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Building synergy between G20 and APEC
Although there are stark differences between the G20 and the Asia-Pacific Economic Cooperation (APEC) — the G20 is a global institution that provides global public goods while APEC is a regional institution that operates in an Asian-Pacific context — both act based on the same cooperative, non-binding and consensus-based tradition
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lthough there are stark differences between the G20 and the Asia-Pacific Economic Cooperation (APEC) — the G20 is a global institution that provides global public goods while APEC is a regional institution that operates in an Asian-Pacific context — both act based on the same cooperative, non-binding and consensus-based tradition.
Both of these institutions are not — and should not be — negotiating forums. Most importantly, they need to pool resources. APEC should work under the bigger umbrella of the G20 framework. The G20 might learn from APEC’s experiences, such as successfully getting member countries to commit to strategies on a voluntary basis.
The G20 represents two-thirds of the global population, 85 percent of global GDP and 80 percent of global trade. It has received belated recognition in the wake of shifting global economic power from the over-the-hill West to the emerging East.
APEC is comprised of 21 Pacific Rim countries and accounts for 40 percent of global population, 54 percent of global GDP and about 44 percent of global trade. It has been successful in promoting free trade and investment in Asia-Pacific countries.
The G20’s long-term goal is to ensure strong, balanced and sustainable growth globally. APEC’s main objective is to enhance trade and investment liberalization in the Asia-Pacific region by reducing barriers to trade and investment and by promoting the free flow of goods, services and capital, as stated in the 1994 Bogor Declaration.
Coordinated action between the G20 and APEC is vital; their objectives must be in accord. A very significant outcome of the 2010 APEC summit in Yokohama was the APEC Leaders’ Growth Strategy, which said: “Support for efforts to achieve strong, sustainable and balanced growth of the world economy as called for by the G20 Framework.”
Both forums can reinforce each other on urgent issues, in particular at the conclusion of the WTO’s Doha round this year. The year 2011 has been called a critical window of opportunity.
Trade Minister Mari Elka Pangestu said that “the G20 and APEC should maintain focus on a renewed effort on completing Doha. It will need a strong political and policy coalition to get there — but it can be done.” She said that “trade issues extend well beyond traditional border barriers to trade” and that a clear reform agenda beyond Doha was needed to secure success.
This reform (which may be called structural reform), is what both the G20 and APEC must also work together. At least, the G20 can learn from the APEC Leaders’ Agenda on the keys to success for structural reform. These include, in order of importance, leadership, effective communication and consultation with stakeholders, institutional framework and the use of independent experts and analysis.
The importance of private sector-led growth and job creation has also been increasingly recognized by both institutions. For the first time since its inception, the G20 Business Summit was held a day before the Leaders’ Summit in Seoul.
Instead of a one-off event, the G20 Business Summit will be held simultaneously during upcoming summits.
In November, APEC’s Business Advisory Council (ABAC) expressed its support of the G20 Finance Ministers and Central Bank Governors’ Initiatives, which included structural reform.
Another issue that the G20 and APEC must work together on is climate change. Both forums have committed to a green growth agenda. This should be part of the “sustainable” growth strategy.
Lessons may be learned from some of the G20 and APEC countries, such as South Korea, which has successfully incorporated green growth strategies in its national agenda. Moreover, environmentally friendly goods, services, and investments should be relieved from heavy trade barriers and taxes.
Looking at these issues, there is certainly enough common ground for the G20 and APEC to work together. There are nine countries that sit on both the G20 and APEC: Australia, Canada, China, Indonesia, Japan, Mexico, South Korea, Russia, and the United States. Moreover, the same nations (minus Canada and Mexico) also participate in the East Asia Summit (EAS) — a new rising strategic regional institution.
They are global and regional strategic players that should be taken into consideration and push for the alignment of APEC’s and the G20’s objectives, although the G20 will provide a broader framework than APEC. Otherwise, domestic economic policies may soon suffer.
As the host of the APEC Summit in 2013, Indonesia has an important role in building such synergy, especially if it also hosts the G20 Summit that year.
The writer is a research fellow at the Centre for Strategic and International Studies, Jakarta, and a lecturer at the University of Indonesia.
