ASIAN PACIFIC ECONOMIC CO-OPERATOION

INDEX / CONTENT

Sr No

Particulars Page No

1 INTRODUCTION OF ASIA PACIFIC ECONOMIC COOPERTION

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2 HISTORY 33 MEMBER ECONOMICS 44 POSSIBLE ENLARGEMENT 55 PILLAR THREE APEC 86 APEC AND LIBERLIZATION 87 APEC STUDY CENTRE 108 APEC BUSSINESS ADVISORY

COUNCIL11

9 MEETING DVELOPMENT 1210 CRITICISM 1411 REFERENCE 1512 OVER VIEW 2813 TRADE AND INVESTMENT AFTER

LIBERLIZATION31

14 BUSSINESS FACILITAION 3215 OTHER ACHIVEMENT 35

INTRODUCTION

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Asia-Pacific Economic Cooperation (APEC) is a forum for 21 Pacific Rim countries (formally

Member Economies) that seeks to promote free trade and economic cooperation throughout

the Asia-Pacific region. Established in 1989 in response to the growing interdependence of Asia-

Pacific economies and the advent of regional trade blocs in other parts of the world, initially,

with the notion to the likely dominance of the sphere of economic influences of the highly

industrialized Japan (a member of G8) in the Asia-Pacific region and for the economic interests

of Australian agricultural/raw material products to search for new buyers other than the demand-

declining European market,[APEC works gradually (to include members of Newly industrialized

economy at the time, although the agenda of free trade was a sensitive issue for the developing

NIEs, and for ASEAN economies to explore new export market opportunities of the natural

resources such as natural gas and seek regional economic integration (industrial integration) by

means of foreign direct investment on the behalf of ASEAN) to raise living standards and

education levels through sustainable economic growth and to foster a sense of community and

an appreciation of shared interests among Asia-Pacific countries. Members account for

approximately 40% of the world's population, approximately 54% of the world's gross domestic

product and about 44% of world trade. For APEC Economic Trends Analysis in 2012,

An annual APEC Economic Leaders' Meeting is attended by the heads of government of all

APEC members except Republic of China (represented under the name Chinese Taipei) by

a ministerial-level official. The location of the meeting rotates annually among the member

economies, and until 2011, a famous tradition involved the attending leaders dressing in

a national costume of the host member.

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HISTORY

ABC news report of the first APEC meeting in Canberra, November 1990. Featuring delegates

watching the Melbourne Cup.

In January 1989, Australian Prime Minister Bob Hawke called for more effective economic

cooperation across the Pacific Rim region. This led to the first meeting of APEC in the

Australian capital of Canberra in November, chaired by Australian Foreign Affairs Minister

Gareth Evans. Attended by political ministers from twelve countries, the meeting concluded with

commitments for future annual meetings in Singapore and South Korea.

Countries of the Association of Southeast Asian Nations (ASEAN) opposed the initial proposal,

instead proposing the East Asia Economic Caucus which would exclude non-Asian countries

such as the United States, Canada, Australia, and New Zealand. This plan was opposed and

strongly criticized by Japan and the United States.

The first APEC Economic Leaders' Meeting occurred in 1993 when U.S. President Bill Clinton,

after discussions with Australian Prime Minister Paul Keating, invited the heads of

government from member economies to a summit on Blake Island. He believed it would help

bring the stalled Uruguay Round of trade talks back on track. At the meeting, some leaders called

for continued reduction of barriers to trade and investment, envisioning a community in the Asia-

Pacific region that might promote prosperity through cooperation. The APEC Secretariat, based

in Singapore, was established to coordinate the activities of the organization.

During the meeting in 1994 in Bogor, Indonesia, APEC leaders adopted the Bogor Goals that

aim for free and open trade and investment in the Asia-Pacific by 2010 for industrialized

economies and by 2020 for developing economies. In 1995, APEC established a business

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advisory body named the APEC Business Advisory Council (ABAC), composed of three

business executives from each member economies

MEMBER ECONOMIES

South Korean President  roomful with Japanese Prime Minister  Shins’ Abe and U.S.

President George W. Bush at APEC2006 in Hanoi.

APEC currently has 21 members, including most countries with a coastline on the Pacific Ocean.

However, the criterion for membership is that the member is a separate economy, rather than a

state. As a result, APEC uses the term member economies rather than member countries to refer

to its members. One result of this criterion is that membership of the forum

includes Taiwan (officially the Republic of China, participating under the name "Chinese

Taipei") alongside People's Republic of China (see Cross-Strait relations), as well as Hong Kong,

which entered APEC as a British colony but it is now a Special Administrative Region of the

People's Republic of China.

