Asia-Pacific Economic Cooperation (APEC)
It is a grouping of 21 Asian economies where its member nations are home to over 2.9 billion people and account for more than half of the global GDP.
What is the Asia-Pacific Economic Cooperation (APEC)?
The Asia-Pacific Economic Cooperation (APEC) is a grouping of 21 Asian economies. Its member nations are home to over 2.9 billion people and account for more than half of the global GDP.
Its partners also account for more than 70% of the world's total trade in goods and services. Regional economic integration encourages global economic growth and prosperity.
The Asia-Pacific Economic Cooperation was founded in 1989 in Australia as an informal forum for member countries to discuss free trade and economic cooperation along the Pacific Rim. From the standpoint of the United States, it has been a critical institution for regional economic engagement.
It was established to promote a growing and prosperous regional economy through the following:
- Commerce and investment liberalization and facilitation at the border, across the border, and behind the border to assist businesses in economic and technical cooperation exchanges of best practice information on trade and investment
- Simplification of regulatory and administrative procedures
- Improving institutional capacity to implement and benefit from trade and investment reform
The APEC Putrajaya Vision 2040 guides its work, which aims to create an open, dynamic, resilient, and peaceful Asia-Pacific community by 2040. This will be accomplished by focusing on three economic drivers:
- Commerce and investment
- Strong, balanced, secure, sustainable, and inclusive growth enabled by innovation and digitalization
- Voluntary consensus decisions and commitments
Asia-Pacific Economic Cooperation Membership
The 21 member countries are:
- Australia (founding member)
- Canada (founding member)
- Japan (founding member)
- Malaysia (founding member)
- Philippines (founding member)
- USA (founding member)
- Thailand (founding member)
- Singapore (founding member)
- Brunei Darussalam (founding member)
- Indonesia (founding member)
- South Korea (founding member)
- New Zealand (founding member)
- Hongkong (joined in 1991)
- Chinese Taipei (joined in 1991)
- China (joined in 1991)
- Mexico (joined in 1993)
- Papua New Guinea (joined in 1993)
- Chile (joined in 1994)
- Russia (joined in 1998)
- Peru (joined in 1998)
- Vietnam (joined in 1998)
The organization has been a success story in regional economic integration, serving as a breeding ground for new trade policies. In addition, it works to counteract protectionism. These activities are becoming increasingly important as the world works to recover economically from COVID-19.
They accomplish this by:
- Promoting service integration
- Working toward an Asia-Pacific Free-Trade Area
- Providing strong advocacy for global value chains and open markets
Structure and Activities of APEC
The administrative structure of this association is divided into two levels: policy and working. The Economic Leader Group is at the top of the policy pyramid, followed by the APEC Business Advisory Council (ABAC), the Senior Officials Meeting (SOM), and various ministerial meetings.
The year-long activities of four core committees, trade and investment, economics, science and technology, and budget and management, all support policy-level work.
The broad workload of each committee is completed with the assistance of a variety of standing and special task forces, expert committees, and working groups.
Each year, the operational level devotes a significant amount of time and effort to four tasks:
- Developing agenda items for annual summits
- Developing plans of action in various areas
- Selecting projects for technical but nonfinancial support
- Conducting seminars, workshops, and expert meetings throughout the region
The Senior Officials Meeting (SOM) Steering Committee and the Secretariat assist the committees in blending policy- and working-level activities.
The Secretariat is based in Singapore and is led by an executive director, assisted by Secretariat staff and budget and management committee members. APEC is committed to incorporating people from all member economies into its structure.
The APEC annual five-day summit is the organization's main and culminating annual event. Each day is dedicated to ABAC, SOM, and ministerial meetings, followed by a two-day meeting of economic leaders. At the end of each summit, a leader's declaration and ministerial reports are issued.
These reports inform the public about the agreed-upon ideas that will help guide policy and working-level workloads, as well as member-economy actions, over the next year.
The summits are linked from one year to the next, providing continuity. Each annual summit responds to items agreed upon at the previous summit and offers ideas to help organize the agenda for the following annual summit.
ABAC Meeting
One of the most critical aspects of each summit is the ABAC meeting, which brings together CEOs from companies all over the Asia-Pacific region. ABAC advises and counsels on issues affecting CEOs, managers, entrepreneurs, and member economies.
The contributions of ABAC are incorporated into the organization's annual program in recognition that private-sector enterprises account for the vast majority of internal and external economic activities carried out by member economies.
Ministerial meetings feature discussions among finance ministers and others who collectively deliberate, exchange ideas, provide information, and propose policies.
Ultimately, the summit aims to effectively deal with complex and important fiscal policy issues, ranging from revenue collections and spending patterns to debt accumulation and debt-servicing mechanisms.
Each member economy faces significant fiscal policy decisions and exchanges, and the ministers are making them have proven useful for cooperation.
SOM is useful because it transfers agenda items from the working level to the policy level and vice versa.
SOM officials at the highest levels hold positions of responsibility in the governments of member economies. They serve on a rotating basis and meet three times a year to consult with officials from the member nation hosting the annual summit.
