Asian Pacific Economy Cooperation Essay
Asian Pacific Economy Cooperation
It is an association of economies that share the boundaries of the Pacific Ocean. Under APEC, member economies work together to:
* reduce barriers to trade, * ease the exchange of goods, services, resources and technical know-how, and * Strengthen economic and technical cooperation between and among them. These concerted efforts, ultimately, would result in a greatly improved global economy and the forging of stronger ties between the developing and the major economies of the world.
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 advisory body named the APEC Business Advisory Council (ABAC), composed of three business executives from each member economy.
1. Thailand 6-7 Nov 1989
2. The United States 6-7 Nov 1989
3. The Philippines 6-7 Nov 1989
4. Canada 6-7 Nov 1989
5. Indonesia 6-7 Nov 1989
6. Japan 6-7 Nov 1989
7. Republic of Korea 6-7 Nov 1989
8. Singapore 6-7 Nov 1989
9. Malaysia 6-7 Nov 1989
10. New Zealand 6-7 Nov 1989
11. Australia6-7 Nov 1989
12. Brunei Darussalam 6-7 Nov 1989
13. People’s Republic of China 12-14 Nov 1991
14. Chinese Taipei 12-14 Nov 1991
15. Hong Kong, China 12-14 Nov 1991
16. Mexico 17-19 Nov 1993
17. Papua New Guinea 17-19 Nov 1993
18. Chile 11-12 Nov 1994
19. Peru 14-15 Nov 1998
20. Russia 14-15 Nov 1998
21. Viet Nam 14-15 Nov 1998
* Trade and Investment Liberalization
* Business Facilitation
* Economic and Technical Cooperation
APEC member-economies have outlined four (4) main objectives: 1. To sustain the growth and development of the region for the common good of its people thus contributing to the growth of world economy; 2. To enhance the gains of both regional and world economy by encouraging the flow of goods, services, capital and technology; 3. To develop and strengthen the open multilateral trading system in the interest of Asia-Pacific member economies and all other economies; and 4. To reduce barriers to trade in goods and services, and minimize hindrance to investment among its participants in a manner consistent with GATT/WTO principles, where applicable, and without detriment to other economies. APEC envisions full trade and investment liberalization and facilitation by 2010 for industrialized economies and 2020 for developing members. With respect to tariffs, the goal is zero tariffs in 2010 and 2020 for developed and developing countries, respectively.
APEC members envisioned an Asia-Pacific region of stronger cooperation, of more open trade, deeper partnership, continuous growth, a stable economy, prosperous constituents, and a secure future. The leaders also pledged to deepen the spirit of the APEC community based on a shared vision of achieving stability, security and prosperity for the people of Asia-Pacific.
Significance to World Trade Economy
APEC groups together three (3) of the world’s most dynamic economies (U.S., Japan, and Canada) and the Asian “tiger” economies. * Collectively, the APEC members are considered the growth engine of the whole world economy. * APEC member-economies represent around two billion people or 42% of the world’s total population, * APEC occupies 43% of the world’s land area.
* In 1997, total Gross Domestic Product of APEC member-economies were US$23,680 billion. * APEC accounted for almost half of the world’s total merchandise exports in 1997. * APEC is characterized by cultural diversity and varied levels of scientific and technological development.
Established in 1989, APEC was designed to promote sustainable economic growth and to strengthen the multilateral trade system through a commitment to open trade, investment and economic reforms among its member economies. APEC’s membership has grown from the original 12 to include 21 economies at the present time. These 21 members, spanning four continents and representing the most economically dynamic region in the world, account for almost 50% of the world’s population, 60 % of global GDP, and 50% of international trade. Since 1993, APEC’s leaders, ministerial, official, and business group meetings have become the premier forum for facilitating economic growth, cooperation, trade and investment in the Asia-Pacific region. It is a remarkable achievement to see such a trans-Pacific forum promoting economic cooperation at such a high level within such a vast and diverse region. Yet, cooperation over diversity has proved to be a daunting task. APEC faces challenges both from within and outside of the organization
1. It has problems with its membership, agenda, and institutional structure Original membership structure, reflecting strong trans-Pacific political-economic ties, was centered on a link between East Asia and North America. But after the mid-1990s APEC’s membership was extended beyond the East Asian-North American to the organization. As the number of members increased to cover the vast Pacific Rim area, the internal cohesion began to decrease and the focus of interest was diluted. “Widening” membership always comes at the expense of “deepening” cooperation. With more members, it is more difficult to reach consensus on what is desirable for the future. At the same time that the organization was losing its focus, Washington’s leadership role was waning as its strategic concentration began to wander after September 11, 2001. 2. APEC’s geographic drift
In the 1990s, APEC was relatively focused on trade liberalization. The 1993 Seattle summit and the following summit in Bogor created a strong momentum for working on the region-wide trade liberalization target by 2010 and 2020. But the growing tension between the interests of “Western” and “Eastern” members and the Asian financial crisis eventually derailed the process of the “early voluntary sectoral liberalization” (EVSL) program in 1998. Since then APEC has been characterized by the strange combination of a loss of direction and mission creep. Every year host governments try to come up with some eye-catching slogans for the summit, while substantive trade liberalization measures are removed from the agenda. In recent years, topics for APEC leaders meeting include cross-cultural communication, shoulder-mounted missile launchers, energy security, and climate change.
