APEC: Who really wins?

Arnie Saiki

HONOLULU—At this week’s Asia-Pacific Economic Cooperation (APEC) forum, Secretary of State Hillary Clinton reiterated U.S. intentions in leading a united effort to establish free and fair trade throughout the Pacific.

The forum itself sees the convergence of finance and foreign ministers, state leaders, CEOs, representatives of the IMF and the World Bank, and investors. All this, State officials say, adds up to an unparalleled opportunity for Hawaii’s economy.

APEC says the 2011 forum will increase Hawaii’s State revenue by a projected $120 million for 2013. Considering that $45 million dollars are going into the security alone, Hawaii is spending big to ensure that there will be favorable opportunities created for attracting the large transnational investments in agricultural development, energy, tourism, and other environmental or service sectors that exploit the use of Hawaii’s environmental and human resources.

The impact of the APEC forum will provide Hawaii’s business and finance community with some economic gains, but it will do so at the expense of long-term environmental consequences while furthering economic disparities. Behind the friendly appearance of its website and the call for a welcoming committee to present leis of aloha, it is important to understand who APEC is and what these new investment agreements mean for our future. There will be many people gathering to protest the APEC forum, many of them representing the millions of people who have been negatively impacted by international business, and it is important to understand why the U.S. host country has put on an aloha shirt to say, “E komo mai.”

Currently, APEC is a 21-nation club of primarily industrialized or emerging economies. It was conceived in 1989, just as free-market deregulations and trade liberalizations were fostering economic advantages to industrialized nations. We began to see a greater consolidation of corporate power across nations, creating international legally binding policies that asserted less government regulations by weakening the labor force and dismantling environmental protections.

It is important to note that besides New Zealand and Papua/New Guinea, there is a noticeable absence of Pacific Island Countries in this APEC forum. The smaller, politically independent Pacific Islands, are represented by the Pacific Island Forum, a non-voting member, while Hawaii, Tahiti, Rapanui, West Papua, Guam, and American Samoa are still under various forms of occupation and/or colonial administration.

The Pacific Islands are an important and resource rich region, and the fact that a single Inter-Governmental Organization, like the Pacific Island Forum/Secretariat, represents the Pacific Islands to APEC simply does not reflect the best interest of the people, the environment, or the overall biodiversity of our region.

Besides the Pacific Island Forum, there are two other official observer organizations: The Pacific Economic Cooperation Council (PECC), the only official NGO observer of APEC, which is a business/government think tank; and the Association of Southeast Asian Nations (ASEAN).

Now, just to give APEC some context: In 1993 when APEC held its first meeting, it was also the same year the Maastricht Treaty was signed, officially creating the European Union, which standardized a supra-national system of trade laws that applied to all the member-states and eventually created their single currency. A year later in 1994, the North American Free-Trade Agreement (NAFTA) was signed between Canada, Mexico, and the United States. And in 1995, the World Trade Organization was established.

APEC, like NAFTA and the EU, was established under a shroud of U.S.-led free-market/free-trade principles, which went to benefit large corporations, banking and financial institutions, and key stakeholders in both government and private sectors. These government deregulations and trade liberalizations policies were other wise known as neo-liberalism. The foundation of this belief, asserted that the market was the grand democratizer and if businesses were allowed to flourish without government regulations and fewer tax burdens, then this “free-market” would be able to invest in greater opportunities for the working and middle class. 

Assumptions were made that corporations were actually concerned about the general welfare of the state, which this financial collapse proved indisputably wrong when we saw that the CEOs of too-big-to-fail industries would sooner abandon the welfare of its people than surrender their golden parachutes13.

Neo-liberalism only widened the gap between rich and poor, and pulled the rug out from under the middle class. In its wake, these policies created a series of credit-based financial bubbles that have led us to where we are now—a global economic downturn for the United States and its economic partners. To not connect the free-market/free-trade system with the collapse of global financial institutions is like not connecting gravity with the proverbial apple that fell on Newton’s head.

For APEC proponents to insist upon the viability of this economic system, these free market/free-trade adherents might argue that the economic downturn is temporary. Of course, their predictions could very well be realized if, and only if, these free-market/free-trade advocates further liberalize government regulations and exploit all the environmental and human resources it wants. However, even that won’t last long, because, as we have seen, particularly in regard to developing economies, this system consumes what it needs and abandons the carcass when it is through.

This system consumes what it needs and abandons the carcass when it is through.

For Pacific Islands, we only need to look as far as Nauru to see how the system has failed. On July 18, Marcus Stephen, the president of Nauru, published an appeal in a New York Times Op-ed, in which he addresses two sides of a crisis facing Pacific Islands: one on “climate change and security,” and the other on “mining.” Nauru was a partner to early private/public partnerships in guano mining, and when the resource was exhausted, it left Nauru with few economic alternatives and one of the highest unemployment rates in the world.

Stephens writes: “Nauru has begun an intensive program to restore the damage done by mining, and my administration has put environmental sustainability at the center of our policymaking. Making our island whole again will be a long and difficult process, but it is our home and we cannot leave it for another one.” 

This sentiment is echoed throughout many of the smaller Pacific Island nations.

As we begin to understand what the APEC forum is and why all people, not just Pacific Islanders, advocates, and environmentalists need to resist it, arguments of development and aid packages providing for jobs, health benefits, and opportunities surface. It may be legitimate and true to suggest that many Pacific Islands are economically under-developed and are in need of aid and opportunity. But it is also important to understand that many of those investment packages negotiated inside regional forums like APEC are responsible for perpetuating debilitating social and environmental conditions in the first place. 