The SOM plays a vital role in developing an agenda at the summit, drawing on the results of both Individual Plans of Action (IPA) and Collective Plans of Action (CPA) that member economies must submit annually.
Asia-Pacific Economic Cooperation History
Since its inception in 1989, it has grown from 12 to 21 member economies. Australia, Brunei Darussalam, Canada, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and the United States were among the founding members.
The People's Republic of China, Hong Kong, and Taiwan joined the forum in 1991. Chile, Mexico, Papua New Guinea, Peru, and Russia joined the organization in the 1990s. Its member economies account for a significant portion of global economic activity.
It established its core objectives during its first five years of operation. Its member economies declared creating a liberalized free-trade zone around the Pacific Rim as the organization's primary goal in the 1991 Seoul Declaration.
A meeting in Bogor, Indonesia, in 1994 established the organization's goal as "free and open trade and investment" for the region, with 2010 as the target date for developed economies and 2020 for developing economies.
Each subsequent annual meeting has addressed the implementation of the Bogor Goals as well as pertinent issues for the member nations' economic and security interests. The topics discussed at yearly meetings usually emphasize trade liberalization, business promotion, and economic cooperation.
The United States has long been a participant in APEC's activities. President Bill Clinton hosted the first annual meeting of member economies, ministers, and economic leaders in Seattle, Washington, in 1993.
This act demonstrated the United States' commitment to collaborating with APEC member economies to achieve greater regional trade freedom. Since then, the US has maintained a high level of engagement with this critical organization.
The organization seeks to strengthen regional economic integration by removing barriers to trade and investment "at the border," improving supply chain connectivity "across the border," and improving business conditions "behind the border."
The goal is to improve the business environment by reducing red tape and other impediments.
It also assists member economies in developing the institutional capacity to implement and reap the benefits of trade and investment reform. It supports the World Trade Organization's multilateral trade negotiations and complements the G20's goals.
The organization is based on non-binding commitments and open dialogue. Decisions are made by consensus within APEC, and commitments are made voluntarily.
The Secretariat provides coordination, technical and advisory assistance, information management, communications, and public outreach services.
In 1995, the APEC Business Advisory Council (ABAC) was established. In addition, the cooperation Leaders have appointed two business representatives to each of the 21 member nations.
The annual cooperation CEO summit and other regular events allow APEC Business Advisory Council (ABAC) members to provide recommendations to its Leaders on key regional issues.
Asia-Pacific Economic Cooperation Goals
The following are some of the main goals:
- Sustain the region's growth and development for the benefit of its people, contributing to the global economy's growth and development.
- Maximize the benefits of increased economic interdependence for the region and the global economy by encouraging the flow of goods, services, capital, and technology.
- Develop and strengthen the open multilateral trading system in the interests of Asia-Pacific and all other economies.
- Reduce trade and investment barriers among participants in a way that is consistent with GATT principles, where applicable, without harming other economies
The cooperation comprises numerous committees, working groups, and a business advisory council. The committees meet twice a year to discuss trade and investment, economic trends, and budgetary issues.
Experts lead the working groups, which look into specific issues, such as energy, tourism, fishing, transportation, and telecommunications.
The organization's chair, which rotates every year, hosts an annual summit meeting and meetings of foreign and economic ministers and other senior officials.
In January 1989, then-Australian Prime Minister Robert Hawke emphasized the need for a permanent body to coordinate economic relations among the Pacific Rim's market-oriented nations.
The Pacific Economic Cooperation Council (PECC), a group of business, academic, and government representatives meeting informally since 1980, endorsed this proposal. The Asia-Pacific Economic Cooperation met in Canberra, Australia, for the first time on November 6-7, 1989.
Five Pacific industrial economies (Australia, Canada, Japan, New Zealand, and the United States) attended, as did ASEAN members (Indonesia, Malaysia, Thailand, Singapore, South Korea, and Brunei).
Initially, the forum was an informal and unstructured arrangement for 'dialogue' among participating countries, primarily because ASEAN nations were concerned about being overshadowed in a regional organization by economic behemoths such as Canada, Japan, and the United States.
However, as the concept of regional economic groups gained traction worldwide, it was decided to formalize the grouping.
The 1991 Ministerial Meeting in Seoul, South Korea, adopted a declaration outlining its objectives and organizational structure and approved the membership of China, Hong Kong (which was still leased to the UK at the time), and Taiwan.
It was fully institutionalized in 1992 when the Bangkok Ministerial Meeting decided to establish a permanent Secretariat in Singapore.
Annual Ministerial Meetings, Senior Officials Meetings, Working Groups, and a Secretariat comprise APEC. The Annual Ministerial Meeting of all member-state foreign and trade ministers serves as its governing body. The chairmanship of the meetings is rotated among the members each year.
Senior Officials Meetings, attended by representatives from all member countries, are held annually and are in charge of implementing policies framed by Ministerial Meetings.
The following are the ten working groups
- Telecommunications
- Trade and Investment Data
- Fisheries
- Tourism
- Transportation
- Trade Promotion
- Investment and Technology
- Human Resource Development
- Regional Energy Cooperation
- Marine Resource Conservation
There are also two ad hoc groups:
- Regional Trade Liberalization
- Economic Policy
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