APEC and the WTO: Which way forward for trade liberalization?

The relative effectiveness of APEC and the WTO in promoting trade liberalization was brought into sharp relief when APEC decided to refer its programme of “Early Voluntary Sectoral Liberalization” to the WTO. The WTO’s success in liberalizing trade in large part stems from clearly specified obligations, legally-binding commitments, reciprocity, and non-discrimination. These characteristics have helped the WTO to discourage opportunistic behaviour by its members; moreover, they have helped governments to resolve domestic political economy problems associated with trade liberalization. In contrast, APEC’s reliance on voluntary compliance with unilaterally defined commitments provides little certainty about the behaviour of partner economies, and fails to address domestic political economy problems. APEC is increasingly likely to return to its roots — the OECD model of trade facilitation and economic and technical facilitation.