Wednesday, June 27, 2012

Bolting on the second track key to regional cooperation in the Asian Century

As the politically and economically diverse Asian Pacific states adjust toward post-Cold War institutional structures and alliances, Australia faces renewed policy making and economic cooperation challenges.

It is precisely this diversity of economic interests and political systems that dictates the mode of engagement and the degree of centralised control over the ‘scripts’ used by the actors who exercise influence over the region through various policies and fora.

Time is a relevant dimension too, because these interests, agencies and scripts have continued to diversify as globalisation has accelerated. Understanding the diversity of the Asia Pacific states can significantly contribute to realising good regional outcomes in the Asian Century.

The combination of accelerating complexity, added layers of stakeholders, and transition to an ill-defined global and regional architecture calls for new and different expertise and experience. Australia has multiple centres of regionally respected Asia Pacific expertise and hosts a diverse eco-system of Asian-focused organisations. Many work within ‘second track’ structures that enable a variety of official and private actors to interact in environments where less protocol is required. This can help build more trust and transparency and, as a result, there are more opportunities to explore sometimes unconventional options.

Second track structures are important because they offer a place to clarify the scope of issues as currently perceived, and then imagine and define solutions in a setting that is free of the constraints of official or national positions. Actors working within these structures can challenge current strategies and provide new solutions by drawing on best available research in the field, irrespective of national source. Given their privileged mode of connecting actors across the region, second track structures can reach deeper by collating views across different economies, identifying paths to consensus on actionable options, and constraints on implementation of what appear to be viable solutions.

In Australia these second track structures currently lack connectivity, which may reduce their ability to capture and share experiences, and weaken their ability to tackle cross-sectoral issues. Greater connectivity could provide simpler channels to link with Australia’s increasingly constrained first track agencies and would offer a broader scope, superior skills, and economies of scale. The potential for gains from better linkages is widely recognised by Australian business leaders.

Without enhanced cooperation and leverage, participants in business and in the university sector may miss a deeper and more subtle understanding of the region’s complexity.

Furthermore, the connectedness of these Australian networks into the region is often mixed and haphazard. In some cases there are significant connections, but they can be intermittent and depend on the contribution of a few key institutions and people, rather than being supported by a consistent strategy. The current lack of a coherent strategy for cooperation between the business and research sector reduces the influence and effectiveness of Australia’s business and diplomatic engagement with the region.

For instance, Australia’s public sector has contributed to the dramatic reduction in intra-regional tariffs since the creation of APEC in 1989. But the growing number of preferential trade agreements between Asia Pacific countries and the ensuing complexity has resulted in a small proportion of businesses trading in the region making use of these agreements. Our view is that those agreements are missing the mark.

Negotiation and international commitment in trade agreements would benefit from a redefinition that took into account how business is actually done and thought about. This is especially important for trade in services. An approach that deals with and responds to the current impediments to integration would also increase the effectiveness of trade agreements. Australian trade and investment in much of the region faces a series of challenges that have less to do with tariffs and trade policy, than with a combination of complex stakeholders, weak institutions, lack of transparency and ‘behind the border’ challenges.

A well-functioning second track structure can help resolve the Australian position on the evolution of regional architectures. There are competing but still evolving structures, including APEC and the East Asian Summit, as well as arrangements around the ASEAN+3 group, and now the TPP too.  Australia would benefit from a well-defined strategy with respect to these groups and the various roles that each might take.

Government might expect businesses should contribute to resolving this situation, or it might expect that universities — which host many of the components of second track networks — should support their own work in these areas and their community links. Our view is that there is public interest in a more substantial public investment in fostering connectivity between business and research-led institutions, and between first and second track institutions.

This effort is all the more valuable in the context of new modes of thinking about Australia’s regional relationships. Getting second track diplomacy right will be vital to implementing the recommendations of the White Paper.

Ian Buchanan and Christopher Findlay are Chair and Vice-Chair of the Australian Pacific Economic Cooperation Committee.  
This post is part of the series on the Asian Century which feeds into the Australian government White Paper on Australia in the Asian Century.

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