24 October 1997 Independent experts seek summit action from APEC leaders

The Asia Pacific Economic Cooperation (APEC) forum – meeting for its annual summit next month in Vancouver – should take urgent initiatives to deal with the financial crisis hitting important parts of its region, says Lincoln University's Professor of International Trade Policy, Ralph Lattimore.

Professor Lattimore is one of a panel of 13 independent, international experts who are prompting APEC leaders to focus their Canadian meeting on the current financial crisis which is centred on key South East Asian economies and poised to possibly spin off more widely from there.

Professor Lattimore and his colleagues say the regional body should take over the controversial proposal for an all-Asia ‘bailout fund’, made by Japan at the Hong Kong meeting of finance ministers and bankers earlier this year.

Because of limitations on the size of International Monetary Fund loans to any one country, the IMF cannot adequately supply funding to help countries effectively defend new and often politically difficult programmes, they say. Hence the need for other mechanisms.

"APEC leaders should recognise that weak financial sectors are a central cause of the recent currency and economic problems in a number of countries," says Professor Lattimore.

"Hence liberalisation and deregulation of these sectors, phased in over reasonable periods of time and coupled with the installation of effective supervisory regimes, are essential elements in resolving difficulties."

This can best be accomplished through successfully concluding the worldwide negotiations on financial services reform in the World Trade Organisation (WTO) by their target date of 12 December, says Professor Lattimore and his international colleagues.

Agreement to do so by APEC at Vancouver would almost certainly galvanise a global accord, they say, just as an APEC agreement to eliminate all tariffs on information technology products at its Subic meeting in 1996 produced the worldwide Information Technology Agreement in the WTO a few weeks later.

A second summit initiative the experts would like to see would be the creation of new arrangements to help prevent future monetary crises in the region and to provide supplementary financing for member economies required to undertake difficult adjustment programmes.

This could be built on the close relationships already developed by APEC's finance ministers and would reinforce the central role of the International Monetary Fund, they say.

Based on IMF advice, APEC should try to persuade its members to take timely action to avoid crises and thus prevent difficulties for the region as a whole. In addition, APEC members should create a Supplementary Financing Facility to augment IMF lending in support of effective policy responses to crisis developments.

The panel of independent experts, from leading research institutions and universities throughout the Asia Pacific region, have sent a Memorandum to Canada's Prime Minister, Jean Chretien, the chairman of the Vancouver summit and to other APEC leaders. In it they elaborate on the rationales and details of their call for APEC action on the financial crisis and they also make recommendations on several other key issues on the APEC agenda including trade liberalisation, economic and technical cooperation and the environment.

Names and Affiliations of Panel of Independent Experts:

C. Fred Bergsten, Director, Institute for International Economics, Former Chairman, APEC Eminent Persons Group, United States

Suthiphand Chirathivat, Associate Professor, Chulalongkorn University, Thailand

Wendy Dobson, Director, Centre for International Business, University of Toronto, Canada

Peter Drysdale, Executive Director. Australia-Japan Research Centre, Australian National University, Australia

Jesus Estanislao, President, University of Asia and the Pacific Former Member, APEC Eminent Persons Group, Philippines

Ralph Lattimore, Professor. Department of Economics, Lincoln University, New Zealand

Suhadi Mankusuwondo, Trade and Development Institute, Former Member, APEC Eminent Persons Group, Indonesia

Luis Rubio, Director General, Centre of Research for Development, Mexico

Rong-I Wu, President, Taiwan Institute of Economic Research, Former Member, APEC Eminent Persons Group, Chinese Taipei

Ippei Yamazawa, Professor, Hitotsubashi University, Former Member, APEC Eminent Persons Group, Japan

Soogil Young, President, Korea Institute for International Economic Policy, Korea

Chia Siow Yue, Director, Institute of Southeast Asian Studies, Singapore

Zhang Yunling, Director, Institute of Asia Pacific Studies, Chinese Academy of Social Sciences, China

Professor Ralph Lattimore, Department of Economics & Marketing, Lincoln University, Canterbury, New Zealand