Cheesy Group Photos Symbolize Economic Paralysis
As Pacific-Rim (MXAP) leaders gather for a summit in the Russian city of Vladivostok, one thing seems painfully clear: It will end in disappointment.
This isn’t a matter of cynicism, but frustration at the paucity of accomplishments by the 21-member Asia-Pacific Economic Cooperation group over the last two decades. It has proved to be too disparate economically, geographically and ideologically to get big things done. If its summits are memorable at all, it is because of the wacky outfits leaders are obliged to wear for the customary class photo. Furry hats, anyone?
That’s a shame given the magnitude of the region’s challenges: slowing growth, territorial disputes and over- reliance on exports to countries that can’t consume as they once did. More troubling is the leadership void as APEC prepares for its Sept. 8-9 confab.
Still, here are four things I would love to see APEC tackle this weekend.
First, attack the bubble in inequality. If anything is clear about the last decade, it’s that the rich are getting richer at the expense of the poor. Other than a Pacific shoreline, the one thing countries such as Brunei, Chile, Russia, the U.S. and Vietnam genuinely have in common is a widening income gap. This socially corrosive development does no one any good aside from those at the top.
Working jointly to eradicate corruption and build better safety nets would broaden the benefits of growth. So would an APEC-wide free-trade zone. World leaders and trade ministers talk a good game about reducing tariffs and sign off on sweeping communiques to that effect. We need less gabbing and more action to stop trade deals from becoming bilateral and narrowly focused.
The problem in today’s world isn’t too much globalization, but not enough for those who need it most. Reinvigorating an area that accounts for roughly 55 percent of global output through lower barriers on goods, services and people would create a new economic engine in a world that needs one.
Two, address climate change. APEC should join hands to promote energy conservation. Its members burn through more than their fair share of oil, gas, coal and trees.
That reliance on dirty energy fouls Hong Kong’s skies, causes deadly floods in Thailand and the Philippines, adds to the price of Chinese goods, raises costs for American motorists and forces Indonesia to offer budget-crippling fuel subsidies. It burdens Japan at a time when the majority of its nuclear reactors are offline, hurting manufacturers beset by a rising yen. It feeds hostility between China and its neighbors and distorts Australia’s resource-dependent economy.
Cutting use of fossil fuels would lower tensions in the South China Sea and increase incentives for alternative green- energy sources. That might help reduce the need for massive public-infrastructure expenditure, cut poverty, tame inflation, increase manufacturing productivity and slash health-care costs.
Three, overhaul territorial laws driving Asia toward armed conflict. APEC should help devise a code of conduct for the disagreements among China, Japan and South Korea. The leaders of three of Asia’s biggest economies can’t even get into a room together and chat. That is an impediment to lowering trade barriers, linking bond and stock markets and figuring out what to do with the trillions of dollars of currency reserves Asia has amassed over the last 15 years.
At the very least, APEC should include the issue in its formal communique in ways that the 10-member Association of Southeast Asian Nations hasn’t. The benefits of pragmatism and free trade outweigh nationalistic tendencies. If Asia doesn’t put these issues on the discussion table now, the result could be clashes that imperil trade, credit ratings and markets.
Four, devise a common response to North Korea. APEC members include five of the six parties trying to rein in that country’s ambitions to build an arsenal of nuclear weapons. It is perhaps the only forum in which China’s financial support of the Kim Dynasty could conceivably come in for criticism. The United Nations, where China has a permanent Security Council seat and veto privileges, sure hasn’t done the job.
The recent power transfer from the late Kim Jong Il to his son, Kim Jong Un, is an opportunity for the Asia-Pacific region to tackle one of the biggest threats to peace and stability. All APEC leaders need to do is take it. One idea: Hold up Myanmar’s sudden opening, and the world’s rapid embrace of its efforts, as a blueprint for the good that may come from change in North Korea.
There are many other things on which APEC should take the lead -- water and food security, human trafficking, a global approach to financial regulation, increasing literacy, seeing to it that girls are educated as well as boys. The trouble is, the group’s performance since its first summit in 1989 is so spotty. APEC has to improve its record. Humanity needs more from Vladivostok than photos of people in furry hats.
(William Pesek is a Bloomberg View columnist. The opinions expressed are his own.)
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