The annual leaders meeting has become inversely related to APEC’s original goals of trade liberalization. There is more competitive initiative-launching and more “announceables” in the annual gathering than there are substantive measures. 3. APEC also suffers from “soft institutionalism” and an inadequate institutional foundation The core idea of APEC’s “soft institutionalism” is that members’ actions or statements are to be strictly voluntary or self-imposed, without any central enforcement mechanism.
In the early years, this might have worked when the WTO multilateral negotiations ran into trouble and APEC could serve as a regional engine for trade liberalization. But it failed the effectiveness test when regional crises like the AFC and the 9/11 attacks occurred. Furthermore, the APEC secretariat, with an annual budget of just a few million dollars and a staff of only several dozen, can provide no more than meeting services. APEC was formed with the idea of serving as the Pacific’s OECD, but it does not have an OECD-type of independent research and evaluation ability, not to mention policy formulation and recommendation functions. Externally,
1. New competitors in East Asian regionalism, 2. Its future relationship with the emerging East Asian community. The “East-West divide” within APEC has existed since its foundation. In the 1990s, APEC’s Asian members were more interested in development and technology cooperation, while Western members perceived it more as a vehicle for promoting trade liberalization. Domestic politics and rising nationalism also suggested that there were different and competing priorities between the “East” and “West” within APEC.
The failure of the EVSL and American indifference toward the AFC, however, dramatically reduced enthusiasm for using APEC as a trade negotiation platform. On one hand, it prompted East Asian members to turn to bilateral and Asian-only multilateralism on trade and investment issues. On the other hand, Washington, which originally saw the utility in using APEC as a tool for trade liberalization during the Clinton Administration, began to shift its attention to the Global War on Terror after September 11, 2001. This was a major blow to APEC’s original goal and dialogue agenda of promoting sustainable growth. Searching for its relevance in future regionalism has become a serious challenge for the forum.
The Future of APEC
The future of APEC plays a vital role to its importance. 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% of world GDP; 45% of global trade; and 40% 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. 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. Though have the significance, APEC leaders must address the problems arising from its membership, institutional structure, modalities of decision making, and leadership as the forum works to redefine its relevance for the future regional architecture.
APEC’s early objective of negotiations on intra-APEC trade liberalization has proved to be too ambitious, and most members now prefer bilateral and sub-regional trade arrangements or multilateralism under the WTO structure. As we see the establishment of more and more bilateral and sub-regional preferential trading arrangements (PTAs), the chances of launching negotiations on the Free Trade Agreement of the Asia-Pacific (FTAAP) within APEC will diminish, and may become impossible. Even if APEC cannot serve as a negotiation platform for regional trade liberalization, it does not mean it has lost all chance of promoting free trade in the Asia-Pacific. APEC should use its collective weight to continue pushing the WTO Doha Round of multilateral trade negotiation forward. APEC can still provide some basic functions for business and trade facilitation, can encourage measures to make investment more convenient, can provide technical and development assistance, and can foster socialization, in addition to playing its role as an important meeting venue for regional leaders.
These low-profile, business facilitation functions actually serve the region well by producing a higher degree of economic coherence among member economies. APEC is facing keen competition from other community building initiatives and projects in East Asia, many of which are more active and dynamic. It is imperative for APEC to find its “market niche” in the future regional architecture. Looking into future, APEC will be only one of several Asia-Pacific regional fora. How to define its future role in an appropriate division of labor with other regional arrangements and organizations is a challenge that requires a forward-looking answer. In order to survive, APEC may need to scale back some of its current over-ambitious agendas and initiative-conscious activities, and transfer them to other East Asian fora and mechanisms.
University/College: University of Arkansas System
Type of paper: Thesis/Dissertation Chapter
Date: 13 February 2017
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