Asia-Pacific Economic Cooperation

Published Apr 5, 2024

Definition of Asia-Pacific Economic Cooperation (APEC)

Asia-Pacific Economic Cooperation (APEC) is a forum for 21 Pacific Rim countries that seeks to promote free trade and economic cooperation throughout the Asia-Pacific region. Founded in 1989, APEC aims to ensure that goods, services, investment, and people move easily across borders by reducing tariffs and addressing other trade barriers among its member economies, thereby encouraging economic growth and creating a more efficient and productive regional economy.

How APEC Functions

APEC operates on the basis of non-binding commitments and open dialogue among member economies, with respect to each country’s economic context. Decisions are reached by consensus, and commitments are undertaken on a voluntary basis. APEC’s structure includes a number of committees, working groups, and task forces focused on trade and investment liberalization, business facilitation, and economic and technical cooperation.

Annual APEC Economic Leaders’ Meetings, attended by the heads of government of all APEC members except Taiwan (which is represented by a ministerial-level official under the name Chinese Taipei), serve as the organization’s apex. The location of these meetings rotates among the member economies, and the host economy for any given year plays a pivotal role in setting the agenda for APEC’s work and hosting a series of senior official and ministerial-level meetings.

Example

A prominent example of APEC’s impact is its role in facilitating the Bogor Goals, named after the city of Bogor in Indonesia where they were adopted in 1994. These goals aim for free and open trade and investment in the Asia-Pacific by 2020 for developed economies and by 2020 for developing ones. To support these goals, APEC members have worked collaboratively to reduce tariffs, remove trade barriers, improve customs efficiency, and promote sustainable economic growth through policy alignment and mutual cooperation.

Why Asia-Pacific Economic Cooperation Matters

APEC is crucial for several reasons. Firstly, the Asia-Pacific region is a significant driver of the global economy, representing about 60% of the global GDP and around 47% of world trade. The economic dynamism of the region makes it vital for global economic health. Secondly, APEC plays a key role in addressing regional and global economic challenges, including those related to trade disputes, environmental concerns, and the digital economy. Finally, APEC’s efforts to create a seamless regional economy contribute to reducing income disparities between economies, promoting inclusive economic growth, and enhancing global competitiveness of businesses, especially small and medium-sized enterprises (SMEs) within the member economies.

Frequently Asked Questions (FAQ)

What are the benefits of being an APEC member?

Membership in APEC offers economies the opportunity to participate in a forum dedicated to reducing tariff and non-tariff barriers to trade and investment, thereby encouraging economic growth and increasing prosperity. Members benefit from cooperation in areas such as trade facilitation, business mobility, and technology exchange, which can help improve national economies and foster global economic stability.

How does APEC influence global trade policies?

Although APEC decisions are non-binding and based on consensus, the forum influences global trade policies by setting examples through its members’ commitments to open trade and investment environments. APEC’s work, including its initiatives on trade liberalization and facilitation, serves as a model for global trade practices and often informs broader agreements within the World Trade Organization (WTO) framework.

Can APEC’s initiatives directly impact everyday businesses and consumers?

Yes, APEC’s initiatives can have a direct impact on businesses and consumers by making it easier and cheaper to trade goods and services and invest across borders. Reduced trade barriers can lower the cost of imports and exports, encouraging consumer choice and competition, which can lead to lower prices and greater availability of goods and services. For businesses, especially SMEs, APEC’s efforts to improve business mobility and facilitate access to international markets can result in increased opportunities for expansion and growth.

APEC continues to be a fundamental platform for fostering regional economic integration, promoting sustainable economic growth, and enhancing the economic prosperity of its member economies and the world.