Member economy (name as used in

APEC)Date of accession

Australia 1989

Brunei (Brunei Darussalam) 1989

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Member economy (name as used in

APEC)Date of accession

Canada 1989

Chile 1994

China (People's Republic of China) 1991

Hong Kong (Hong Kong, China)[4] 1991

Indonesia 1988

Japan 1989

 South Korea (Republic of Korea) 1989

 Mexico 1993

 Malaysia 1989

 New Zealand 1989

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Member economy (name as used in

APEC)Date of accession

 Papua New Guinea 1993

 Peru 1998

 Philippines 1989

 Russia 1998

 Singapore 1989

 Republic of China (Chinese Taipei)[5] 1991

 Thailand 1989

 United States 1989

 Vietnam 1998

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POSSIBLE ENLARGEMENT

India has requested membership in APEC, and received initial support from the United States,

Japan and Australia. Officials have decided not to allow India to join for various

reasons. However, the decision was made not to admit more members until 2010. Moreover,

India does not border the Pacific Ocean, which all current members do. However, India has been

invited to be an observer for the first time in November 2011.

in addition to India, Mongolia, Pakistan, Laos, Bangladesh, Costa Rica, Colombia, Panama

and Ecuador, are among a dozen countries seeking membership in APEC by 2008. Colombia

applied for APEC's membership as early as in 1995, but its bid was halted as the organization

stopped accepting new members from 1993 to 1996, and the moratorium was further prolonged

to 2007 due to the 1997 Asian Financial Crisis. Guam has also been actively seeking a separate

membership, citing the example of Hong Kong, but the request is opposed by the United States,

which currently represents Guam.

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Pillars APEC's Three

To meet the Bogor Goals, APEC carries out work in three main areas:

1. Trade and Investment Liberalization

2. Business Facilitation

3. Economic and Technical Cooperation

APEC and Trade Liberalization

According to the organization itself, when APEC was established in 1989 average trade barriers

in the region stood at 16.9 percent, but had been reduced to 5.5% APEC has long been at the

forefront of reform efforts in the area of business facilitation. Between 2002 and 2006 the costs

of business transactions across the region was reduced by 6%, thanks to the APEC Trade

Facilitation Action Plan (TFAPI). Between 2007 and 2010, APEC hopes to achieve an

additional 5% reduction in business transaction costs. To this end, a new Trade Facilitation

Action Plan has been endorsed. According to a 2008 research brief published by the World

Bank as part of its Trade Costs and Facilitation Project, increasing transparency in the region's

trading system is critical if APEC is to meet its Bogor Goal targets. The APEC Business Travel

Card, a travel document for visa-free business travel within the region is one of the concrete

measures to facilitate business. In May 2010 Russia joined the scheme, thus completing the

circle.

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Proposed   Free Trade A rear of the Asia-Pacific

APEC is considering the prospects and options for a Free Trade Area of the Asia-Pacific

(FTAAP), which would include all APEC member economies. Since 2006, the APEC Business

Advisory Council, promoting the theory that a free trade area has the best chance of converging

the member nations and ensuring stable economic growth under free trade, has lobbied for the

creation of a high-level task force to study and develop a plan for a free trade area. The proposal

for a FTAAP arose due to the lack of progress in the Doha round of World Trade

Organization negotiations, and as a way to overcome the "spaghetti bowl" effect created by

overlapping and conflicting elements of the umpteen free trade agreements—there are

approximately 60 free trade agreements, with an additional 117 in the process of negotiation

in Southeast Asia and the Asia-Pacific region.[18][18][19][20][20] The FTAAP is more ambitious in

scope than the Doha round, which limits itself to reducing trade restrictions. The FTAAP would

create a free trade zone that would considerably expand commerce and economic growth in the

region.[18][20] The economic expansion and growth in trade could exceed the expectations of other

regional free trade areas such as the ASEAN Plus Three (ASEAN + China, Japan, and South

Korea).[21] Some criticisms include that the diversion of trade within APEC members would

create trade imbalances, market conflicts and complications with nations of other regions. The

development of the FTAAP is expected to take many years, involving essential studies,

evaluations and negotiations between member economies. It is also affected by the absence of

political will and popular agitations and lobbying against free trade in domestic politics.

