HISTORY

What is the Asia-Pacific Economic Cooperation and why was it established?

The Asia-Pacific Economic Cooperation, or APEC, was established in 1989. It started
as an informal ministerial level dialogue group with 12 members comprising of
Australia, Brunei Darussalam, Indonesia, Japan, South Korea, Malaysia, New
Zealand, Philippines, Singapore, Thailand, Canada, and the United States. The APEC
was initiated as an annual meeting of foreign and trade ministers to sustain the
momentum of market opening and economic cooperation which are vital to the
growth and prosperity of the Asia-Pacific region.
The primary reason and purpose behind APECs establishment is the desire to have
a forum that caters to the enhancement of economic conditions of states. This
would entail the facilitation of economic growth, promotion of cooperation among
states, liberalization of trade, and creation of opportunities for investments in the
Asia-Pacific community.

MEMBERSHIP
Who are the members of APEC?
The Asia-Pacific Economic Cooperation (APEC) was founded by 12 members
Australia, Brunei Darussalam, Indonesia, Japan, South Korea, Malaysia, New
Zealand, the Philippines, Singapore, Thailand, Canada, and the United States with
the mission to build a dynamic and harmonious Asia-Pacific community 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 favourable and sustainable business
environment.
They were later joined by China, Hong Kong, Chinese Taipei, Mexico, Papua New
Guinea, Chile, Peru, Russia, and Viet Nam, bringing the number of members to 21,
referred to as member economies to highlight the organizations concentration on
trade and economic issues
Oftentimes, the members of APEC are referred to as economies. The term
member economies is used because APEC primarily addresses issues concerning
trade and economy. APEC members are considered to be engaging with one another
as economic entities.
The formulation of APEC was first voiced out through a speech in Seoul, South Korea
in January 1989 by the Prime Minister of Australia, Mr. Bob Hawke. In the same year
in Canberra, the first APEC meeting was held. The founding members of the
organization were the member states of ASEAN, the market economies of East Asia
which were South Korea and Japan, countries in the Southwest Pacific namely

Australia and New Zealand, and the United States and Canada in North America.
Aside from the fact that all these states had sovereign political status, they
envisioned their economies towards attaining an internationally oriented growth.
Also, all these member economies conducted a high proportion of trade with other
Asia-Pacific economies. These factors sovereign political status, economic growth,
and trading with Asia-Pacific economies served as the initial basis for
membership.1 It was only after a time that the other present member economies of
APEC were able to comply with the criteria for membership.
However, complications as regards the criteria for membership emerged. This was
in the case of the small island economies of the Southwest Pacific which were
considered as strongly internationally oriented in economic structure and traded
largely with other Asia-Pacific economies. Their size and political and administrative
capacity hindered Southwest Pacific states from acquiring membership in APEC,
except for Papua New Guinea. Another issue was on Russias APEC membership
following the rudimentary nature of market reform it had established and its
external economic relations which were highly focused towards Europe. 2
Because of these issues, APEC issued a ten-year moratorium on membership in
1997. But by the end of 2007, the moratorium was extended until 2010.
Who are the observers?
The three official observers of the Asia-Pacific Economic Cooperation (APEC) are the
Association of Southeast Asian Nations (ASEAN) Secretariat, the Pacific Economic
Cooperation Council (PECC), and the Pacific Islands Forum Secretariat. These
observers are entitled to participate in APEC meetings and enjoy the privilege of
accessing documents and any related information. In order to assist APEC in
attaining its goals and implementing its initiatives, these observers provide
partnership, expertise, and insights. These groups all aim for cooperation and
economic growth in the region. The descriptions below provide details of their
respective aims and purposes.
As stated in the ASEAN Declaration in Bangkok on August 8, 1967, ASEAN aims to
promote regional cooperation and accelerate economic growth, social progress, and
cultural development in the Southeast Asian region through joint endeavours in the
spirit of equality and partnership. By such means, regional solidarity will be
reinforced, contributing to peace, progress, and prosperity in the region. ASEAN also
seeks to promote regional peace and stability by abiding to the rule of law in the
conduct of its ties with other countries and adherence to the principles of the United
Nations Charter.3
Unlike the ASEAN, the Pacific Economic Cooperation Council (PECC) is comprised of
senior individuals from the business and industry sector, government, academic,
and other intellectual circles creating a tripartite partnership. These groups of
individuals from different backgrounds participate in their private capacity to freely
discuss current, practical policy issues in the Asia-Pacific region. The PECC serves as