The Asian Development Bank (ADB) has been a leading donor to Pacific Islands. Along with the IMF, development banks promote a kind of loan program to Pacific Island governments, technically called “Structural Adjustment loans.” These are conditional loans provided to countries that open themselves up to the free-market. In other words, countries receive aid on the condition that governments enact austerity measures that deregulate protections on sectors like labor, energy, water, and the environment, creating opportunities for foreign investment that often overreach upon the acquisition of labor and resources.

The negotiations that take place in APEC, like the Trans Pacific Partnership Agreements or other bilateral or regional free-trade agreements, such as Pacific Island Countries Trade Agreement (PICTA), exert tremendous influence on smaller nations. One example of how this system exacts profits for its stakeholders is that transnational corporations franchise industries within regions the way fast-food or mini-marts are franchised in neighborhoods. Countries are led to believe that they need to compete for investment with other countries in the region and governments are often willing to compromise long-term environmental security, or in some cases the traditional needs of its people.

Transnational corporations franchise industries within regions the way fast-food or mini-marts are franchised in neighborhoods.

Unfortunately, these arrangements are held together by legally binding investment agreements. The impact of these agreements often alienate peoples from their traditional livelihoods, often jeopardizing food and water security, housing, health, and other economic securities. As a result of labor disputes, for example, corporations might insist that governments open their borders for cheaper labor from other countries. This liberalization of labor protections often destabilize security and undermine any kind of long-term, meaningful equitable solutions that may actually benefits workers and families. This is a system that rewards consumption while strangling meaningful job creation.

There are many alternative and viable economic strategies worth examining, yet, entrenched free-market /free-trade advocates refuse to abandon their stakeholder shares.

As if this were not bad enough, there is what is called “Implementing Arrangements” written into trade frameworks or treaty agreements. Implementing Arrangements are measures of development and security that protect investments. This not only includes the building and maintenance of infrastructure, but security as well.

In 2004, when Lori Wallach of the consumer and trade organization Public Citizen called the over-reaching Free Trade Area of the Americas (FTAA) a “NAFTA on Steroids, fair trade advocates also applied this to the TPPA, which defines itself as “comprehensive regional trade agreement intended to serve as a pathway to the broader Asia-Pacific trade integration, the Free-Trade Area of the Asia Pacific (FTAAP).”

Because of the changing geo-politics of the region, it is unlikely that we will see an FTAAP anytime soon. However, within APEC, Implementing Arrangements in the TPPA enhances militarization in the Pacific; destabilizing communities and traditional practice; depleting resources and degrading the environment, creating a loss of reef and regional bio-diversity in the Pacific; and accelerates the impact of climate change to Pacific Island Nations by providing the infrastructure and security programs called for by the TPPA.

This agenda for regional investment, although not specific to the Pacific region, is clarified through APEC resolutions.

In November 2008, just after the financial crisis, APEC leaders resolved to “take coordinated action to restore stability to financial markets and economic growth. Specifically, they endorsed the common principles” and “broad policy responses” of the Washington Declaration, which affirms a commitment to “free market principles and open trade and investment regimes.” APEC also called for the accelerated implementation of regional integration that would lead to an FTAAP.

To note, the condensed acronym TPPA really stands for the Trans-Pacific Strategic and Economic Partnership Agreement. As this was referred to as an “FTA on steroids,” I would go further and call the TPPA the Terminator VI of trade agreements because of the strategic implementation included in these agreements.

To make sense of the current geo-political actions around China, the TPPA strategically isolates China through both military and economic means and we are seeing that through an increase of military expenditures in the Pacific and through China’s rise as a military power.

In the Pacific Islands, the U.S. military is providing the infrastructure and security for investment agreements to islands that are unable to attract financing.

Currently, Assistant Secretary of State, Kurt Campbell has announced that the United States will “work closely with the smaller Pacific Island nations to help combat the effects of climate change and to improve food security.” This seemingly altruistic plan should remind small island states of the housing bubble that popped in 2008. When governments deregulated financial instruments and offered unqualified buyers the opportunity of home ownership, within a very short time these credit-based loan/investment packages went bankrupt and needed tax payer money to bailout the banks. It wasn’t the investor that provided for the bailout, it was the government. Investment regimes devastate communities with debt and blight. The “Pacific Plan” created by the Pacific Islands forum in 2007—like the housing bubble—does not contain a safety net that protects the people from losing their lands and resources as a result of the investment regime.

How this is justified in the eyes of the investment regimes is that these investment agreements are heard in the supra-national WTO court outside of the state’s domestic courts. And these courts generally rule in favor of the agreement. Locally, these conflicts can take a long time to resolve and sometimes stop production. Investments in large-scale mining or port projects require tremendous coordination and commitments of support by equity stakeholders, even though these investments often displace peoples and destroy environments, as is the case in the current mining development in West Papua. Investment regimes require these implementing arrangements to protect the investors, and if disputes cannot be resolved, then military or private military contractors may intercede on behalf of the corporations.

In the case of West Papua, it is the Indonesian army that is brutalizing our Pacific Island brothers.

Locally, when there are disputes between tenants and landlords for example, this dispute may be heard in a local court and landlords could be fined, or new laws could be legislated. There is a semblance of accountability. International trade or investment disputes that take place in foreign courts, behind closed doors, often result in massive settlements that are disadvantageous to smaller countries.

Also, as a result of these new U.S. led Free-Trade agreements, of which the TPPA represents, it makes it easier for corporations to sue governments.

As this system evolves, it is the transnational corporation who gains the greater power.

Addressing many of these points, an alternative conference called Moana Nui, which ends this Friday. Comprised of some of the world’s leading international experts35 and Pacific-wide advocates and practitioners, Moana Nui seeks a saner and more equitable solution for organizing our labor and environmental resources. For more information, visit the Moana Nui website.