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New Vietnam, Old APEC?

Updated On: Nov 14, 2006

Vietnam is eager to showcase its new look with the hosting of the APEC summit.

The government has gone all out to impress the APEC visitors. More than 20,000 plots of fresh flowers and 8,000 banners and posters have been placed on the main streets and the city of Hanoi has been thoroughly cleaned up. 115 Cultural programmes have also been planned.

Perhaps Vietnam need not have to do too much. After all, its young and educated population has already made it an attractive investment site. In April, Microsoft announced that it would build a US$300 million plant in Vietnam. The number of investment in Vietnam has almost doubled from US$1.2 billion in 2002 to US$2.02 billion in 2005. Its exports has increased 28.8% to hit US$18.8 billion With its membership of the World Trade Organisation (WTO) member, the value of investment is likely to increase even further.

However, Vietnam has set its sights even higher. It is likely to bid for the non-permanent United Nations (UN) Security Council seat in 2008. To increase the chances, it is deciding to send peacekeeping troops overseas.

Even as Vietnam is trying to re-invent itself, APEC itself faces the problem of making itself relevant. The members of APEC will be discussing the possibility of an APEC-wide free trade area. The idea was floated last June during the APEC Business Advisory Council (ABAC) meeting but no consensus was reached. The stalling of the Doha Round has increased the attractiveness of a FTA. An APEC FTA is likely to provide APEC with a boost given its lack of direction since the Asian Financial Crisis.

However, the APEC-wide FTA idea will not be without difficulty. First, it has been complicated by the possibility of other FTAs. The Japanese had been pushing for a FTA with the other participants of the East Asia Summit, namely ASEAN, China, Japan, South Korea, Australia, New Zealand and India. However, the United States has informally objected to the idea, saying that it did not want “a line drawn in the middle of the Pacific.”

Second, not all the members of APEC are equally as enthusiastic with the idea. Thailand, for instance, has already stated its opposition to an APEC FTA. Chutima Bunyaprahasara, Director-General of the Trade Negotiations Department said that the idea was impractical because of the great diversity of the APEC economies.  

With the APEC-wide FTA not receiving the widest support, APEC leaders look set to call for revival of WTO trade talks.  WTO Director-General Pascal Lamy will be present at the APEC meetings to revive the Doha Round.

While Vietnam’s new make over is likely to impress its APEC visitors, it is not clear as to how much APEC’s new proposals will inspire confidence in the organisation again. Indeed a most recent study by PECC reflects the general perception that APEC is losing its relevance.

Sources:

Boom Boom Nation (Straits Times, 11 November 2006)

The Times: They’re A-Changing (Straits Times, 11 November 2006)

Preparations for Grand Event (Saigon Times Magazine, 11 November 2006)

Roundup: Vietnam Ready to Host APEC Annual Meetings (Xinhua, 11 November 2006)

Trade: Thais Against APEC FTA (Bangkok Post, 10 November 2006)

APEC Free Trade Zone on Hanoi Meet Agenda (BusinessWorld, 9 November 2006)

APEC leaders to call for revival of WTO trade talks (Straits Times, 14 November 2006)