a regional forum for cooperation and policy coordination in the promotion of

economic development in the Asia-Pacific region. The forum tackles issues focused
on the acceleration of economic growth, social progress, scientific and technological
development and environmental quality in the region, trade, joint ventures, mutual
aid and other forms of linkage, fairness, respect and genuine cooperation, and
lastly, the strengthening of the foundation for a prosperous, progressive, and
peaceful Asia-Pacific Region.
The Pacific Islands Forum is the leading regional inter-governmental forum in South
Pacific comprised of 16 independent and self-governing states. Similar to the goals
of the ASEAN and PECC, it also seeks to stimulate economic growth, enhance
political governance and security, and strengthen regional cooperation and
integration. It addresses issues relating to regional trade, economic development,
environment and regional law enforcement, cooperation and security in the South
Pacific region.4

MAIN GOALS
What does APEC want to achieve?
The main goal of APEC is to provide an avenue in creating and maintaining
sustainable economic growth and prosperity in the region. This vision was
translated to the Bogor Goals of 1994 of free trade and open trade and investments
in the Asia-Pacific. During its creation, APEC aimed at attaining this goal by 2010 for
industrialized economies and 2020 for developing economies.
Moreover, to achieve the Bogor goals, the APEC member economies developed a
framework known as the Three Pillars in Osaka, Japan in 1995. The three (3)
pillars serve as a guiding instrument in attaining the overall goal of free trade and
investments. These pillars are stated below:
TRADE AND INVESTMENT LIBERALIZATION
The trade and investment liberalization pillar aims to gradually reduce and
eventually eliminate tariff and non-tariff barriers to trade and investment.
Protectionism is an economic policy implemented when government protects its
domestic industries against foreign competition usually by means of tariffs,
subsidies, import quotas, and the like. As a result, the prices of goods, commodities,
and services tend to rise. In contrast to this, trade and investment liberalization
opens markets thereby increasing the volume of trade and investments among
countries. Through the reduction and elimination of tariffs and barriers to trade,
states would not need to worry about inflation, thus economic growth for APEC
members is made visible and attainable.

APECs Regional Economic Integration agenda is another means by which the three
pillars are to be made effective in relation to the Bogor Goals. The Regional
Economic Integration works on measures to facilitate bilateral and regional trade
agreements. It also examines the prospects for a free trade area in the region.
BUSINESS FACILITATION
Business Facilitation aims to reduce business and trade transaction costs. The
reduction in the production costs leads to an increase in trade, investments, and
business opportunities for the primary reason that goods and services become
cheaper. This could result in more employment opportunities which contribute to
the overall improvement in ones economy.
This pillar also aims to facilitate faster means of accessing and acquiring trade
information. It aligns its policies and strategies towards the facilitation of economic
growth and an open and free trade environment.
ECONOMIC AND TECHNICAL COOPERATION (ECOTECH)
Through the Economic and Technical Cooperation pillar, APEC intends to provide
training and cooperation through capacity-building projects and activities among its
member economies. ECOTECH prioritizes regional economic integration, addressing
inclusive growth, improving and protecting peoples quality of living through
sustainable growth, structural reform, and human security. 5

APEC IN ACTION
How does APEC put its goals and vision into action?
To achieve APECs Bogor Goals of free and open trade and investment in the AsiaPacific, the member economies of APEC formulated a strategic roadmap during the
APEC Economic Leaders Meeting in Osaka, Japan in 1995. This roadmap is known as
the Osaka Action Agenda.
The Osaka Action Agenda provides a framework for meeting the Bogor Goals
through trade and investment liberalization, business facilitation and sectoral
activities, subsumed within policy dialogues and economic and technical
cooperation. The Osaka Action Agenda has identified General Principles in
operationalizing APEC liberalization and facilitation process, these are:

Comprehensiveness in addressing all impediments to long-term goal of

free and open trade.
WTO-consistency in its principles.
Comparability in terms of trade and investment liberalization and
facilitation, taking into consideration the general levels of each APEC
member-economies.
Non-discrimination in the reduction in barriers to trade available to all
APEC and non-APEC economies.

Transparency in the laws, regulations and administrative procedures of all

APEC member economies.
Standstill or not taking measures that may increase levels of protection.
Simultaneous start, continuous process and differentiated
timetables in the process of liberalization, facilitation and cooperation
towards the achievement of Bogor Goals.
Flexibility in dealing with liberalization and facilitation process.
Economic and technical cooperation is actively pursued.
The APEC member economies report their progress of meeting the Bogor Goals
through the Individual Action Plans (IAPs) and Collective Action Plans (CAPs). These
reports are submitted to the APEC Secretariat on a regular basis.

