At the 10th summit of APEC ministers and the 6th summit of APEC leaders, held in Kuala Lumpur on November 14-15 and November 17-18, respectively, it was only natural that the continuing Asian financial crisis would be a topic of discussion.

The delegation from the ROC, led by Council for Economic Planning and Development (CEPD) chairman P.K. Chiang, carried out its mission without a hitch. Not only did Chiang stand in for President Lee Teng-hui at the summit, he also held bilateral talks with the leaders of many APEC nations, including Malaysian prime minister Mahathir Mohamad, Singaporean prime minister Goh Chok Tong, Philippine president Joseph Estrada and Indonesian president B.J. Habibie.

In addition to exchanging views, the 21 leaders in attendance at the summit released a statement in which they agreed to create a system to monitor cross-border short-term capital flows. The "Group of 22" and the International Monetary Fund moved a step closer to determining what form these measures will take.

There was also much discussion of both the joint US-Japanese plan to provide US$10 billion in aid to stabilize the region's financial systems and the collateralized bond obligations (CBO) proposal put forward by Taiwan.

The CBO mechanism is intended to help Asian nations battered by the regional financial crisis. Bonds issued by these nations would be bought with funds from the private sector and from the public sector of those nations in better financial shape. Taiwan hopes that the mechanism would provide additional channels of communication between it and other nations and allow Taiwan itself to play a more active role in international affairs. However, the leaders meeting in Kuala Lumpur made no pronouncement on the issue for a number of reasons, including the fact that the question of sovereignty is unavoidable and the proposal itself was similar to the joint aid proposal made by the US and Japan. Nonetheless, Malaysian prime minister Mahathir strongly encouraged member nations to examine the mechanism. Even the US eventually expressed its support. In the future, it may be possible for Taiwan to work informally with other interested nations to move ahead with the CBO mechanism.

Another major issue discussed was the early, voluntary liberalization of regional trade in nine product categories. However, as Japan insisted that forestry and fisheries products be excluded from the agreement, it was referred to the World Trade Organization for a decision.

Taiwan itself continues to make strides towards liberalizing trade. A draft version of the "Chinese Taipei Individual Action Plan for the Implementation of APEC Measures" states that tariffs on 1,358 information technology products, which have already been lowered to 8.25%, will be further lowered to 8.14%. Moreover, Taiwan will continue to eliminate measures which restrict trade in commercial goods. At the same time, the island is speeding up the approval process for inward and outward remittances of foreign investment capital and loosening limits on foreign investment in the stock market. Unfortunately, as a result of the regional crisis, the plan no longer stresses the complete lifting of restrictions on capital movement by the year 2000 as was once promised.

Commenting on the results of this most recent meeting of APEC, Sung Chen-chao, a professor in the graduate institute of political economy at National Cheng Kung University, states that APEC has difficulty reaching decisions because it acts by consensus rather than by majority vote. The increase in the number of participating nations means that differences in economic level have also increased. Some of the organization's less developed members are facing pressures which make it difficult for them to embrace the liberalization of economics and trade. In addition, a number of secondary regional organizations have developed, creating a number of political and economic turf-battles. This has also worked against the consolidation of APEC. As a result, Sung believes that APEC now faces a difficult question: to remain a forum for discussion or to become an "official" regional institution.

Lai Shin-yuan, director of international affairs at the Taiwan Institute of Economic Research, also believes that APEC's member nations have differing views on a number of fundamental issues. Given the organization's loose structure, this means there is too little binding its members together. Further, the process of liberalization is no longer straightforward, and political issues, once assiduously avoided, are now thought to have a place in the previously purely economic forum. These circumstances make it unlikely that APEC will be able to avoid reform. In Lai's analysis, the implosion of the Asian economies last year demonstrates their interconnectedness. Therefore, in order to place its own existence on a more secure foundation, Taiwan should carefully observe changes in APEC and use its influence to make the organization into a vehicle driving regional consolidation.

Unfortunately but not unexpectedly, the international struggle between Taiwan and the mainland flared up once again outside the meeting halls of APEC. Before the leaders' summit, Zhu Bangzao, a spokesperson for the PRC's Ministry of Foreign Affairs, stated in Kuala Lumpur that after the mainland joins the WTO, Taiwan will only be able to participate in that body as a customs zone. Moreover, he claimed that Taiwan will be ineligible to participate in any of that body's discussion between sovereign nations. Wu Yuan-yan, a spokesperson for the ROC's Ministry of Foreign Affairs, responded that admission to the WTO is based on an applicant's economic and trade system. Any entity which meets the organization's criteria may join. Therefore, Taiwan and the mainland have applied separately to join the WTO and their admissions will also be handled separately.

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APEC held its meeting at a popular vacation spot within Kuala Lumpur. It was a delightful setting. (photo by Lee Chih-wei)