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Joint Statement on APEC and Economic Liberalization by NGOs in the APEC Region

The following is the text of a joint statement on APEC and Economic Liberalization by NGOs in the APEC region opposing moves by several developed countries to convert APEC into a free trade arrangement. The NGOs are also anxious that APEC countries should not accept rapid liberalization without prior detailed studies.


A. INTRODUCTION

1. We the undersigned non-governmental organizations located in countries of the Asia Pacific Economic Cooperation Forum (APEC) wish to register our deep concerns over recent developments in the APEC. We would like to address these concerns to the APEC leaders and officials that are coming to Osaka for the APEC meeting in November 1995.

2. We represent some of the important NGOs and citizen groups in the APEC region, involved in development, social, environmental and peace issues and activities. We believe in the fostering of closer ties and relationships among people in the region.

3. However we do not believe that the current heavy pressure towards economic liberalization through the APEC process is healthy. Instead it is likely to result in adverse effects for large sections of the region's population, especially the poor, and the weaker countries.

B. APEC MOVING AWAY FROM AN INFORMAL FORUM TO A FREE TRADE ARRANGEMENT

4. When APEC was formed in 1989, it was meant to only be a loose forum for economic discussion and cooperation. It was never meant to become a "free trade area."

5. However, starting with the unilateral decision by President Clinton of the US, the APEC meeting in Seattle in 1993 was elevated to the status of a "Summit". At the 1994 meeting in Bogor, attempts were made to convert APEC to a free-trade area. These attempts were to some extent deflected because of contrary views of a few countries.

6. In the end, the political leaders in the Bogor Declaration agreed to "the goal of free and open trade and investment" in the region by 2010 for industrialised countries and 2020 for developing countries. Malaysia also attached an annex stating that implementation would be flexible and the time frame was non- binding.

7. Despite the reservations of many developing countries, the strong countries (particularly the United States and Australia), have been pushing very hard for rapid liberalization of all sectors, not only in trade but also in investment. It would appear that these strong countries would like APEC leaders to quickly agree to compulsory liberalization through declarations or agreements that are increasingly legally binding, and for APEC to eventually be converted to a free trade area.

C. DANGERS OF RAPID IMPORT LIBERALIZATION

8. We are opposed to these moves by the strong countries to bulldoze the rest of the region into accepting rapid economic liberalization, or into legally binding agreements, or a free trade area.

9. This is because the countries of APEC are at different stages of development. Countries that are smaller or weaker require more time to build up their domestic economic enterprises to be able to withstand the full weight of competition from bigger foreign firms. If countries that are weaker are rushed into opening up their economies before their domestic firms and farms are strong enough to compete with the bigger foreign firms, then they will suffer serious adverse effects:

10. Through the process of import liberalization, it is likely that the products and services of the strong countries will take over the markets of the developing countries and eventually control their economies. Many local firms will lose their business to foreign enterprises. There is likely to be a net loss of jobs.

11. If the agricultural sector is also liberalized rapidly, local farmers in many countries are also likely to face difficulties and may lose their livelihoods as their products may be threatened by cheaper imports.

12. In order to prevent serious economic and social dislocation, and to retain a minimum degree of economic sovereignty and control of their own development policies, APEC developing countries are well justified in demanding that the liberalization process be carried out gradually, in an unforced manner. The nature and pace of liberalization will have to differ from country to country, depending on the level of development, the structure of the economy, the strength and weakness of various sectors, and the development vision, objectives and strategy of each of the countries.

13. We understand the concerns of some APEC countries that should agriculture be subjected to rapid liberalization, that their farmers may suffer instability and potential loss of livelihood, and consumers may suffer from greater food insecurity.

14. The same feeling of uneasiness is also understandable should there be compulsory rapid liberalization in the services sectors, on which a very large proportion of the labour force of APEC developing countries depend.

D. PROBLEMS WITH INVESTMENT LIBERALIZATION

15. We are also especially concerned about the pressures being applied by the strong countries, and by certain business lobbies, to get all APEC countries to agree to rapid liberalization of foreign investments. Should these pressures succeed, there would be very serious consequences for the developing countries.

16. At the Bogor meeting, the leaders agreed to "non-binding investment principles" on investment liberalization. There are now proposals by the Eminent Persons' Group to:

(i) Strengthen these principles, for instance to include giving foreign investors the right to establish themselves in all APEC countries and to be given "national treatment" (to be treated at least as favourably as local firms), and the right to profit repartriation, transfer of funds and capital movements, without government regulation or intervention.

(ii) Convert the non-legally binding principles into a voluntary code and then into a legally binding agreement.

17. Most APEC countries are still at the developing stage, and that many have relatively weak domestic sectors. The proposals for rapid investment liberalization and the granting of almost total rights to foreign investors would rob these countries of the right to regulate the inflow of foreign firms, their operations and their financial impacts. The governments and people of these countries would cede control over a critical and strategic part of their economic decision-making. The road would be open for overwhelming foreign control of these economies.