INDIVIDUAL ACTION PLANS

The Individual Action Plan (IAP) is the primary mechanism for the implementation of
trade and investment liberalization and facilitation agenda. IAP is basically a record
of actions taken in meeting the goals for free and open trade and investment. The
IAP promotes transparency as APEC member economies report their individual
progresses in undertaking their commitments to investment liberalization.
The IAP reporting is based on the following areas:

Tariff

Intellectual property

Non-tariff measures

Competition policy

Services

Government
procurement

Investment

Standards and
conformance

Customs procedures

Deregulation/
regulatory review

WTO Obligations
(including rules of
origin)
Dispute mediation

Mobility of business
people
Official websites that
gather economies
information

Transparency

Regional
Trade Agreement/
Free Trade
Agreements (RTAs/
FTAs)

BENEFITS
What are the benefits of being an APEC member?
As a multilateral forum, APEC provides its 21 member economies, together with the
business community and other parties, an avenue to discuss issues that impact the
Asia-Pacific region. It provides these stakeholders an arena to exchange ideas,
opinions, concerns, and plans towards the strengthening of the regions future
growth.

Developing and developed economies benefit significantly from APEC. APEC

provides developing economies additional information and guidelines relating to
areas such as development of procedures, policy frameworks, and other systems
that deal with contemporary issues. Some of these issues include transparency,
governance, financial sector reform, and customs procedures. With the various
APEC forums ranging from working group meetings, seminars, up to the leaders
meetings, representatives from each country are given the opportunity to learn new
skills and acquire the best practices from other economies. Both developed and
developing member economies have the opportunity to set APECs agenda. APEC
strengthens the individual and collective capacity of its member economies as
participants for economic analysis. It also facilitates an effective consultative forum,
allowing participants to promote their common interests and be able to push
through these interests in larger multilateral forums.
Lastly, businesses also gain an advantage and benefit from taking part in APEC.
Such benefits include the reduction of barriers and obstacles to trade across
borders.

ACHIEVEMENTS
What has APEC achieved so far?
Since the establishment of APEC, its success has been notable and the Asia-Pacific
has become an economically dynamic region. In 2012, the member economies of
APEC comprised 40 percent of world population (2.8 billion people). 6 Their
economies combined make up for 47 percent of world trade (USD 21 trillion) and
their share of global GDP is 57 percent valued at USD 41 trillion. 7 These facts attest
to APECs dynamism.

As for trade and investment liberalization, to date, APEC has achieved the following:
At the outset of APECs establishment in 1989, the average trade barriers in
the region was at 16.9 percent. Significantly, trade barriers have decreased
up to 5.8 percent as of 2010.8
The overall intra-APEC merchandise trade, has grown from $1.7 trillion in
1989 to $9.9 trillion in 2012. On the other hand, APECs total trade in terms of
goods and services has also increased from $3.1 trillion in 1989 to $16.8
trillion in 2010.
The APEC members have a total of 140 signed free trade agreements as of
June 2013, 51 of which are with at least one other APEC member. Out of all
the free trade agreements signed, 134 are in force while 49 are with at least
one other APEC member.9
The Regional Economic Integration agenda, which is a multi-year programme
aimed at achieving the Bogor goals of trade and investment liberalization, is
currently investigating the prospects of the creation of a Free Trade Area of
the Asia-Pacific. It has developed 15 model measures for free trade
agreements and regional trade agreements. 10 Also, APEC is notable for being
an active promoter of multilateral trade negotiations in the World Trade
Organization over the past 20 years.
BUSINESS FACILITATION
APEC has promoted trade facilitation with the globalization of the world economy.
The aim of the Trade Facilitation Action Plan (TFAP) of APEC is to keep trading
procedures simple, predictable, and transparent in order to allow commerce to
freely flow across borders. On this note, cutting red tape for imports and exports are

