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October 20, 1998 Keidanren (Japan Federation of Economic Organizations) |
The purpose of the Asia-Pacific Economic Cooperation forum (APEC) is to seek the region's economic development through liberalization and facilitation of trade and investment as well as promotion of economic and technical cooperation. With much of Asia having been plunged in a serious currency-financial crisis since last year, how APEC will meet the challenge attracts wide attention.
Now APEC is being called upon to redefine the reason for its existence and pursue truly effective measures to help sustain economic stability and development within its member countries and areas and around the region. From this viewpoint, we submit the following proposals.
In coping with the current difficulty, APEC members must adhere to the course of liberalization in financial markets and foreign exchange transactions. This is to ensure an adequate flow of capital, which is indispensable for economic development. Some member economies in trouble have been compelled to apply a variety of emergency measures. Although their choice seems unavoidable in certain respects, we expect these measures to be in effect only for a limited period of time. And we hope to see them returning to the course of liberalization as early as possible before such measures begin to interfere seriously with trade and investment activities.
APEC members, while further improving mutual surveillance for financial stability, should strengthen cooperation toward establishing sound financial systems, nurturing the growth of financial and capital markets and reforming corporate governance. Also, it is necessary for APEC to study ways to monitor short-term capital movements and meet potential problems associated with them.
APEC represents an ambitious attempt to encourage economic growth throughout the Asia-Pacific region. Its guiding principle is voluntary liberalization. Keidanren has always advocated liberalization of the Japanese economy. In addition to international negotiations under the World Trade Organization (WTO), Keidanren also supports APEC's liberalization approach with its emphasis on voluntarism. In line with this thinking, we propose the following.
APEC should go forward with implementing the EVSL proposal adopted at the Vancouver meeting of APEC. However, the work must proceed in a manner consistent with the principle of voluntarism. Cast for a leading role in market-opening efforts in the APEC region, Japan should actively participate in liberalization in the 15 designated priority sectors including forestry and fisheries.
In addition to acting on the EVSL, it is important for APEC to show results in implementing MAPA. All APEC members must present a roadmap that lays out concrete steps taking them to the final goal of liberalization and make maximum possible efforts to carry them out. In doing so, APEC members must increase the level of transparency of MAPA, so that they can confirm the progress made by the other members.
APEC's organization and activities have been growing in scope and complexity. For APEC to be able to produce results, it continually has to define its priorities, better focus its organization and operations and enhance work efficiency. Keidanren already raised these issues in September last year in a report entitled "Toward the Development of APEC-More Efficient, Concentrated Activities and Positive Participation by the Private Sector." In fact, however, few significant improvements have been noted in this area. For this reason, we resubmit the following proposals.
The proposed reform is to be implemented by re-focusing APEC's diverse committee activities on its central mission-liberalization and facilitation of trade and investment, and promotion of economic and technical cooperation. To this end, APEC activities should be reorganized under two existing policy committees and a new one. Specifically, the Committee on Trade and Investment is to handle promotion of liberalization and facilitation of trade and investment. The Economic Committee is to take charge of reviewing and reporting on economic developments in the APEC countries and areas. Alongside the above two, a Committee on Economic and Technical Cooperation should be established by way of consolidating and integrating APEC's activities relating to economic and technical cooperation.
In carrying out the proposed reorganization, APEC should move boldly forward with merging and disbanding working groups and some other units in existence. The reorganization should go forward without feeling constrained by either the early circumstances of their coming into being or the sometimes competing interests of different government departments, ministries and agencies of individual APEC countries and areas.
In order to achieve real success in slimming down the APEC organization, the Budget and Administrative Committee must be granted greater powers. It must closely oversee the activities, budgets and financial reports of various APEC working groups, and the information collected in the course of this monitoring must be made available for public scrutiny.
The activities of the APEC Business Advisory Council (ABAC), as is the case with those of APEC itself, have been expanding and becoming more specialized. So much so that the three representatives assigned by each APEC member to the council cannot adequately cover them. ABAC should use this situation as an opportunity to reconfirm its original mandate and redefine its priorities in order to ensure greater efficiency.
Strong expectations are held internationally for Japan to lead Asia out of the current crisis. If this country is to meet that responsibility, it is extremely important that the Japanese government provide more leadership in the affairs of APEC as well. This is all the more apparent in light of the fact alone that this country supplies more than 60 percent of APEC's operational outlays through the so-called Murayama fund and other sources.
The Japanese government, first of all, must thoroughly liberalize trade and investment activities at home to further improve access to Japanese markets. It is important that businesses in the affected sectors make themselves more competitive, with the government accelerating deregulation as a means of spurring greater efficiency and productivity. Where the process of liberalization brings about an abrupt increase in imports threatening to disrupt domestic industry, the government can apply the so-called safeguards and other internationally accepted measures to deal with such situations.
Infrastructure development, especially projects involving private sector participation, holds a key to economic development in the Asia-Pacific region. APEC, operating primarily through the proposed Committee on Economic and Technical Cooperation, must work to create conditions conducive to direct private sector participation in infrastructure development. APEC needs to cooperate with international organizations such as the United Nations and the World Bank in this area. The Japanese government should play a leading role in APEC discussions concerning the subject. Japan has much experience and expertise in the energy sector including nuclear power and alternative energy sources, environmental protection and industrial infrastructure. We are hopeful, therefore, that the emphasis in Japanese development assistance will be placed, for example, on industrial infrastructure projects in the region of the Association of Southeast Asian Nations (Asean) and environmental programs in China.
For Japan to provide increased leadership in the APEC forum, it must have an integrated policy-making and approach in relation to APEC, based on its foreign and international economic policies and strategies. Another major concern among the business community is to keep itself better informed of APEC's programs and performance. It is hoped that the government more often and proactively make public APEC's yearly operational objectives, the progress made toward reaching them, detailed information about the APEC budget and annual financial report.