Riding the dragon.

• Author: O'Meara, Molly
• Position: Asia Pacific Economic Cooperation

Around the Pacific Rim, a new kind of power is emerging. APEC, the region's biggest trade network, can now influence more than half the world's economic production. The question is - will APEC make that production sustainable?

"APEC Means Business!" Every few feet, it seemed, that slogan jumped from banners that lined the streets of Manila. The Philippines was hosting the 1996 meeting of the Asia Pacific Economic Cooperation forum, a loose conclave of 18 Pacific rim states - among them such economic giants as the United States, Japan, and China. To APEC's boosters, that slogan was a way of commending these annual meetings as a new paradigm in international negotiations - one that harnesses the private sector to achieve practical results. But in the mouths of critics, the slogan meant something very different. Many environmentalists, human rights advocates, and other activists see APEC as a dangerous new variation on an old theme: a collusion of big business and government that shuts social and environmental concerns out of the loop. In the debate surrounding the Manila meeting, from November 20 to 25, perhaps the only point of agreement was that APEC could be changing the nature of the trading game.

The Philippine government intended the APEC meeting as a national "coming out" party. While many of its Southeast Asian neighbors had prospered during the 1980s, the Philippines had been mired in stagnant growth and burdened by runaway inflation. Frequent brown-outs plagued business and private life. But four years of economic reform under President Fidel Ramos had revived the economy, which grew by 7 percent in 1996. Foreign direct investment rose by 40 percent in the first half of that year; inflation had slowed to under 5 percent; and the lights were back on.

But the festivity in the streets was mingled with frustration. On Roxas Boulevard, the main route to the ministerial conference site, half the lanes had been reserved for the conference. On one side of the median, local traffic inched along in congestion even worse than usual; on the other side, in the nearly deserted "friendship lanes," a few shiny vehicles sped APEC visitors to their destinations. The highway between Manila and Subic Bay, where the heads of state were meeting, was lit by garlands of holiday lights - and by protestors who were burning Ramos and U.S. President Bill Clinton in effigy. The protestors' ire is not hard to understand: according to the government's own estimates, over a third of the population lives in poverty. Yet the country had just spent $15 million on cosmetic alterations for foreign visitors - a make-over that included the bulldozing of squatter settlements near the conference sites.

My own excursions in and around Manila showed me a reality that seemed almost entirely divorced from APEC's rhetoric. An estimated 1 million vehicles already clog Manila's streets and that number is expected to double by 2002. The current level of congestion is already costing at least $51 million a year in wasted fuel. Manila's trademark "jeepneys" (converted U.S. army jeeps used now for public transport) are powered by inefficient, second-hand diesel engines that belch exhaust with health-threatening levels of pollutants. My taxis often crossed over the fetid Pasig River, which snakes through Manila, carrying much of the city's sewage and industrial waste into Manila Bay. Fishery yields in the bay have declined by 39 percent from 1975 to 1988; some 30,000 tons of dead fish washed ashore there about a month before the conference began. Thousands of squatter families who lack access to safe water make their homes on the banks of the Pasig. The population of metropolitan Manila has ballooned from 1.5 million in 1950 to 8.9 million in 1990, an increase fed in part by the continual influx of migrants from the country's impoverished and environmentally degraded outer provinces.

It was against this backdrop that government officials, business leaders, and activists alike were all trying to articulate the long-term significance of APEC. How could the forum best foster trade and economic development in the Asia-Pacific region? And what will it mean for the region's already advanced state of environmental decay?

Avoiding "Euro-Sclerosis"

Every year, now, it seems that the APEC forum produces group photos of beaming presidents and prime ministers in local costume. But that simple, outward token of success belies the complexity within. APEC is a difficult creature to understand. Its structure grows more unwieldy every year and its acronym-rich language seems impenetrable - the Philippine government tried to decode it last year in an 83-page dictionary.

The reason for this complexity lies in APEC's unique history. APEC grew out of a set of less glamorous meetings convened by groups like the Pacific Basin Economic Council (PBEC), which was formed in the late 1960s and which continues to be important for business networking in the region. A more direct precursor is perhaps the Pacific Economic Cooperation Council (PECC), a forum set up in 1980 by academic economists and government officials to discuss trade and investment. In 1989, Bob Hawke, then Prime Minister of Australia, organized APEC to give these conversations a kind of official status. Hawke's original group consisted of Australia, New Zealand, Japan, South Korea, the United States, Canada, and the members of ASEAN. (ASEAN, the Association of Southeast Asian Nations, then included Brunei, Indonesia, Malaysia, the Philippines, Singapore, and Thailand. Vietnam has since joined.)

From its inception, then, APEC encompassed a huge range in level of development and wealth. The per capita GNP of Indonesia, for instance, is just $880, while Japan's is about $35,000. This disparity is largely responsible for APEC's amorphous structure, since ASEAN members initially feared that APEC would become a tool for strong-arming them in trade negotiations with the heavyweights. To coax them on board, Australian and Japanese diplomats had to assure them that APEC would be a purely consultative body, and that it would operate according to the model of consensus pioneered by ASEAN itself. This distaste for binding rules, along with the links to business and academia, became hallmarks of the forum. In his book on APEC, Asia Pacific Fusion, Japanese journalist Yoichi Funabashi calls this approach the "APEC way."

The "APEC way" grew even broader in 1991, when South Korea scored a diplomatic coup with an agreement in which China, Taiwan, and Hong Kong joined APEC simultaneously. China tries to bar Taiwan's entry into all clubs of nations in which China is itself a member, but was placated by the notion that APEC members would be called "economies" rather than nations, that no national flags would be flown, and that Taiwan would use the alias "Chinese Taipei." Mexico and Papua New Guinea were added in 1993, and Chile was accepted a year later. By the time of the Manila meeting, 11 other countries were petitioning for membership, including Russia, Vietnam, and India.

The present roster accounts for 40 percent of the world's population, 46 percent of its exports, and 56 percent of its production. APEC includes the world's largest economies - the United States and Japan - as well as many of its fastest growing ones. Korea, Taiwan, Hong Kong, and Singapore have seen per capita income rise at an average rate of almost 7 percent per year during the past three decades. Indonesia, Malaysia, and Thailand have grown at an average annual rate of 6 percent over the past decade. And China's...