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APEC Study Center Consortium

In 1993, APEC Leaders decided to establish a network of APEC Study Centre among

universities and research institutions in member economies.

Notable centers include:

Australian APEC Study Centre, Royal Melbourne Institute of Technology, Australia

Berkeley APEC Study Center, University of California, Berkeley, United States

Chinese Taipei APEC Study Center, Taiwan Institute of Economic Research, Taiwan

HKU APEC Study Center, Hong Kong University, Hong Kong, China

Kobe APEC Study Center, Kobe University, Japan

APEC Study Center, Nacka, China

Philippine APEC Study Center Network, Philippine Institute for Development

Studies, Philippines

The Canadian APEC Study Centre, The Asia Pacific Foundation of Canada, Vancouver,

Canada

Indonesian APEC Study Centre, APEC Study Center University of Indonesia, Indonesia.

APEC Business Advisory Council

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The APEC Business Advisory Council (ABAC) was created by the APEC Economic

Leaders in November 1995 with the aim of providing advice to the APEC Economic Leaders on

ways to achieve the Bogor Goals and other specific business sector priorities, and to provide the

business perspective on specific areas of cooperation.

Each economy nominates up to three members from the private sector to ABAC. These

business leaders represent a wide range of industry sectors. ABAC provides an annual report to

APEC Economic Leaders containing recommendations to improve the business and investment

environment in the Asia-Pacific region, and outlining business views about priority regional

issues. ABAC is also the only non-governmental organ that is on the official agenda of the

APEC Economic Leader’s Meeting.

Annual APEC Economic Leaders' Meeting

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Since its formation in 1989, APEC has held annual meetings with representatives from all

member economies. The first four annual meetings were attended by ministerial-level officials.

Beginning in 1993, the annual meetings are named APEC Economic Leaders' Meetings and are

attended by the heads of government from all member economies except Taiwan, which is

represented by a ministerial-level official. The annual Leaders' Meetings are not called summits.

Meeting developments

In 1997, the APEC meeting was held in Vancouver. Controversy arose after officers of

the Royal Canadian Mounted Police used pepper spray against protesters. The protesters

objected to the presence of autocratic leaders such as Indonesian president Suharto At the 2001

Leaders' Meeting in Shanghai, APEC leaders pushed for a new round of trade negotiations and

support for a program of trade capacity-building assistance, leading to the launch of the Doha

Development Agenda a few weeks later. The meeting also endorsed the Shanghai Accord

proposed by the United States, emplacing the implementation of open markets, structural

reform, and capacity building. As part of the accord, the meeting committed to develop and

implement APEC transparency standards, reduce trade transaction costs in the Asia-Pacific

region by 5 percent over 5 years, and pursue trade liberalization policies relating to information

technology goods and services.

In 2003,  leader Redman had planned to attack the APEC Leaders Meeting to be held

in Bangkok in October. He was captured in the city of Ayutthaya, Thailand by Thai police on

August 11, 2003, before he could finish planning the attack.[citation needed] Chile became the

first South American nation to host the Leaders' Meeting in 2004. The agenda of that year was

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focused on terrorism and commerce, small and medium enterprise development, and

contemplation of free trade agreements and regional trade agreements.

The 2005 Leaders' Meeting was held in , South Korea. The meeting focused on the Doha

round of World Trade Organization(WTO) negotiations, leading up to the WTO Ministerial

Conference of 2005 held in Hong Kong in December. Weeks earlier, trade negotiations

in Paris were held between several WTO members, including the United States and

the European Union, centered on reducing agricultural trade barriers. APEC leaders at the

summit urged the European Union to agree to reducing farm subsidies. Peaceful protests against

APEC were staged in Bus but the meeting schedule was not affected.

At the Leaders' Meeting held on November 19, 2006 in Hanoi, APEC leaders called for a new

start to global free-trade negotiations while condemning terrorism and other threats to security.

APEC also criticized North Korea for conducting a nuclear test and a missile test launch that

year, urging the country to take "concrete and effective" steps toward nuclear disarmament.

Concerns about nuclear proliferation in the region was discussed in addition to economic topics.

The United States and Russia signed an agreement as part of Russia's bid to join the World

Trade Organization.