E. WRONGLY PUSHING FOR EARLY IMPLEMENTATION OF URUGUAY ROUND COMMITMENTS

18. The Eminent Persons' Group is also pushing for APEC countries to accelerate the implementation of their Uruguay Round commitments. In its third report, this Group calls for a "50 per cent rule". Developing countries are asked to cut by half the period to implement their Uruguay Round commitments on intellectual property rights and investment measures; double the speed in reducing subsidies; and cut in half the gaps between their bound and applied tariff rates. Industrial countries are asked to speed up the reduction of their tariff schedules, reduction of agriculture subsidies, and the phasing out of their textiles and apparel import quotas.

19. APEC leaders are asked to adopt these measures as a "down-payment" at the Osaka Summit to show their commitment to APEC. But in fact agreeing to these proposals would double the difficulties faced by developing countries which have taken on already very heavy obligations at the World Trade Organization through the Uruguay Round. These countries are already finding it very difficult to adjust their economic policies to fit the Round's disciplines. To cut the already short grace period given to developing countries to implement the Round's decisions would lead to greater dislocation for these countries. APEC would then be imposing unfair burdens on the weaker countries for the benefit of the strong.

F. PROPOSALS AND DEMANDS

20. We perceive a real danger of the APEC process being dominated by a few strong countries, pushing their own agenda for their own commercial interests, whilst many of the APEC developing countries may be pushed along by the pressures for rapid liberalization and for more and more legally-binding agreements. This will most likely lead to a situation of benefits accruing to a few major countries, less or no benefits to other countries, whilst many smaller or weaker countries may have to endure losses.

21. We therefore urge the leaders of APEC countries not to agree to rush towards rapid liberalization in trade and investments, nor into converting non-binding principles or discussions into legally- binding agreements which could close off economic and development options for many countries.

22. We would also like to propose the following:

(a) APEC should return to its original objective and function as a loose non-structured forum for discussion on regional trade and economic affairs. There should not be measures taken to convert it to a more and more formalized and legally binding free trade arrangement.

(b) APEC countries should not be pressurised into accepting a standard and rapid rate of economic liberalization. Instead, each country should be allowed to liberalize their various sectors and activities at their own chosen rates, depending on the level of overall economic development, the strength and weakness of the various sectors, and the country's development objectives and strategies. There should not be any binding time frame for liberalization.

(c) APEC countries should thus be also allowed to exempt sectors or activities (such as agriculture or services) of their choice from liberalization, on the grounds of the need to build up stronger capacity for the domestic sector to compete with foreign firms and products, food security, the need to prevent loss of livelihood and income, etc.

(d) APEC officials and leaders should not at this time strengthen the "non-binding investment principles" set up in 1994. There should first be a review of the economic and social implications, should these principles be adopted in practice. The proposals to include the right of foreign investors to establish themselves in any APEC country, to be given national treatment, and to be free from government financial and economic regulation, should be rejected. APEC leaders should also not agree to proposals to take steps to convert the non-binding investment principles into a voluntary code or into a legally binding agreement.

(e) Developing country members of APEC should not agree to proposals that they speed up the implementation of their Uruguay Round commitments faster than the allocated grace periods, as this would result in even greater difficulties in coping with the various Uruguay Round agreements.

(f) APEC officials and leaders should not feel pressurised into having to give more concessions, as a "down-payment" to "prove their commitment" to the Bogor Declaration. APEC should exist to serve the needs of the members, especially the smaller and weaker countries. These countries should not feel obliged to have to "prove their commitment" by giving "down-payments" to a process of rapid liberalization, especially since there is no concrete evidence that this process will be of equitable benefit to all, and since there are reasons to believe that some countries may suffer losses whilst others may gain.

(g) Instead of pushing even further more rapidly into the liberalization process, the APEC officials and leaders at the Osaka meeting should decide to slow down and pause. Instead, they should order that detailed scientific studies be conducted to review the economic, social and environmental implications and impacts that the various liberalization measures will have on each APEC country. These studies should include, for instance, the impact of different rates of tariff reductions on the imports, exports and domestic production of the various sectors of each country; and the impact of foreign investment liberalization on the domestic market of each country as well as the earnings from these foreign investments for each country. Until such studies are carried out, governments of APEC countries, especially of developing countries, should be very cautious in their attitude towards liberalization.

(h) We are also very concerned that APEC's impetus for rapid liberalization will lead to greater deregulation and a higher rate of primary and industrial production through foreign trade and investment, without adequate environmental safeguards. The Asia Pacific region is already suffering from rapid ecological deterioration. A serious and detailed environmental impact assessment of the liberalization measures and proposals should be conducted prior to the adoption of these measures. APEC officials and leaders at the Osaka meeting must show more serious commitment to environmental protection and sustainable development.


 


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