being implemented so that goods may be delivered efficiently and cost effectively.
Between the years of 2002 up to 2006, APEC has achieved a step in reducing the
cost of business transaction across the region by 5 percent. From 2007 to 2010, the
TFAP II was able to further reduce the transaction costs by another 5 percent. This
resulted in a total of USD 58.7 billion as savings. 11
Several initiatives were implemented that contributed to the facilitation of trade.
These include the following:
Member economies introduced an electronic ordocument processing.
Through the adoption of the Single Window Strategic Plan in 2007, the
development of a single window system that allows importers and exporters
to submit necessary information to the government in a single transaction
instead of sending to multiple government agencies is being promoted.
Easy access to APEC member economies tariff and Rules of Origin
Information is made available through the APEC webpage on Tariffs and ROOs
(WebTR). This was launched in November 2010.
APEC aims to improve the investment environment of its member economies
and this is being promoted through the Investment Facilitation Action Plan of
2008.
APEC member economies and businesses are guided by the APEC Privacy
Framework on implementing information privacy protection policies and
procedures.
Through the APEC Business Travel Card (ABTC), traveling is made easier by
allowing bona fide business travelers with pre-approved visa clearance and
express lane transit at airports in participating economies.
Behind-the-border barriers to trade will be addressed through the Structural
Agenda of APEC. It will focus primarily on the domestic policies and
institutions that negatively affect market operations, together with the
capacity of businesses to access markers to operate efficiently.
ECONOMIC AND TECHNICAL COOPERATION (ECOTECH)
A total of 1600 projects designed for capacity building have been initiated since
1993. Yearly, APEC funds around 100 to 150 projects. In fact, in 2011-2012, a total
of 73 projects were implemented, 32 of which were APEC-funded projects that were
focused on safeguarding quality of life through sustainable growth, 9 projects
focused on inclusive growth, 21 on human security, 2 projects on structural reform,
and 9 projects on regional economic integration. 12

One of the notable contributions of ECOTECH focuses on the reduction of the digital
divide between industrialized and developing countries. In 2000, APEC envisioned a
region having accessible internet for everyone, it therefore made a goal of tripling
internet usage in the region. This goal has been achieved as it has been recognized
by the 2008 APEC Ministerial Meeting on the Telecommunications and Information
Industry. At present, APEC has set out another goal of providing universal access to
broadband in the region by 2015, although this has been dubbed by
Telecommunications Ministers in Okinawa, Japan in 2010 as an ambitious target.

Another project considered to contribute to the reduction of digital divide is the

establishment of a network of 46 APEC Digital Opportunity Centers (ADOC)
operating in 10 member economies at present. These centers act as local
information and communication technology (ICT) resource centers that provide
citizens and businesses of the region with access to ICT technologies, education,
and training.

OTHER ACHIEVEMENTS
APEC has not only focused its attention on concerns and issues relating to the
facilitation of free trade and investments but has also included in its agenda
pressing regional priorities. These include counter-terrorism (The Shanghai
Statement in 2001 and the Counter-Terrorism Task Force), human security (Health
Working Group), emergency preparedness (Emergency Preparedness Working
Group), climate change, energy security and clean development (The Sydney
Declaration in 2007 and the APEC List of Environmental Goods in 2012), and lastly,
global financial crisis (The Vladivostok Statement in 2012).

OPERATIONS
How does APEC operate?

The APEC operates as a cooperative, multilateral economic and trade forum. It is

considered the only international intergovernmental grouping in the world
committed to reducing barriers to trade and investments without requiring its
members to enter into legally binding obligations. Participation in APEC is voluntary
in nature and decisions are non-binding. 13 APEC promotes dialogue and decision on
a consensus basis, thus upholding the equality of its member economies. It
conducts its activities on the basis of open dialogue and equal respect for the views
of all the participants.14
Who sets the APEC agenda and work plan?
The activities of APEC are guided by the Economic Leaders and Ministers of APEC
member economies who meet throughout the year to determine the future of trade
and investment cooperation in the Asia-Pacific region. In the APEC Economic
Leaders Meeting which is held at the end of each year, a declaration enumerating
the priorities of APEC for the following year is issued. Ministers representing various
portfolios, Senior Officials and members of various APEC forums meet throughout
the year to launch new initiatives, track the progress of existing programmes and
implement directives from economic leaders. APEC promotes the involvement of
developing and developed countries, small and large in its decision-making process.

SCOPE OF WORK
What is the scope of work of the APEC?
APEC is currently working on three broad areas to meet its Bogor Goals of achieving
free and open trade and investment in the Asia-Pacific by 2010 for industrialized
economies and 2020 for developing economies. These key areas, identified as
APECs
Three Pillars are:
Trade and Investment Liberalization
Business Facilitation
Economic and Technical Cooperation (ECOTECH)
APEC is considered among the pioneering international institutions that closely link
economic and technical cooperation to trade and investment liberalization. 15 It has
facilitated conferences and training sessions on timely and significant important
topics such as corporate governance, financial supervision, competition policy,
electronic commerce, educational reforms, and efficient energy production, among
others.

POLICY DIRECTION
Who sets the policy direction of APEC?