The APEC Australia 2007 Leaders' Meeting was held in Sydney from 2–9 September 2007. The

political leaders agreed to an "a goal" of a 25% reduction of energy intensity correlative with

economic development. Extreme security measures including airborne sharpshooters and

extensive steel-and-concrete barricades were deployed against anticipated protesters and

potential terrorists. However, protest activities were peaceful and the security envelope was

penetrated with ease by a spoof diplomatic motorcade manned by members of the Australian

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television program The Chaser, one of whom was dressed to resemble the Al-Qaeda

leader Osama bin Laden.

The APEC USA 2011 Leaders' Meeting was held on Honolulu, Hawaii 8–13 November 2011.

Criticism

APEC has been criticized for failing to clearly define itself or serve a useful purpose. According

to the organization, it is "the premier forum for facilitating economic growth, cooperation, trade

and investment in the Asia-Pacific region" established to "further enhance economic growth and

prosperity for the region and to strengthen the Asia-Pacific community" .However, whether it

has accomplished anything constructive remains debatable, especially from the viewpoints of

European countries that cannot take part in APEC.

OVERVIEW

Projects are a vital part of the APEC process. They help translate APEC Ministers' and

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Economic Leaders' policy directions into actions and create tangible benefits for people living in

the Asia-Pacific

Projects assist member economies in building a dynamic and harmonious Asia-Pacific region by

championing free and open trade and investment, promoting and accelerating regional economic

integration, encouraging economic and technical cooperation, enhancing human security, and

facilitating a and sustainable business environment. 

APEC contributes funding to around 100-150 projects each year, with a total value of over $23

million committed by APEC to projects in 2010-2011. Over 1600 projects have been undertaken

since 1993, when APEC initiated project work. At any moment in time, up to 170 projects may

be in implementation, he majority of projects are focused on transferring knowledge and skills

between members and building capacity so that each economy can move closer towards

the Bogor Goals of free and open trade and investment. 

APEC projects include workshops, symposia, publications, and research. They are open to

participation from all 21 member economies. As well as engaging with public and government

sector organizations in the 21 economies, external stakeholder engagement is encouraged.

APEC also works to maximize the benefits of globalization. In particular, APEC supports

projects that: promote public health; improve the skills of workers; contribute to green growth;

reduce the risks of and improve responses to natural disasters and emergencies; and that help

small, medium and micro-sized enterprises to grow and access markets. 

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In 2010-2011, APEC approved funding for 235 projects, focusing on trade-related issues, with

particular focus on areas of relevance to APEC’s for. 

Projects cover a wide range of priority sectors. Each year APEC defines the key policy priorities

and projects aim to contribute to these directions. Please see the Funding Criteria for APEC-

Funded Projects in 2012. 

In addition to cooperation for trade liberalization, APEC also supports projects that seek to make

trade and doing business easier and more efficient such as: agreeing to common standards for

product testing and labeling, developing safer and more efficient transportation routes, and

providing information on each member's regulatory and legislative requirements for imports and

exports.

Recent themes launched as APEC projects include:

Regional economic integration: energy management standardization, intellectual property rights,

traditional knowledge protection, self-certification of origin

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Green growth:  low-carbon model town , green finance , phasing out fossil fuel subsidies, smart

grids

Structural reform:  regulatory impact analysis, principals of corporate governance, competition

law and policy

Capacity building for APEC’s developing members: ship and port security, trade of second

generation bio, best practices for green ICT, infectious disease prevention

 

Information about individual projects can be found through the APEC Project Database. 

Development of APEC’s Projects

APEC began funding projects in 1993 with three self-funded projects. Since then, the number of

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projects funded each year has increased to up to 150 per year.  Over the same period, the funds

APEC committed to projects increased from just under $1 million to over $14 million per year,

depending on members’ contributions.

To implement BMC-led project management reforms and effectively build project management

skills and knowledge among APEC members, the Secretariat established the Project

Management Unit in 2007. The PMU brings a professionalized approach to projects and helps

capacity in project management within the Secretariat and the wider APEC community. The

PMU provides specialized advice and guidance to  both internal and external APEC

stakeholders.  It provides the main link between members, Program Directors, Program

Executives and the Executive Office and the Budget Management Committee (BMC) regarding

project matters.

Multi Year Projects

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In 2011 APEC launched a Multi Year Project (MYP) initiative, for ongoing, phased projects that

continue for three to five years. MYPs focus strategically on building capacity in members so

that they can take full advantage of trade opportunities. Information on eligibility criteria and the

application process can be found on the Multi Year Projects page.

