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Since 1996, the European Union (EU) has launched several significant initiatives which seek to forge closer economic partnerships with various APEC participants. The 1996 Asia- Europe Meeting (ASEM) initiative has now been followed by the launch of a new Transatlantic Economic Partnership (TEP) to be forged between the EU and the United States. These links will influence the evolution of APEC, the North American Free Trade Agreement (NAFTA) as well as the potential Free Trade Area of the Americas (FTAA). This combination of initiatives could contribute towards the gradual emergence of a global marketplace. On the other hand, since the EU and APEC have adopted very different models of cooperation, these new experiments in inter-regional economic cooperation could also lead to new tensions within existing regional groups. The TEP represents a new approach to the EU's economic relations with the rest of the world. It does not propose yet another traditional, preferential 'free trade area" and deals with issues other than the reduction of border barriers to trade. The proposal also indicates clear awareness of the need for the TEP to co-exist and complement other international economic institutions. This combination of features creates an opportunity to encourage the leaders of both APEC and the EU to adopt some new guiding principles for the nature of new cooperative arrangements among groups of economies. Such principles would seek to ensure that new cooperative arrangements among economies were 'open clubs' which took adequate account of the interests of others; these principles can build on and generalise the fundamental principles of the World Trade Organisation (WTO) as well as on APEC's principles of open regionalism, as expressed in the 1995 Osaka Action Agenda. They will also need to be applicable to the full range of international economic transactions, which now extend far beyond trade in goods and services. This paper proposes a set of guiding principles to facilitate closer economic integration among groups of economies are proposed in this paper; under the headings of: WTO-consistency, transparency, non-discrimination, accession and review.

Economic cooperation, including in East Asia, involves more than trade liberalisation. Other opportunities for cooperation include the exchange of expertise and technology enhancing communications networks as well as cooperative arrangements to facilitate trade and investment. Many formal border barriers to trade have already been reduced to negligible levels. At the same time, political pressures continue to sustain high protection of a few sensitive sectors, especially in agriculture. In such circumstances, there is little need for formal agreements to liberalise trade in most products, while seeking such agreements to liberalise trade in sensitive sectors is likely to prove either impossible or divisive. It would seem more efficient to leave attempts to deal with sensitive sectors to the World Trade Organization (WTO), while pursuing cooperation among East Asian economies on other matters. Nevertheless, East Asian governments are preferring to follow the conventional wisdom that serious economic cooperation must start with a preferential trade arrangement (PTA). If these agreements merely meet the minimum requirements of the WTO, they will avoid the hard issues and it will not prove possible to link them to an East Asia-wide trading arrangement. They could make it harder to pursue other mutually beneficial opportunities for region-wide cooperation. Alternatively, East Asian leaders could adopt WTO-plus principles for their PTAs, along the lines recommended in this paper. These guidelines would require them to cover all products and to extend such liberalisation to other economies in the medium term. Such WTO-plus PTAs could be linked subsequently and could form part of broader efforts towards economic cooperation and integration. This paper spells out the multiple objectives of closer economic partnerships. These can be achieved only by careful assignment of alternative options for cooperation, ranging from bilateral to multilateral and from voluntary to formally binding arrangements. PTAs are one of these options; however, they can only be an efficient component of efforts to forge East Asia-wide cooperation if they are based on WTO-plus principles.

The emergence of the new process of Asian Pacific Economic Co-operation (APEC) since early 1989 has been a significant development for a vast region which accounts for just one half of the world economy. The paper describes the evolution of the APEC process, its basic principles and objectives, the challenges it faces and the role it might play in the 1990s and beyond. (DÜI-Sen)