Chapter 4: Implications for a Post-2020 Vision for APEC

In many ways, APEC is ‘ready to roll’ with respect to the options for cooperation in the current circumstances. It has processes, systems, structures and tools. It has a significant membership and the flexibility to work with sub-groups and non-members. Its potential is substantial and the value which it can create is large. We first consider matters to which it might contribute related to capability at the domestic level, the vision for regional growth and the design of regional institutions.

• The region and the world have been struck by an unprecedented crisis and attention must be focused on how to overcome the challenges it presents. COVID-19 has accelerated some trends already evident, and on which APEC had a work agenda. The current situation has had both differential effects as well as effects common across many economies, which are further drivers for cooperation offering lessons for all parties and new forms of cooperation and gains from exploiting complementarities. It has also led to a series of policy experiments, from which there is much to learn, for example, with respect to managing supply chain robustness and resilience. APEC has roles related to transparency, information sharing and capability building role in these respects.
• APEC has another role, which concerns the development of a way of thinking, and a mindset. Before the Covid-19 Virus crisis struck much of the APEC policy community’s attention was focused on assessing progress made on the Bogor Goals and formulating a post-2020 vision for the region. The PECC post-2020 vision for the region was

“An Asia-Pacific community of open interconnected, and innovative economies cooperating to deliver opportunity, prosperity and a sustainable future to all their peoples.”

That vision remains valid. When endorsed by APEC leaders, it will provide a long-term strategic framework for regional governments and stakeholders to plan for the future. Without such a framework there is a risk that the recovery will be much slower than need be, opportunities to sustain reform will not be taken, inefficient policy adopted for short term goals will remain stuck in place, and investment plans put on hold. APEC has a key role to play in articulating that vision.

• The issues associated with the COVID-19 experience will not go away. The rapid spread of the Covid-19 crisis has demonstrated that people are more connected than ever. This is through trade, travel, and digital technologies. Common threats such as pandemics and climate change remain. There will be value in a more tightly coordinated set of responses than observed to date. Success in these respects requires firstly anticipation of when that coordination will matter and the principles of its operation. But success also depends on the presence of governance systems and the institutions that facilitate coordinated responses. These too need to be strengthened not weakened, a task best undertaken in the abstract, rather than in the heat of a crisis. APEC can provide leadership in this area too.

We now turn to some internal matters. There is a rich agenda of items on which cooperation would be useful and this report lays out a number of those. We are not making the case that all those listed should be done, but rather we are presenting them as options for consideration. The question now is how many of these to take up, in order to deliver significant outcomes but at the same time not over-promise and underdeliver. This is an issue, since APEC is already in a relatively fragile state compared to its long history, following the disruptions of the last two years. A careful choice followed by delivery of significant outcomes that demonstrate APEC’s relevance and value, and which thereby draws deeper commitments, is important.

A technology of cooperation for making progress in this context, and creating more options for consideration, is the use of pathfinder initiatives, in which a group of interested APEC economies are able to move forward together on a topic while working towards additional membership or eventual APEC-wide consensus. This concept was endorsed by Leaders nearly 20 years ago. A recommendation from the PECC Post-2020 report was for APEC to encourage well-designed pathfinder initiatives that support deeper connectedness and openness. An example follows.

• A potential pathfinder is the Declaration on Trade in Essential Goods for Combating the COVID-19 Pandemic. Notwithstanding the technical difficulties of 21 economies of coming to agreement given their diverse tariff schedules, a pathfinder gives sufficient flexibility to those not yet ready to make a commitment. Moreover, given that APEC economies are at the 2020 deadline for the Bogor Goals, there should be little resistance in principle. This also provides an opportunity for APEC economies to provide leadership in putting form to principles for open plurilateral agreements. These would not be dissimilar from the principles that underpinned the concept of open regionalism but allow for a greater degree of ‘variable geometry and with flexible boundaries’ as seems necessary in today’s world. This would also provide much needed impetus into multilateral rule making.

Other possibilities for pathfinders are evident in the series of suggestions for attention offered here. However, a strong governance structure is valuable for this approach, involving a test of the proposal before the whole membership (even if not all wish to participate), regular reporting on outcomes, demonstrations of commitment and expanding membership, and a willingness to shut down a project which is going nowhere. As APEC confronts the future, pathfinders should be open to non-member participation who meet criteria. This puts form to one of the region’s longstanding principles of open regionalism. An audit of existing projects involving the application of an update framework is a useful parallel project to, while not impeding, those driven by the imperatives of COVID-19.

A weakness of APEC that once again recent events have highlighted is the lack of integration of all the pillars of policy that matter. Strenuous efforts have been made to link the agendas of liberalization, facilitation and capacity building. Less developed is the link to developments, policy and institutions in financial markets. Once again, recent events have demonstrated the relevance of those connections, and specific areas of cooperation have been suggested here which involve those linkages. There is an opportunity to build a virtuous circle between these areas of policy, by building up from a series of specific COVID-19 driven projects.

A final observation concerns the development of the intellectual capital available. APEC has developed strong relationships with ABAC and PECC, and this needs to be matched by similarly strong working relationships with appropriate civil society groups and with academia. APEC’s norms based on openness and a commitment to economic and technical cooperation plus its modus operandi based on dialogue and collective promotion of best practice are tailor-made to build the stock of ideas, to sustain the capacity to innovate and to meet the challenges of the post-2020 world.

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