The Importance of APEC

Hosting Asia-Pacific Economic Cooperation (APEC) in 2007 allows Australia to assume a key

coordination and agenda-setting role. As host, Australia will chair most major meetings, set the

annual themes and priorities, and drive substantial elements of the APEC work program. This

provides Australia with a valuable opportunity to set the future direction of the APEC

organization and to pursue important trade and foreign policy goals.

Additionally APEC provides an opportunity to promote Australian exports, economic growth

and prosperity. To date, APEC Member Economies account for approximately 70 per cent of

Australia's trade and almost 50 per cent of inward investment and include eight of our top 10

export markets.

The 21 APEC Member Economies represent over 40 per cent of the world's population, 56 per

cent of global GDP, and around 48 per cent of world trade.

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IMPORTANCE OF APEC

APEC is strategically important to the United States because it is a primary venue for

multilateral engagement with the Asia-Pacific on economic and other key interests. APEC’s

growing economic importance is clear. The 21 APEC members account for 55 percent of world

GDP; 45 percent of global trade; and 40 percent of the world’s population. Sixty percent of U.S.

goods exports go to APEC economies. Five of America's top seven trade partners are APEC

members.

Moreover, the Asia-Pacific economies are leading the global recovery, with recent forecasts

suggesting that emerging Asian economies could grow by at least 5 percent in 2009 while the G-

7 economies contract by 3.5 percent.

APEC is the only forum in the region that meets annually at the head of state level and includes

the United States, providing our country a crucial opportunity to lead as a full member of the

Asia-Pacific region. APEC brings together senior and working level officials, including from

both China and Taiwan, several times every year to tackle an array of important issues in

practical ways. APEC’s partnership with the region’s private sector – including many of its

leading companies – ensures that its initiatives are focused, constructive, and of tangible benefit

to U.S. businesses.

APEC’s role is particularly important in the current economic environment. Although nations on

both sides of the Pacific have taken individual steps to respond to the economic crisis, President

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has emphasized that concerted action is needed to get the global economy back on track and to

pursue the reforms needed to protect against future crises.

APEC is unique in that it already has the tools and focus to ensure regional economic prosperity

by promoting policies that will spur long-term economic growth, and ensure all our citizens have

the opportunity to thrive in the global economy. It promotes free and open trade and investment,

and initiatives to build healthy and resilient economies by tackling such issues as energy

security, food security, and preparing workforces for an increasingly competitive global

economy.

I note that there has been a proliferation of pan-Asian institutions such as the ASEAN+3 process

and the East Asia Summit. The United States does not want or need to be a member of every

organization, and we support Asia’s efforts at multilateral cooperation. But given the trans-

Pacific nature of economic affairs in the region, we believe that effective regional economic

institutions must include members from both sides of the Pacific. We also believe that truly

effective institutions must not only be a forum for high-level dialogue, but they must also be

geared toward producing tangible progress in addressing the challenges facing the Asia-Pacific

region. On the economic front, we believe APEC provides the best and most established regional

mechanism for practical cooperation and action, in no small part because the United States is an

active and contributing member. 

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EXCUTIVE SUMMARY

The APEC economies have become the drivers of the world economy. How they

interrelate is central to growth in those economies and global growth. All APEC

economies are undergoing significant change. APEC developed and developing

economies are generally experiencing higher growth than their developed and developing

counterparts in other regions. A key reason is adaptability to change and a focus on

maintaining open economies.

APEC needs an economic focus which is more relevant to these needs. Its focus to date

has been on trade liberalization, to a lesser extent on liberalization of investment, and

related matters. As the pattern and movement of financial flows within the region

demonstrate, and the importance of laying down the foundations to get domestic

markets to function properly shows, it is now clear that institutions to promote trade

liberalization, while important for their own goals, are not now central to the task of

promoting economic growth and integration based on open economies.

Promoting growth through enhanced productivity would be natural “vision” for APEC.

All APEC economies understand the importance of global competitiveness and are

aware of the need to enable their economies to adjust as the relative efficiencies of

industries and sectors alter. Focusing on what generates productivity is an effective

organizing principle for identifying what produces growth in open economies.

Reforming any multilateral institution is a challenge. APEC is a “virtual” institution as

multilateral bodies go. This has advantages and disadvantages. APEC’s organization

would need to alter if the organization adopted a new economic mission.

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This would be most effectively secured if Leaders adopted a new vision for APEC, for“ Securing

Growth through Productivity”, and adopted a major multi million

dollar three year research program to support it. This would entail creation of a special

high level research group which would produce analysis of how productivity is improved,

the levels of productivity in each economy, and what each member should do to improve

productivity and growth.

