Chapter 16 – APEC: At The Creation


1. PAFTA Japan’s New Trade Policy
2. PAFTA becomes PAFTA
3. APEC to the Rescue
4. Australia claims the Limelight

In the 1960’s the Japanese rightwing, Kojima included, had a problem. 

The then strong leftwing was arguing that Japan’s postwar economy badly needed access to the markets and raw materials of China, North Korea and the Soviet Union if it was to survive. 

(In prewar years it had depended heavily on China and the Korean peninsula for both. It had yet to discover how Australia could be a major supplier of raw materials and food.) 

This meant that Japan could not afford to go along with US-inspired, Cold War strategies that said it should not trade with these Communist nations. 

Kojima’s concept was an attempt to answer the leftwing argument.     

The concept said that Japan’s economy did not have to rely on the Communist economies to the west. 

It could and should rely on the much more reliable capitalist nations to the east, in the Pacific – specifically the US, Canada, Australia and New Zealand.

The key to all this would be a Pacific Free Trade Area – PAFTA.

1.  PAFTA  Japan’s New Trade Policy

But even to this fledgling economist at the time it was obvious that PAFTA had flaws, and not just because of its unpleasant Cold War bias.

A free trade area with nations like the USA, Canada, Australia and New Zealand would automatically see demands for the dismantling of Japan’s agricultural protectionism. Japan’s farming lobby would be violently opposed. 

Kojima’s answer seemed to be that the US and the others would overlook the problem.They would realise the Cold War merits of encouraging Japan to look to the Pacific rather than to Asia. They would be willing to give Japan a free ride. 

Another flaw was the fact that multilateral free trade schemes between nations with different levels of economic progress inevitably cause problems.

It is one reason why the WTO is in such a mess, and why the EU has found it so hard for so long to get off the economic ground. If freer trade is seen as desirable, then the bilateral FTA’s which we see today make  more sense. 

A further flaw was that the US, even then, had global ambitions. It was not going to tie its economy to one area of the globe, the Pacific, just for the sake of Japan. Already it was trying to link up in some way with the emerging EU. 

Years later while insisting it was an active APEC member it was working to create NAFTA and other Latin American trade blocs clearly aimed to protect Latin American markets from Asian trade inroads. 

The US seemed to want to dominate all global economic activity, regardless of contradictions.

Finally, there was the fact that PAFTA, in turning its back on communist Asia, also had to exclude much of non-communist Asia. 

True, at the time non-communist Asia did not amount to very much. But could Japan really afford to ignore the nations on its doorstep? 

2. PAFTA becomes PAFTAD 

For these and other reasons, PAFTA died an early and well-deserved death. But Kojima was not about to give up. 

He repackaged the idea as some kind of Pacific Vision for the new Japan and sold it to enough politicians and bureaucrats to keep it alive. 

For many Japanese, including even some progressives such as the liberal Prime Minister, Ohira Masayoshi, the idea of a postwar Japan making a fresh start looking more towards the advanced, Westernised nations of the Pacific and away from the problem-infested Asian mainland, was attractive. 

It was a postwar version of Fukuzawa Yukichi’s Meiji era concept of datsuA, nyuO (leave Asia, enter Europe). 

Kojima moved quickly to have PAFTA replaced by PAFTAD – a talkfest operation where academics could discuss endlessly something called Pacific Trade and Development, even if their governments had been reluctant to talk about pie-in-the-sky PAFTA free trade area plans. 

PAFTAD was soon supplemented by PBCC (an equivalent talkfest operation for businessmen) and the quasi-official PECC (Pacific Economic Cooperation Council) where both the academics and the businessmen could come together for more discussions, this time with bureaucratic and political endorsement. 

Meanwhile Japan’s Gaimusho (Foreign Ministry) was toying with various schemes that would see the non-communist Asian nations brought together in some vague way – ASPAC, MEDSEA. 

In the event, they all foundered on vagueness, and Asian suspicion of Japanese leadership intentions (war memories still ran deep). 

It was at this point that official Japan, with the indefatigable Kojima still at the helm, began to push for something that would allow the wreckage of ASPAC and MEDSEA, together with the floundering PAFTAD, PBCC and PECC, all be amalgamated into some entity enjoying full government backing. 

