|I. WHAT IS APEC?
APEC stands for the Asia-Pacific Economic Cooperation Forum. Today, APEC has 21 members, including all the major economies of the region and the most dynamic, fastest growing economies in the world. APEC members have a combined Gross Domestic Product of over $16 trillion and carry out 42% of world trade. Over the past decade, APEC has become the primary vehicle in the region to promote open trade and economic cooperation. APEC's role has grown in recent years in both depth and scope and now encompasses trade liberalization, business facilitation, economic and technical cooperation, youth and women.
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APEC was established in 1989 in Canberra, Australia with 12 members. Its origins lay with the desire of the founding members to promote economic growth, foster and strengthen trade, and improve living standards. APEC started with a modest program of sectoral and trade negotiations. From the beginning, APEC has seen itself not as a grouping of countries, but of economies, the term emphasizing that the organization discusses economics, not politics. It was also established as a loose consultative forum, with no organization structure or a large bureaucracy supporting it. Indeed, even today, the APEC Secretariat, which is located in Singapore, includes only 23 diplomats seconded from APEC member economies in addition to 20 locally hired staff.
It was in 1993 that an annual meeting of APEC Leaders became a regular feature of APEC. Only one year after this first meeting, which was held in the U.S., APEC Leaders took another historic step at their meeting in Bogor, Indonesia. At this meeting, the Leaders declared a bold goal of creating the world's largest area of free trade and investment by 2020. Within APEC, this challenge became known as the "Bogor Goals." Under the plan, developed economies would achieve free trade by the year 2010 and developing economies would follow in 2020.
APEC's 21 members today are: Australia; Brunei Darussalam; Canada; Chile; the People's Republic of China; Hong Kong, China; Indonesia; Japan; South Korea; Malaysia; Mexico; New Zealand; Papua New Guinea; Peru; the Philippines; Russia; Singapore; Chinese Taipei; Thailand; the United States; and Viet Nam.
How Business Can Get Involved in APEC
At their meeting in Japan in 1995, the Leaders approved what became known as the Osaka Action Agenda. Under this approach, APEC established three central pillars to its cooperative work: trade and investment liberalization, trade facilitation, and economic and technical cooperation. A more detailed discussion of these three pillars appears below. Building on both Bogor and Osaka, the next year, the Leaders endorsed a "Manila Action Plan." In effect, this Action Plan put the flesh on the bare bones of both Bogor and Osaka. It outlined the trade and investment liberalization and facilitation measures needed to reach the Bogor Goals. It also established a system of collective and individual action plans which detail the paths by which economies will reach the Bogor Goals.
- Contact Richard Eason at the APEC Secretariat. (Tel: 65-276-1880; Fax: 65- 276-1775; E-Mail: firstname.lastname@example.org); or
- If you are interested in the specific activities of an APEC working group, task force, or other APEC group, contact directly the program director for that group. Check the APEC Secretariat website or bizAPEC.com for the name and contact information of the relevant director.
Before describing any further what APEC is, it would be useful to make clear what it is not. APEC is not:
APEC's First Pillar: Trade and Investment Liberalization
- A formal trade agreement like the North American Free Trade Association (NAFTA);
- A European-style "common market,"
- A rules-based organization like the World Trade Organization (WTO);
- A policy think tank group like the Organization for Economic Cooperation and Development (OECD).
The first pillar is critical for APEC's ability to achieve its Bogor Goal of free trade in the APEC region by the year 2020. It works on the basis of unilateral liberalization, which means that each APEC member voluntarily agrees to liberalize in a particular area of trade and investment. APEC has developed a basic tool for achieving this pillar: individual action plans (known by the acronym IAP). All APEC economies are required to prepare and regularly update these IAPs.
Each IAP includes details on the 15 sectors specified by the Osaka Action Agenda. They include the following areas:
In addition to each IAP describing what APEC members are doing in these areas, there are working-level groups within APEC which work towards making further progress in each of the 15 areas. APEC is currently completing a project to make these IAPs more accessible to business by simplifying formats and creating electronic IAPs. These "e-IAPs became fully operational in November 2000. In addition to the IAPs, APEC members work together collectively in these same areas through the use of Collective Action Plans, known as CAPs.
- Non-tariff measures
- Standards and conformance
- Customs procedures
- Intellectual property rights
- Competition policy
- Government procurement
- Rules of origin
- Dispute mediation
- The mobility of business people
- Implementation of outcomes of the Uruguay Round of trade talks, and
- Information gathering and analysis.
APEC's Second Pillar: Trade Facilitation
Basically, trade facilitation is aimed at making doing business in the region easier and less costly. Although work in this area continues on a broad front, APEC has already made substantial progress in many areas including standards, customs, electronic commerce, business travel, telecommunications, energy, fisheries, and government procurement. Some examples will be discussed separately, to better highlight how business can best take advantage of the progress in these areas.
APEC's Third Pillar: Economic and Technical Cooperation
Within APEC, economic and technical cooperation is described in shorthand by the term, "Ecotech." It should first be stressed that Ecotech does not mean development assistance to developing APEC economies. Instead, the goals of Ecotech are to:
At their meeting in Manila in 1996, APEC Leaders identified six priority areas for APEC's work in Ecotech:
- Attain sustainable growth and equitable development within APEC
- Reduce economic disparities
- Improve the economic and social well-being of the people
- Deepen the spirit of community in APEC.