II. Assumptions

This note makes the following assumptions:

APEC Governments consider APEC serves an effective purpose

A core function for APEC is to foster growth based one open economies

There is a Pacific Rim economic dynamic that is important for global growth and

growth of APEC economies.

Continuing growth of APEC economies depends on more than trade

liberalization

ƒ APEC’s economic mission needs reorientation to enhance its effectiveness

III. A logical focus for APEC - Growth and Productivity

APEC was founded on the presumption that economic integration of open economies

served the common good. The focus was on trade liberalization because that was the

common denominator for integration among members in 1988.

It was not in Europe and North America. The need to do more than reduce barriers to

trade in goods had already been accepted by then.

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APEC’s work programs have also since moved inexorably in the same direction. The trade

agenda has inevitably reflected the broadening of the economic integration agenda. It is now

accepted the focus on trade policy in APEC should be “beyond the border”. This has come from

trade officials, finance and treasury officials and ABAC.

The primary aim of trade reform was to foster growth. The call to focus on issues

“beyond the border” is to do the same thing. Declaring the end point of these processes

as a firm goal for APEC – growth – is logical.

The linkage between growth and open markets must be retained. A focus on the role of

productivity in producing growth would be an effective organizing principle to bring the

focus onto those features of open markets which promote growth.

There have already been vigorous debates in East Asia about what contributes to Total

Factor Productivity, including the intriguing public exchanges over between Paul and the

Singapore Government.

More importantly the OECD has recently completed a comprehensive program which

reviewed first what contributed to increases in productivity among its members states

(stimulated by significant gains increases by some member over the nineties, apparently

by rapid embrace of IT technologies). This lead to detailed studies about what generated

growth. Interest among APEC economies in what enhances productivity in their own economies

would have to be strong. They are highly conscious of the need to maintain global

The OECD had pioneered work on the need to reform and liberalize services sectors and reduce

the role of government in the national economy, particularly in the utilities. This was reflected in

the EC Single Market Program, completed in 1988, which sought to free movement of labor and

capital in Europe, liberalize services, enhance competition and reduce regulatory barriers. The

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NAFTA Agreement also extended the ambit of economic integration beyond liberalization of

trade in goods, embracing investment, liberalization of services, competition policy

and even intellectual property. These agreements anticipated the broadening of the international

trade agenda which occurred when the Uruguay Round concluded a few years later.

competitiveness and the changing sources of economic strength in their economies as

their comparative advantage changes An international imperative

There is strategic importance in this. APEC countries are very important economic

partners. There is no economic cooperation without economic rivalry. A vital function

of international economic public policy is to ensure appreciation of the benefits of

cooperation has a higher priority than the gains from rivalry. The appeal of multilateral

arrangements to promote free trade is that they rest on that assumption. It is why

APEC’s initial focus was on trade. Direction of attention to the common interest remains a

significant short and long term challenge for the management of Asian Pacific affairs, as the

current imbalance in financial flows between East Asia and the United States shows. They also

show that progressing trade liberalization, as important as it is in its own right, is no longer

adequate for this task.APEC needs a new core economic mission which will serve that purpose.

A focus on growth and how to increase productivity to achieve it will foster common

perspectives about the benefits of open economies and economic integration based on them.

APEC as set up could not easily or successfully adopt this as a core focus. The

management of APEC’s core activities is handled by officials from foreign affairs and

trade ministries for whom economic management is not a primary responsibility.

Challenges reshaping APEC

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Any proposal to reorient APEC is likely to entail suggestions to change to the structure of the

organization and its focus. It is difficult to change multilateral institutions. That is why so few

reform. Decisions are usually made by consensus which is a difficult and time consuming

process. As organizations go, APEC is “virtual”. It has a very slim secretariat. A lot of its

technical activity is funded by agencies of member states. The lack of institutionalization is an

advantage. The organization can quickly change priorities, reflecting the changing priorities of

the leaders each year. It is also a disadvantage. Much of the technical work in APEC has a short

term focus and is poor quality. It generally suffers lack of technical expertise. The core function

of the Secretariat is administration. V. Making “Productivity and Growth” a new and effective

core mission If APEC is to adopt “Productivity and Growth” as a new core mission, this will

only succeed if

1. The relevant Ministries are in the driving seats.

There is no point in Senior Officials or Ministers from foreign or trade ministries

preparing material for executive decision by Leaders on core economic issues. The

advice will not be expert and the subject will lose its pertinence.

