Scepticism grows as trade barriers fall

The last time leaders from Asia-Pacific Economic Cooperation (Apec) economies met in Indonesia was in 1994.

Dr Bayu Krisnamurthi was an agricultural economics lecturer at a university in Bogor, just across from the presidential palace where leaders including Mr Bill Clinton and Mr Suharto were meeting.

At the time, the idea of a free trade area spanning the Pacific seemed far-fetched, and Dr Bayu - now deputy trade minister - said he did not understand what they were talking about.

Almost two decades on, as Apec leaders converge in Indonesia once more for their annual summit this week and the next, trade barriers continue to fall across an increasingly connected region, but scepticism of Apec and its goals remains strong in some quarters.

Many Indonesians feel trade liberalisation has made life harder for them. Entrepreneurs struggle to compete against cheaper goods produced elsewhere, farmers say they find produce prices have fallen and low-skilled workers say their salaries have stagnated.

Activists and civil society groups see falling barriers as a means of further exploiting Indonesia's natural resources.

But officials say this is all the more reason to agree in the coming days on ways to ensure there are benefits to disadvantaged groups and less developed countries.

The effects, said Dr Bayu, now a champion of the 21-member regional grouping, will be incremental. "The decisions that come out will not be immediately felt, but they will come in the form of investments and structural reforms," he said.

Indonesia has been pushing the concept of "sustainable growth with equity" over the past year in its role as Apec chairman.

Putting this into action, on Wednesday, senior officials from Apec's 21 economies - Hong Kong and Taiwan are represented alongside China - agreed to help small and medium-sized enterprises, in particular, businesses run by women, compete abroad and seek financing.

They also agreed to expand transport links and education exchange across the region, and step up investment in infrastructure. "The benefits for Indonesia are clear, given that infrastructure is one of the most pressing needs in our country," said Ambassador Yuri O. Thamrin, the Foreign Ministry's director-general for the Asia-Pacific and Africa.

On Friday and Saturday, foreign and trade ministers from Apec economies will discuss these moves and assess progress on the 1994 Bogor goal of free trade across Asia-Pacific by 2020. Then comes the leaders' summit next Monday and Tuesday.

The new director-general of the World Trade Organisation (WTO), Mr Roberto Azevedo, will be present.

Indonesian officials hope discussions among Apec leaders will help untangle some of the sticking points in ongoing global trade negotiations, ahead of the WTO ministerial meeting in Bali in early December. They have mooted a "Bali package" that helps less-developed countries join the global trading system without undue domestic pain.

But Dr Djisman Simandjuntak of the Centre for Strategic and International Studies, who chairs the Indonesian Pacific Economic Cooperation Council committee, believes the Apec meetings in Bali are not going to make much breakthrough on trade liberalisation.

"This will come through the TPP and RCEP," he said, referring to two free trade pacts being worked out - the Trans-Pacific Partnership backed by Washington, and the Regional Comprehensive Economic Partnership, of which Beijing is a major driver.

The Obama administration had initially targeted to complete TPP talks by the end of this year, but the government shutdown in Washington has left trade negotiators unable to work.

Talks on the RCEP are expected to conclude by end 2015.

zakirh@sph.com.sg

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