The policy direction of APEC is provided by the 21 APEC Economic Leaders. Strategic
recommendations by APEC Ministers and the APEC Business Advisory Council are
considered by APEC Economic Leaders as part of this process.
APEC ECONOMIC LEADERS MEETING: The APEC Economic Leaders Meeting is
held once a year in the APEC host economy. It is attended by the heads of state of
member economies except for the Republic of China (represented by a ministeriallevel official under the name Chinese Taipei). The 2013 APEC Economic Leaders
Meeting was held on October 5-7, 2013 at Bali, Indonesia. The Philippines will be the
host and chair of APEC 2015.The declarations from the Leaders Meeting set the
policy agenda of the APEC.
APEC MINISTERIAL MEETING: The Annual APEC Ministerial Meeting of the foreign
and economic/trade ministers are held a day or two prior to the APEC Economic
Leaders Meeting. The objective of the ministerial meetings includes assessment of
the years activities and providing recommendations for APEC Economic Leaders
consideration.
SECTORAL MINISTERIAL MEETINGS The Sectoral Ministerial Meetings are held
regularly to discuss issues relating to education, energy, environment and
sustainable development, finance, human resource development, regional science
and technology cooperation, small and medium enterprises, telecommunications
and information industry, tourism, trade, transportation and womens affairs. Similar
to the APEC Ministerial Meetings, outputs and recommendations from the sectoral
meetings are forwarded to APEC Economic Leaders for their consideration.
BUSINESS ADVISORY COUNCIL (ABAC): Established in 1995, the APEC Business
Advisory Council (ABAC) is a private sector body that offers recommendations to
APEC Leaders through their annual dialogue and advises APEC officials on business
sector priorities and concerns. ABAC convenes four times per year.
It also sends representatives to the APEC Senior Officials Meeting, Annual
Ministerial Meeting and Sectoral Ministerial Meetings. ABAC consists of three senior
business leaders per APEC member economy.
Who hosts the annual APEC Leaders Meeting?
Every year one of the 21 APEC Member Economies hosts the APEC Meetings and
serves as the APEC Chair. As host, the member economy is responsible for chairing
the annual Economic Leaders Meeting, selected Ministerial Meetings, Senior
Officials Meetings, and the APEC Business Advisory Council and the APEC Study
Centers Consortium.
APEC features an annual cycle of leadership, with a member economy assuming the
task of being the APEC Chair for one year. This cycle ends with the convening of the
ministerial meeting and the Leaders Meeting (APEC Summit).

The APEC Chair has a critical role in influencing the direction of the development of
APEC in terms of the content of cooperation and nature of process. 16 Furthermore,
the rotational character of the chairmanship ensures that the broad scope of the
agenda will somehow reflect the varying interest of its member economies.
Where does APEC get funding to finance the various activities and meetings held?
The activities of APEC are centrally funded by annual contributions from APEC
member economies presently totaling US$5 million. These contributions are used to
fund a Secretariat in Singapore and various projects which support APECs economic
and trade goals. Member economies also provide voluntary contributions to support
projects that advance APECs trade and investment liberalization and facilitation
goals and meet capacity-building needs, especially for APEC developing economies.
Aside from the meetings identified, how are APECs working level activities being
carried out?
APECs working level activities and projects are guided by the APEC Senior Officials
from the 21 APEC member economies. Such activities and projects are being carried
out by four high level committees: (1) Committee on Trade and Investment; (2)
Senior Officials Meeting Committee on Economic and Technical Cooperation; (3)
Economic Committee; (4) Budget and Management Committee. The various subcommittees, experts group, working groups and task forces all support the
activities and projects led by these high level committees.

APEC SECRETARIAT
What is the role of the APEC Secretariat?
The APEC Secretariat operates as the core support mechanism for the APEC
process. It is tasked with coordination, technical and advisory support including
information management, communications and public outreach services. The APEC
Secretariat performs a central project management role, assisting the APEC
member economies in overseeing the various APEC-funded projects, and in
administering the annual budget. The APEC Secretariat maintains a capacity to
support research and analysis in collaboration with APEC Study Centres and PECC as
required by APEC fora. The APEC Secretariat is headed by an Executive Director,Dr.
Alan Bollard. The Executive Director is responsible to APEC Senior Officials through
the SOM Chair and manages the Secretariat in line with priorities set by SOM on
behalf of the Ministers. Appointment to the Executive Director position is on a threeyear-fixed-term basis, and is open to professional candidates from any of the APEC
member economies. The APEC Secretariat is housed at the University of Singapore.

APEC
(Asia-Pacific Economic Cooperation)

Assignment
In
Economics 1
(12:00-1:30 TTh )

Submitted by:

BUSQUE, HILLARY A.

BSEcE-3
Submitted to:

MS. ROSAL