APEC and Trans-Pacific Dispute Management

INTRODUCTION The November 1994 Asia-Pacific Economic Cooperation (APEC) Leaders Meeting(1) in Bogor, Indonesia, ended with a bold call for free and open trade and investment in the Asia region by the year 2020.(2) Accomplishing this ambitious goal presents many challenges. The region's economic interdependence provides strong incentive for greater cooperation; however, its diversity creates many questions as to the ability of APEC members to agree on common approaches. Economic, political, and cultural differences among APEC members dwarf those among the countries of the Western Hemisphere or Europe and preclude facile comparisons between APEC and the early days of the European Common Market or the expanding North American Free Trade Agreement (NAFTA). APEC links Chile, the United States, and other NAFTA countries to the world's fastest growing economic region.(3) Between 1965 and 1990, East Asia grew more than twice as quickly as Organization for Economic Cooperation and Development (OECD) countries generally, and it is expected that the region will surpass North America and Europe as the world's largest economic zone by the year 2000.(4) As a result of this rapid growth, the share of U.S. trade is expected to rise to about forty percent by the end of the decade.(5) Trans-Pacific trade relations have spawned many rancorous international disputes over issues relating to market access, intellectual property protection, labor, and human rights. One of the keys to APEC's success will be its ability to better manage or avoid these disputes. Though there have been various proposals for the creation of an APEC dispute resolution mechanism, this Article argues that an effective dispute resolution mechanism in APEC is a somewhat illusory goal; the real need is for greater policy harmonization among APEC members. Furthermore, this Article argues that the most effective way to achieve harmonization is through consultative processes rather than formal rule-making. I. INTRODUCTION TO APEC Interest in some form of regional economic group in the Rim dates back to the early sixties. It was stimulated by the success of the European Common Market and growing awareness of the economic potential of East Asia. An early Japanese proposal for a Free Trade Area led to formation of a group of economists known as the Pacific Trade and Development Conference (PAFTAD), which has met annually since 1968.(6) At about the same time, a group of business leaders began annual meetings under the banner of the Basin Economic Council (PBEC).(7) When these efforts began, there was surprisingly little intellectual contact across the or among elites. Many countries had ties to former colonial powers but little knowledge of their neighbors. Meetings of PAFTAD and PBEC began to establish a new sense of the Ocean as a link among diverse and distant countries. In the mid-seventies, Japanese Prime Minister Ohira gave impetus to the emerging notion of a Pacific Community.(8) This idea evolved into the Economic Cooperation Council (PECC), which began in 1982 to hold regular tripartite (government, business, and academic) conferences on issues.(9) These meetings generated many useful ideas and projects, but, over time, participants increasingly felt that real progress could not be made without more direct governmental involvement. In 1989, Bob Hawke, then Prime Minister of Australia, presented the idea of an intergovernmental forum for strengthening economic ties.(10) The original proposal would have excluded the United States, the aggressive trade policies of which were generating considerable resentment among countries. However, Japan did not want to be seen as the center of a new Asian Co-Prosperity Sphere and insisted on inclusion of the United States as well as Canada. The concept of an East grouping, however, remains alive in the proposals of Malaysian Prime Minister Mahatir for an East Economic Caucus (EAEC). …