It was to be called APEC (Asia-Pacific Economic Cooperation). And that would be in 1989. 

3.  APEC to the Rescue 

Kojima’s fingerprints were heavy on the APEC design. 

To retain his original Pacific Basin concept, APEC had to include a bunch of Latin Americans – Mexico, Chile, Peru – whose relevance to Asian trade and development at the time was minimal.

If anything, Asian manufacturing interests were, and remain, antagonistic to Latin American interests – as the Peruvians were to discover when cheap Chinese imports allowed in under  international agreements put a virtual end to their up-and-coming textile and garment industry. 

If any nation needed a labor-intensive textile industry it was Peru. It had traditions of fine textiles. And it desperately needed employment for its rapidly growing labour supply.

(If APEC could have made its large staff bureaucracy look at this kind of development-killing problem instead of just reciting free trade slogans it might have been of some use to the world.)

For years under APEC the Latinos had to be dragged all the way across the Pacific for meetings with the people trying to make sure they had little industrial development. 

And APEC has occasionally had to drag itself all the way in reverse, simply to maintain the original Kojima dream of a pan-Pacific economic unit. 

Meanwhile, the Asian communist nations close to Japan had to be kept on the sidelines for as long as possible, but the distant Latinos had to be included.

And with Taiwan favoured over China at the start, the anti-communist agenda also managed to survive for a while, even if today APEC has finally had to bow to realities, with not just China but a slightly puzzled Russia also included. 

4. Australia claims the Limelight 

There remained the problem of APEC sponsorship. 

Tokyo was anxious not to repeat its ASPAC experience, where Asian suspicions of Japan had caused so much trouble. It did not want to appear to be too pushy with the alternative APEC scheme. 

So it turned to Australia to take the lead. The then Prime Minister, Bob Hawke, never reluctant to claim global headlines, was easily persuaded to be the front-runner. 

The ANU people, with Drysdale largely in charge, were more than happy to see Kojima’s baby finally come of age at Australia’s alleged initiative. 

Meanwhile, the Canberra bureaucrats were delighted to discover a paper link with the Asian economies – one where they could pretend to be closely involved with Asia without themselves having to go out and do the hard work needed to build real economic bridges into Asia. 

(This curious Australian reluctance physically to get involved with Asia, despite the constant talk about Australia being a part of Asia, remains curious.

(For example, at time of writing the Europeans send hundreds of young people to Japan each year to be trained so they can work at the grassroots of the Europe-Japan relationship. Ireland alone used to send several dozen.

(Australia sends none, and does little to help young Australians trying to get into Japan.

(The Scandinavians have worked hard to help mediate Asian conflicts, from Sri Lanka to Aceh with no hope of reward. 

Australia did, and continues to do, nothing.

(If anything, the participation of our spies in the 1965 Indonesia massacre mainly of leftwing and educated Indonesians greatly retarded that nation’s progress.)

Yet this reluctance to go out and talk to Asians and to learn Asian languages did little to stop our businessmen and academics from lining up to tell us the glorious opportunities we would gain from APEC.

Ironically, they were to get those Asian opportunities…but from the China that Australia was still going out of is way to antagonise, and that APEC had originally been intended to exclude.

APEC has limped along for a decade and a half now, doing little more than provide jobs for an army of academics and bureaucrats.

At its annual summit meetings it also manages to force the political leaders of the various nations to assemble and waste time repeating the same free trade platitudes, and to wear funny clothes, with occasional US leaders having the sense to skip the meetings, or leave early. 

(If it is true that the year 2000 APEC summit in Okinawa pulled US President Clinton away from one crucial day in the Israeli-Palestinian talks at Camp David, and so caused them to fail, as Clinton himself has claimed, then APEC has a lot to answer for.) 

True, APEC has collected many member nations, including even a Kremlin that cannot claim great Asian-Pacific relevance.

But governments will always jump at the chance to join an international grouping for fear of being left out.

Hopefully the rise of China and the growing clout of ASEAN will eventually put this hybrid outfit out of its misery.