation and integration. While one group favours ‘ASEAN plus 3’ framework to take up that role, casting doubt on US participation, the other firmly advocates US participation. According to the latter group, the Trans-Pacific Partnership (TTP), recently announced by President Barrack Obama, would provide a boost to the integration process of the Asia-Pacific economies. Thirdly, apart from addressing such most obvious challenges, factors like the threat of protectionism, lack of trust in financial institutions, etc. also have proven detrimental for the progress of APEC.

    Despite these hurdles, it is hoped that during its tenure as APEC chair, Japan will be able to overcome, or at least be successful in minimizing, their adverse impact on Asia-Pacific economies, and take the forum forward. As a crew member of the ‘APEC Ship’, Japan is expected to draw up a chart for future meaningful cooperation in the APEC framework.