INTERNATIONAL TRADE: by Colin TeeseNews Weekly
Rudd's scheme for an EU-style Asian community
, July 5, 2008
Is Kevin Rudd's proposed scheme to unite our region in a European Union-style Asian economic community any more credible than the Asia-Pacific Economic Cooperation (APEC) forum? In this, the first of two articles, Colin Teese, a former senior trade negotiator, discusses where the Rudd Plan is likely to lead us.As a policy developer, the Prime Minister Mr Kevin Rudd seems to be gaining a reputation as something of an unguided missile.
His recent promised $35 million handout to Toyota to develop the "Green Car" was apparently made without reference to his own Cabinet — and this while an investigation into the car industry, headed by his own Industry Minister Senator Kim Carr and former Victorian Premier Steve Bracks, was still incomplete.
Then there was his back-down from his original threat to take Japan to the International Court of Justice (ICJ) over whaling.Puzzling
His recent announcement of the appointment of Mr Richard Woolcott — former secretary of the Department of Foreign Affairs and Trade, and former ambassador to the United Nations and to Indonesia — to pursue by some means or other the idea of an Asian economic community is no less puzzling. What exactly was he on about, and why Mr Woolcott?
Former Labor Prime Minister, Mr Paul Keating, never the shrinking violet, jumped in immediately with comments that seemed to be off the point and ill-founded. If nothing else, Mr Keating displayed an appalling lack of knowledge — about both the European Union and of the aspirations of the likely partners in any genuinely Asian regional grouping.
According to Mr Keating, any Asian economic union should not model itself on the European Union (EU). Well, really? Mr Keating's own unimpressive attempt at bringing Asians together was the Asia-Pacific Economic Cooperation (APEC) forum.
This, of course, begs the question of whether or not Keating, as a non-Asian, is entitled to have a view as to what Asians should or should not aspire towards. Many would say he is not.
But a sense of propriety never inhibited Mr Keating. True to type, he jumped in immediately with the view that the EU should not be the model. Why? Because, you see, the EU had its beginnings in 1951 with a European Coal and Steel Community, and that, according to oracle Keating, was clearly not an appropriate starting point for a 21st-century Asian community.
Well, well! As a matter of fact, unless this writer's memory fails him, there was also a European body called the European Atomic Energy Community (Euratom), created not long afterwards in 1957, whose purpose was to coordinate atomic energy policy.
That was the appropriate terminology back in the 1950s. Today, we would be talking about nuclear policy. European unity had its origins in neither trade nor economics, but in the pursuit of European security. After two disastrous wars within the first 50 years of the 20th century, is it any wonder? Atomic bombs were seen as a threat, and coal and steel were the basis of the arms industry.
But more on that and its relevance to Asian regionalism later. First, we should try and see if we can make any sense of the Prime Minister Rudd's initiative — if, indeed, that is the right term for it.
The PM must surely know that his immediate Labor predecessor and latterly critic, Mr Keating, has been at pains to claim credit for the establishment of APEC. However, it is still not clear whether APEC is an agency for which anyone would want to claim credit. Judged purely on performance to date, it cannot be deemed to have been notably successful.
Wise observers will have noted that APEC, during its Sydney meeting in the dying days of the Howard government, proved to be no more than a talk-fest in search of a place in the sun.
This is a far cry from the lofty aims of its original promoters. The reasons are there for all to see. Whatever Keating and others may have hoped for, APEC was an idea from the start hijacked by free-trade ideologues. Keating almost certainly was blind-sided by the ideologues from the very beginning; but the same could certainly not be said for the Asian participating countries.
Most were discreet enough not to make public their understanding. But one of the outspoken among them, the then Malaysian Prime Minister Dr Mahathir, was unkind enough to express, publicly, his displeasure over APEC's ideological underpinnings.
In late 1993, he refused to attend the APEC summit, prompting Mr Keating to say, "APEC is bigger than all of us — Australia, the U.S. and Malaysia and Dr. Mahathir and any other recalcitrants." Mr Keating's outburst soured our relations with Malaysia for years.
The economic ideologues, quite obviously, were less concerned with the emergence of a genuinely Asian community than with the creation of a vehicle for the promotion of their dream of a region of free trade.
Spurred on by the success they had enjoyed in converting the Hawke/Keating Labor governments to their cause, they came up with a crazy idea in the mid-1990s which they christened "open regionalism".
The plan was to create a broad-based, but not exclusively Asian, membership for APEC (both the United States and Russia were found places). These diverse members were presented as being committed to establishing free trade among themselves.
But, more than that, the concept of so-called "open regionalism" was grafted onto it. This concept was revealed to mean that APEC members, in addition to practising free trade among themselves, would offer the same open market to the rest of the world.
The first proposition, free trade among the APEC membership, was improbable enough. Never mind what the South East Asians thought, could anyone of sound mind believe — then or now — that the US, Russia and Japan would commit themselves to this?
As for the idea that they would embrace, on top of that, the insane notion of open regionalism, that was pure fantasy.
All the APEC membership, except Australia and New Zealand, recognised the absurdity of any such idea. The obvious reason for this was that the concept of open regionalism would immediately discount to zero the value of the free trade zone to the APEC membership.
The Europeans had taught the world well that free trade areas were of no regional benefit unless members enjoyed tariffs at lower levels than those applying to outsiders.
Just why Australia and New Zealand could have believed that the US or Japan — to take just two members of APEC — would in the context of some regional pact of no more than passing interest, open their markets to the world has never been adequately explained.
Meanwhile, APEC limps on without a worthwhile supporting crutch.
What followed APEC's setting up is, however, worth recalling. Almost before the ink was dry on the document, the world, under strong US and European influence, began the process of committing to their own battery of bilateral trade agreements.
Not only were these arrangements the antithesis of what APEC's founders wanted; they went against the whole idea of Australia's commitment to multilateral agreements engineered in the context of the World Trade Organization(WTO).
Ultimately, Australia too joined in the rush to embrace bilateralism. And guess what? Among the earliest bilateral agreements we concluded were with Singapore and Thailand — both members of APEC!
And, of course, none of these agreements contemplated the distribution of the benefits of the agreements beyond the two signatories, even within the APEC region.
So much for APEC and the promises of "open regionalism".
Our Prime Minister Mr Rudd, in his drive for some kind of Asian community, has chosen to put aside all of this background. So too, presumably, has Mr Woolcott, who had some role in the original setting up of APEC.Personal
Beyond the APEC connection, the PM's reason for involving Woolcott is, perhaps, personal. Mr Woolcott, as former head of the Department of Foreign Affairs and Trade under the Hawke/Keating administrations, would certainly have been known to Mr Rudd when the current PM was a junior departmental officer.
Previously, under Mr Gough Whitlam, Mr Woolcott had been Australia's ambassador to Indonesia. In that role, he is said to have had a major part in the Whitlam Government's decision to accept an Indonesian occupation of East Timor. One presumes it was in that period that he built his reputation as an Asian specialist.Article to be continued.— Colin Teese is a former deputy secretary of the Department of Trade and senior trade negotiator. In the next issue of News Weekly, he will look at the sort of important issues that Asians might want an Asian community to deal with.