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Apec: Costs and benefits

There are two questions worth considering with regard to the Asia-Pacific Economic Cooperation (Apec). The first is: Is the Apec worth it? The second is: Is hosting an Apec meeting worth it? These are two totally different questions which some of us (well, really, most of us) seem to have taken as one in our minds. No wonder we are confused.

But before we begin, let’s make sure we know what the Apec is. Is it a Community, like the European Economic Community (EEC)? Obviously not. Is it an Association, as in the Association of Southeast Asian Nations (Asean)? Neither. So what is it? Well, the website says it is “a regional economic forum,” something like the World Economic Forum (WEF, founded in 1971), except that the latter is a private-sector organization while the Apec’s members are “economies” (two members are not countries). And what is a “forum”? It is defined as “a place, meeting or medium where ideas and views on a particular issue can be exchanged.”

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A question then crosses the mind: If the Apec is a regional economic forum, why then was it not called the Asia-Pacific Economic Forum? “Cooperation,” which makes up the “c” in Apec, means the process of working together to the same end. Your guess is as good as mine.

The “end” for which the Apec was originally working was to reduce all barriers to trade and investment among its members (by 2010 for developed countries, by 2020 for developing countries). This was set in 1994, and there have been other goals, action plans, roadmaps and blueprints since then (named after the host country), and they are now talking about economic integration, sustainable and inclusive growth with corruption and transparency thrown in, plus ease of doing business and women entrepreneurship. Quite a large bite.

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So now to the question: Is the Apec worth it? If the judgment is based on whether the members have accomplished what they set out to do, the answer is No (for example, the Bogor Goals above). There are accomplishments, some apocryphal (the Apec takes credit for carrying out a successful Uruguay Round), and others real or perhaps less apocryphal, such as that the average tariffs fell in the region from 17 percent in 1989 to 5.2 percent in 2012. The apocryphal part of this statement is that it is all attributed to the Apec, rather than to, say, the Uruguay Round results. Other goals that seem not to have been accomplished: paperless trading by 2005 for developed countries and 2010 for developing countries, and doing business in the region 25 percent cheaper in 2015 than it was in 2009.

If the basis of the judgment is broadened to include the effects of the goodwill generated by the meetings, and the opportunities they afford for more productive meetings and future encounters between ministers, business people and economic leaders, then the answer will have to be modified to a Maybe or to a Yes. By the way, reasons such as “80 percent of the Philippines’ trade is with the Apec” or “50 percent of assistance we receive is from the Apec” are specious. If the Philippines “resigned” from the Apec, we would still be trading with those countries and getting assistance from those countries. The Apec had nothing to do with it.

The next issue we deal with is: Is hosting this Apec meeting worth it?

Well, let us count the costs. The direct costs (to the government) have been pegged at roughly P10 billion. On the face of it, it looks like the Philippines is spending P500 million for every participating economy (P10 B/20 economies). But the costs were spread over the entire year, for 47 different Apec-related meetings held all over the country.

Then there are the external costs, those imposed on others, who did not voluntarily choose to incur them: the costs to the laborers who apparently were given a no-work-no-pay two-day holiday, the costs to the airlines who had to cancel flights, the costs to the motoring public of the delays caused by the new traffic patterns, the losses of businesses who were depending on that travel. But except for wage loss for the laborers, the other costs may be mitigated by future traffic (from postponed appointments, etc.). It is pretty cold comfort to be told that China (last year’s host) did the same thing, and even more drastically, to save its guests from its polluted air.

Now let us count the benefits: The P10 billion, or most of it, will have been spent in the Philippines, not abroad, on goods and services connected to the Apec meetings—food, souvenirs, giveaways, performances. Would you believe that the inmates of the National Mental Hospital, as well as prisoners, are part of those who will benefit? Because Lulu Trinidad, whose recycled newspaper products will be given away at the meetings, employs these people to make them.

Then there are the expenditures that will be made by an estimated 2,000 foreign media representatives, and the 7,000 others, including business leaders from the Apec and their spouses, who otherwise would not have traveled here. These represent revenues to Filipino business enterprises.

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There are external benefits, too: the opportunities given to local enterprises to show their wares to the business, social and political leaders of the member-economies whose influence on others is out of proportion to their numbers. They will benefit from the meetings, although they did not ask for it. Contacts will be made, which may lead to contracts. There will also be transfer of knowledge and techniques.

The values to these I cannot give. But I invite students to make this the subject of their senior theses. I know what they will find. Why else do countries bid to host events?

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TAGS: Apec 2015, asia pacific economic cooperation
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