Yet engineering a major change in the system of executive management of APEC is likely

to meet resistance.

2. APEC’s capacity to produce substantive analysis

and research is strengthened .

Analyzing what determines productivity and how to capture those benefits to secure

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growth, then applying that to twenty-one economies, for many of whom the basic

research has not been conducted, requires considerable expertise and substantial

research. APEC’s current funding arrangements which depend on short term funding

cycles or voluntary short term contributions by member states cannot support such a

program. Yet substantial strengthening of the Secretariat or expansion of APEC’s budget is

likely to be resisted because of the cost.

3. The interest of Leaders is engaged

Any reorientation will only succeed if leaders see substantive merit and political benefit in

it. Politicians invariably focus on the substance and have little patience with the

organizational changes which are usually needed to effect any change.

4. Growth and Productivit becomes the leading

economic activity in in APEC .

APEC’s core economic mission will not be re-oriented unless this is the result.

Yet Suggestions that the relative importance of existing programs, for example, those in

the CTI area, be downgraded in relation to new programs would only engender

resistance from those with long involvement in them.

VI.A.Strategy to build the new economic mission.

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Create a program, not an institution Organizations will reshape around the realities. They change

most readily when the reality carries political endorsement and is well funded.

A program should be prepared for the endorsement of leaders.

B. Adopt a new vision for APEC – “Growth from

Productivity”

Recognize in a declaration that continuing prosperity and sustainability in APEC depends

on achieving high levels of productivity. All APEC economies are changing.

Maintenance of open economies is essential if productivity is to be maintained or

increased as the relative importance of sectors and comparative advantage alters.

Give it political appeal – APEC Leaders pledge to make APEC the most productive

region in the world; to guarantee growth and prosperity for their peoples; to

demonstrate how integration of open economies fosters cooperation; and to provide

leadership in the global economy.

Set new policy (not quantitative) targets for APEC – secure optimal levels of

productivity, maintain them as economies adjust, remove barriers to integration of open

economies; build the foundations for consistent growth of open economies.

C. Adopt a program to build the vision

Implement a large, three year research program on Growth and Productivity in APEC,

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modeled on the recently completed OECD program.

The program will first report on what drives productivity and assess the rates of

productivity each APEC economy.

The study could move to a second phase where analysis is provided on what each APEC

economy should do to increase its productivity.

This program would provide economic deliverables each year for leaders.

D. Volunteer fund the program.

The program should be large - US$10 million a year for three years. This would enable

recruitment of the best set of technical experts available in the region.

It should be volunteer-funded, but cover all APEC economies.

If the output is valuable, member states will contribute. Contributions from lower

income members of APEC could be on concessionary terms.

E. Locate a temporary research task force for the

program alongside the

The taskforce should be kept separate from the Secretariat to protect the integrity of the

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research program. The head of the taskforce should be an eminently international figure

from the region who would report directly to Finance Ministers/Treasurers and Leaders.

F. Maintain existing economic programs

Under this scenario, trade policy would become relatively less important. However, its

trade program would remain important in its own right and the goals of the Bogor

Declaration would remain as key goals for APEC.

VII. An enduring legacy

One of the major weaknesses in institutional arrangements in the APEC region is lack of

access to the type of high quality economic research that is available from the OECD to

members.

As new and dialogue members to the OECD from the APEC region have found, this is a

valuable source of policy research and advice.

There is every reason to suppose that access to and experience of the sort of high quality

economic advice that would be produced by this program would demonstrate to APEC

members the value of continuing access to such a resource.

This would build recognition of how APEC can provide increasing value to members

and suggest a long term direction for APEC which would distinguish it from other

regional institutions.

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ACHIEVEMENT & BENEFITS

The Asia-Pacific region has consistently been the most economically dynamic region in the

world. Since APEC's inception in 1989, APEC's total trade has grown 395%, significantly

outpacing the rest of the world.1 In the same period, GDP (in purchasing power parity terms) in

the APEC region has tripled, while GDP in the rest of the world has less than doubled.2

APEC's work under its three main pillars of activity, Trade and Investment Liberalization,

Business Facilitation and Economic and Technical Cooperation, has helped drive this economic

growth and improve employment opportunities and standards of living for the citizens of the

region.

Trade and Investment Liberalization

APEC is the premier forum for trade and investment liberalization in the Asia-Pacific and has set

targets dates for "free and open trade": no later than the year 2010 for economies, and 2020 for

developing economies (the Bogor Goals).

