An Agenda for APEC 2040
Undeniably, the world today is very different from the world in 1989 when the Asia-Pacific Economic Cooperation (APEC) forum was founded, and from 1994, when it set its lodestar, the Bogor Goals. Since then, in the wake of the global financial crisis, the foundations of the neoliberal economic model have been irreparably damaged. Chiefly among these is the idea of ever freer trade and globalisation, which is of course the founding animus of APEC.
Although increased trade among its members has led to economic growth and higher levels of development, the distribution of the benefits has been unequal, and the majority of the population in the member states has been confronted with increasing economic insecurity for the last 10 years. Indeed, APEC should be more aware of this than any other organisation since its annual Leaders’ Summit for 2019, due to be held in Chile, was cancelled due to domestic protests, primarily caused by deteriorating economic conditions.
Moreover, in the case of APEC, this overall disillusion with trade liberalisation is exacerbated by the sudden rise in strategic competition between the two biggest members of the bloc, the US and China. While externally it may not have suffered from this, for example because manufacturing shifted from China to South-East Asian countries, internally its effectiveness is unavoidably at risk.
Lastly, at a global level, climate change and technological disruption pose massive challenges that are too large for any individual nation to handle and hence require coordinated efforts to address them.
Against this backdrop, Malaysia’s theme for APEC 2020, “Optimising Human Potential towards a Future of Shared Prosperity,” strikes the right note, but behind the words what matters more is the path chosen. The Pacific Economic Cooperation Council (PECC) released a report setting out their vision for APEC in 2040, and while it highlights the challenges mentioned above, its proposals to address them are still rooted in the free markets doctrine. In the present day, this may prove to be an inadequate response, and especially insufficient to rally popular support for APEC.
Instead, proposals that take into account the changing economic and geopolitical realities may help drive a more effective agenda for the next 10 years.
Focus on inequality rather than just inclusion
To a degree, each member state in APEC faces significant entrenched and rising inequality. Over the last few years, this issue has spilled over from the economic sphere into the political and even national security spheres. Merely calling for more liberalisation and freer markets will not fix this, to the contrary, it will make it worse.
APEC has from the beginning resolved to work toward prosperity for the broader population, but its agenda has narrowly focused on inclusion of groups underrepresented in the economy (e.g. women) and their access to economic opportunities.
As part of an ambitious agenda for the next 20 years, ensuring an equitable distribution of the benefits of free trade more widely across society should be at the top of the list. First of all, the existing unequal distribution should be recognised unequivocally as a problem, rather than merely described as a “perception” that exists among the population.
From there, several proposals for action should be considered. For example, regional coordination within APEC should be encouraged to prevent a “race to the bottom” amongst its member states. This could range from technical issues such as coordination on tax incentives to transformational ones, such as policy initiatives to increase wage levels across the region, which should be seen as the end goal for the development of human potential.
Translating these broad policy objectives into actionable and effective plans will also require broader engagement with civil society, rather than relying solely on the input of businesses (i.e. employers) through the APEC Business Advisory Council (ABAC). Existing and prospective employees’ voices should also be represented, for example through representation of labour representatives and other stakeholders. Beyond ensuring that any proposals would balance the competing interests of both groups, the participation of broader segments of the population will ultimately also increase the popular legitimacy of APEC’s efforts.
The rapid advance of disruptive technologies, based on the ever-increasing extraction of data, is already reshaping economies. With an “arms race” among the biggest economies to achieve technological dominance, the rapid increase in the scale of application risks deepening existing economic fault lines further. Taken to its extreme, this may even lead to a new form of colonialism, where the value embedded in individual countries’ data is extracted by and hence accrues to other countries, rather than where it was extracted, much like natural resources once were.
Here too, APEC is in a prime position to foster coordinated efforts between member states, to ensure that all are in a position to benefit from technological disruption. Policies at a regional and national level could encompass leveraging taxation to smooth potential disruption to the workforce, regulation to prevent disproportionate extraction of value, or an industrial policy targeted at developing specific sectors where a comparative advantage might exist. All of these constitute a necessary departure from the free markets doctrine.
Lastly, technology cannot exist in isolation of its economic, political and social context. Consequently, it may make sense to direct its evolution and application through broad societal “missions,” as popularised by the economist Mariana Mazzucato. The major challenges mentioned higher, e.g. climate change or cleaner oceans, lend themselves well to this kind of approach.
Multi-speed regional integration
With the breakdown in relations between APEC’s two largest members causing collateral damage to all multilateral organisations, including the World Trade Organisation (WTO), APEC’s other members have an opportunity to leverage its relatively loose organising principles to reinvigorate their commitment to deeper trade and regional integration, and “lead by example.” The re-negotiated Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) after the US’ withdrawal can provide a blueprint here.
2019 has brought into sharp focus the risks facing the world, from political to natural. At this critical juncture, APEC members have an opportunity to set out an innovative agenda that will make the organisation uniquely relevant for years to come. They should take it.