Chat time Apec's saving grace

By WARREN GAMBLE

The setting: a plush beachside resort at the tip of Mexico's Baja California peninsula where grey whales frolic in the Pacific Ocean and tourists putt around Jack Nicklaus-designed golf courses carved from the desert.

The guests: some of the world's most powerful leaders, from United States President George W. Bush, to China's President Jiang Zemin and Russia's Vladimir Putin. New Zealand's Helen Clark, Indonesia's Megawati Sukarnoputri and Philippine President Gloria Macapagal Arroyo are the only women at the leaders' table this weekend.

The agenda: terror and trade.

The fact another "T word" has pushed trade down the agenda in the Los Cabos resort this week marks a turning point in the 13-year history of Apec.

Critics have questioned its Groundhog Day reiteration of trade goals which have made glacial progress, largely because they are voluntary.

Apart from the direct impacts of traffic holdups and Clinton mania during Auckland's 1999 hosting, for many New Zealanders Apec is a far-off meeting producing dense communiques, acronyms, buzzwords and the annual photograph where leaders appear in the host's silly shirts.

Auckland had some rather refined black wool jackets; Indonesia's Bogor had crazy-patterned batik shirts; the betting is on ponchos in Mexico.

But observers say apart from progress in trade facilitation - cutting the cost of doing business as distinct from lowering tariffs or subsidies - Apec's value lies in the informal gathering of world leaders who meet without officials or briefing papers.

There are stories of friendships emerging from the closed sessions - Clinton and Jiang Zemin's Apec relationship made flashpoints like the mistaken Nato bombing of the Chinese embassy in Belgrade easier to overcome.

Last year at Apec in Shanghai, Zemin met Bush in what was seen as mending the strained relationship caused by an American spy plane's collision with a Chinese fighter over China's Hainan Island.

Freed from the set-piece formality of other forums such as the United Nations, insiders say there is also more frank debate at Apec.

For smaller players such as Papua New Guinea, Brunei and New Zealand, it is a rare opportunity to get alongside those who can make a world of difference.

PNG trade minister Tukape Masani says Apec helps to focus the industrialised world's attention on "our weaknesses, our difficulties".

After her second summit in Shanghai last year, when leaders issued a joint statement on counter terrorism, Helen Clark said Apec was changing and that the strict economic focus was always too narrow.

"Economics occurs in a context," she said. "That terrorism was able to be dealt with in a mature fashion suggests other important issues will be able to be debated without acrimony.

"That will see the organisation go in directions perhaps not envisaged when it began."

Formed in a post-Cold War world sorting itself into new economic blocs, Apec brought together a mix of powerful and poor Asian and American members conveniently grouped as Pacific Rim economies (not countries, so China and Taiwan could both take part).

Despite representing half the world's population, political issues were resolutely kept off the formal agenda to focus on Apec's free-trade goals.

During the Auckland Apec summit in 1999, as Indonesian militia were rampaging through East Timor, the issue was dealt with on the sidelines, albeit overshadowing the dry trade talk.

With former President Bill Clinton and other world leaders in one place, New Zealand convened a special meeting which led to peacekeepers on the ground in Dili 10 days later.

Last year, the Shanghai summit occurred only a month after the September 11 terrorist attacks. It led to a joint statement - not part of the official communique - pledging to co-operate more on counter-terrorism measures.

In Mexico, counter-terrorism was already on the formal agenda, linked to its impact on trade. The Bali bombing two weeks ago has reinforced its importance.

New Zealand's Foreign Minister Phil Goff, who met his counterparts at the Los Cabos resort over the past two days, says measures being discussed included strengthened customs and immigration enforcement, a cyber security strategy and action to combat the financing of terrorism. The leaders are expected to sign-off on the tougher anti-terrorism package this weekend.

Goff says the enormous economic cost associated with terrorism is illustrated by the $US28 billion ($57 billion) in lost assets and clean-up costs alone from September 11, as well as the impact on jobs, consumer confidence and tourism flows.

But Goff says ministers will also want to prevent tougher anti-terrorism measures impeding the movement of people and goods through the region.

They will discuss how to help struggling economies meet deadlines for enhanced security.

President Bush will also ride into the desert resort with a swag of other issues keeping trade in the shadows. He will continue to lobby for the United States' push against Iraqi leader Saddam Hussein and, in a trilateral meeting with Korea and Japan, will discuss ways to press North Korea to abandon its recently declared nuclear weapons programme. Which leaves Apec's goals of free trade and investment in the region by 2010 for developed economies and 2020 for developing economies as a side issue.

In recent years those goals, which successive New Zealand governments have seen as a glittering economic prize, have made incremental progress.

Some commentators say Apec has effectively become a cheerleader, albeit with a loud voice, for the much wider and more powerful World Trade Organisation which sets rules and policies for global trade.

Apec's reduced role is to build agreement for the new WTO round, including the fraught issue of most benefit to New Zealand, the reduction of agricultural export subsidies.

Commentators say the area where Apec is making progress is in trade facilitation, such as more efficient and standardised customs controls allowing cheaper and quicker movement of goods.

During a speech at the Apec trade ministers' meeting earlier this year, Mexican President Vicente Fox urged member nations to work together for "sustained and balanced development in the region".

"Apec's future depends on how our members and the rest of the world perceive the cooperation made in the Asia-Pacific region," he said.

Some doubt the diverse group of large and small, rich and poor countries without a binding mandate can make any impact.

"It's not clear to me that Apec has a mandate that is going to last and make it important," Ralph Bryant, an expert on international economics at the Brookings Institution in Washington said.

"I haven't seen a lot of evidence that that's the way Asian and American leaders should co-operate."

Others, like Sidney Weintraub of the Centre for Strategic and International Studies, a Washington research organisation, see Apec becoming a uniting force in the divided region.

"My guess," he says, "is it is going to become even more important if we get a Free Trade Agreement of the Americas, because then the Asians will feel they are being discriminated against."

The immediate future of the grouping seems secure with Thailand, Chile and Korea ready to become hosts.

New Zealand observers say, at the least, Apec provides New Zealand with an international network for a whole range of representatives, from business leaders who have their own advisory group at the summits, to diplomats, officials and politicians.

At a time, for example, when New Zealand-United States relations were still frosty because of the nuclear ship ban, then Prime Minister Jim Bolger was able to meet Clinton at Apec and strike a relationship which helped in the thaw.

This weekend, Clark has one-on-one meetings with her counterparts from Australia, Indonesia, Singapore, Philippines, Chile and Canada as well as the leaders' retreat.

The real value in Apec may in the end come down to the ability to sit down and talk face-to-face. In a troubled world, such relationships can become very useful indeed.