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When APEC was established in 1989 average trade barriers in the region stood at 16.9%; by

2004 barriers had been reduced by approximately 70% to 5.5%.3

As a consequence, intra-APEC merchandise trade (exports and imports) has grown from US$1.7

trillion in 1989 to US$8.44 trillion in 2007 - an average increase of 8.5% per year; and

merchandise trade within the region accounted for 67% of APEC's total merchandise trade in

2007.4

Similarly, trade with the rest of the world has increased from US$3 trillion in 1989 to US$15

trillion in 2007, an average increase of 8.3% per year. Trade in the rest of the world has

increased at 7.6% over the same period.

Over 30 bilateral free trade agreements (FTAs) have been concluded between APEC Member

Economies.

APEC is also pursuing trade and investment liberalization through its Regional Economic

Integration agenda. Progress to date includes:

Investigating the prospects of and options for a Free Trade Area of the Asia-Pacific.

The development of 15 model measures for RTAs/FTAs that serve as a reference for APEC

members to achieve comprehensive and high-quality agreements.

APEC has also acted as a catalyst in the advancement of World Trade Organization multilateral

trade negotiations over the past 20 years.

Business Facilitation

As a result of the APEC Trade Facilitation Action Plan (TFAP I) the cost of business

transactions across the region was reduced by 5% between 2002 and 2006.

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A second trade facilitation action plan (TFAP II), aims to reduce transaction costs by a further

5% between 2007 and 2010.

APEC initiatives that help facilitate trade include:

The introduction of electronic/paperless systems by all member economies, covering the

payment of duties, and customs and trade-related document processing.

The Single Window Strategic Plan, adopted in 2007, provides a framework for the development

of Single Window systems which will allow importers and exporters to submit information to

government once, instead of to multiple government agencies, through a single entry point.

Providing business with a concise one-stop repository of customs and trade facilitation related

information for all APEC economies through the APEC Customs and Trade Facilitation

Handbook

The APEC Tariff Database provides users with easy access to APEC member economies' tariff

schedules, concessions, prohibitions and other information.

In 2008, a groundbreaking Investment Facilitation Action Plan was endorsed; it aims to improve

the investment environment in Member Economies.

The APEC Privacy Framework provides guidance and direction to both APEC Member

Economies and businesses on implementing information privacy protection policies and

procedures. By facilitating information flows it will facilitate trade and e-commerce.

The APEC Business Travel Card (ABTC) provides substantial time and cost savings to business

people and facilitates their travel in the region, by allowing visa free travel and express lane

transit at airports in participating economies.

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APEC is also removing behind-the-border barriers to trade through its Structural Reform agenda,

which focuses on reforming domestic policies and institutions that adversely affect the operation

of markets, and the capacity of businesses to access markets and to operate

Economic and Technical Cooperation

APEC's Economic and Technical Cooperation (ECOTECH) activities are designed to build

capacity and skills in APEC Member Economies at both the individual and institutional level, to

enable them to participate more fully in the regional economy and the liberalization process.

Since APEC first began to undertake capacity building work in 1993, more than 1200 projects

have been initiated; and in 2008, APEC was implementing a total of 212 capacity building

projects with a total value of US$13.5m.

A particular focus has been reducing the digital between developed and developing economies:

In 2000, APEC set a goal of tripling internet usage in the region and that goal has now been

achieved, as recognized by the 2008 APEC Ministerial Meeting on the Telecommunications and

Information Industry. APEC's new goal is to achieve universal access to broadband by 2015.

A network of 41 APEC Digital Opportunity Centers (ADOC) now operate in seven Member

Economies. ADOC's objective is to transform the digital into digital opportunities and the

centre act as local information and communication technology (ICT) resource centre, providing

citizens and businesses of the region with access to ICT technologies, education and training.

APEC is also developing a Digital Prosperity Checklist that outlines specific steps economies

can take to enable them to utilize ICT as catalysts for growth and development.

Other Achievements

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APEC has also been able to evolve its agenda to include pressing regional priorities. Examples

include: counter-terrorism (The Shanghai Statement in 2001, and the Counter-Terrorism Task

Force); human security (Health Working Group); emergency preparedness (Task Force for

Emergency Preparedness); climate change, energy security and clean development (The Sydney

Declaration in 2007); and the global financial crisis (The Lima Statement in 2008).

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