By the end of 2000, APEC had 250 ongoing Ecotech activities.
- Developing human capital
- Fostering safe and efficient capital markets
- Strengthening economic infrastructure
- Harnessing technologies for the future
- Promoting environmentally sustainable growth, and
- Encouraging the growth of small and medium enterprises.
II. HOW APEC WORKS
The Asia-Pacific Economic Cooperation Forum is not a rules-based organization with trade dispute enforcement powers like the WTO. APEC, instead, works on the basis of consultation and consensus building. New policies agreed to within APEC meetings are agreed to voluntarily and much of APEC's progress comes through members setting examples for each other and through peer pressure. A key element of the process is open sharing of information between members and the public, an element underlined by the central use of the Individual Action Plans available to anyone logging on to the APEC website.
The apex of each year for APEC is the meeting of Economic Leaders. Since the Chair of APEC rotates each year, there is a different host for each of these Leaders meetings. For example, last year President Clinton, Chinese Premier Jiang Zemin and the other APEC Leaders traveled to Bandar Seri Begawan, Brunei Darussalam, where His Majesty Sultan Haji Hassanal Bolkiah hosted them. This year, China chairs APEC and President Jiang Zemin will host the APEC Economic Leaders in Shanghai in October. In subsequent years, Mexico (2002), Thailand (2003), Chile (2004), and the Republic of Korea (2005) will chair APEC.
However, throughout an "APEC" year, there are many meetings held at different levels aimed at preparing issues for decision by the Leaders, as well as at carrying out directions issued by Leaders in previous years. (The schedule for these meetings can be found on the APEC website under the "APEC Calendar". The meetings of APEC Ministers make up the highest level of these meetings. There are regular, although not always annual, meetings of APEC Ministers of education, energy, environment and sustainable development, finance, human resources development, science and technology, small and medium enterprises, telecommunications, trade, and transportation.
Below the level of the Ministers, APEC Senior Officials meet three or four times throughout the year. As with the meetings of the Ministers, these "SOM" meetings both prepare for the Leaders' Meeting later in the year and respond to directions set by Leaders in earlier meetings. Below SOM are three overarching committees and 23 working level groups that work both in the sectors detailed in the Individual Action Plans and in other areas, including:
There is a Program Director at the APEC Secretariat who supports the working level activities being carried on in APEC in each of these areas as well as those mentioned elsewhere. You can identify each Program Director and contact them by going to the "APEC Secretariat" page and clicking on "Incumbent PSMs and Duties." In addition, information on the working level groups themselves appears under the webpages "Activities by Groups."
- Human resources development
- Industrial science and technology
- Marine resources conservation
- Trade promotion
- Agricultural technical cooperation
- Small and medium enterprises.
The APEC Secretariat
The APEC Secretariat is based in Singapore. The Secretariat is staffed by 23 diplomats seconded from APEC member economies and by 20 local staff. An Executive Director, who is always an Ambassador seconded from that year's APEC host, heads the Secretariat. Since China is this year's host of APEC, the current Executive Director, Ambassador Zhang Yan, is Chinese. The Deputy Executive Director is always from next year's APEC host and he or she becomes the Executive Director the following year when the new APEC host takes over. The current Deputy Director, Mexico's Ambassador Ricardo Villanueva, will serve as the Secretariat's Executive Director for Mexico's year as host of APEC in 2001. The other 21 seconded diplomats are from, currently, from 17 of the APEC members and are from Foreign Affairs and Trade Ministries.
The Secretariat works under the direction of the APEC Senior Officials and is the core support mechanism for the APEC process. It provides advisory, operational and logistical/technical services to member economies and APEC forums. It also provides advice on the design of APEC projects, manages project funding, and evaluates the projects after they are completed. It addition to maintaining the website, it produces a range of publications and liaises with the media. Finally, it provides APEC's institutional memory through its Library, Archives and databases.
III. THE CRITICAL ROLE OF BUSINESS IN APEC
The APEC Business Advisory Council
There are few international or regional organizations of officials in which the business sector plays such a central role. The members of the Asia-Pacific Economic Cooperation Forum have long realized that business is a key constituency for its work and that business must be actively involved for APEC to be successful. During APEC's early years, APEC officials regularly consulted prominent business representatives in the Asia-Pacific region. In 1995, Leaders decided to formalize this relationship and established the APEC Business Advisory Council (ABAC). ABAC's members are chosen directly by the APEC Leaders. Each APEC Leader chooses up to three members. Most APEC economies reserve one of their ABAC positions for a representative from a small or medium-sized enterprise, thanks to the key role that these SMEs play in all APEC economies.
ABAC meets several times during the year and compiles an annual report containing recommendations on ways to improve the business and investment climate in the APEC region. ABAC presents this report personally to the APEC Leaders at the Leaders meeting each year. As an example, at the Brunei Leaders meeting, ABAC members presented their report in a face-to-face meeting with Premier Jiang Zemin, President Vladimir Putin, Prime Minister Yoshiro Mori, Mexican President Ernesto Zedillo and the other APEC Leaders. There was also a lively question-and-answer session during this meeting.
ABAC's 2000 Report to APEC Economic Leaders was broad ranging but full of detailed recommendations aimed at addressing problems in a number of different areas. In this report, ABAC listed its recommendations for 2000:
Trade Liberalization and Facilitation:
- Support the WTO and the New WTO Round
- Improve the form, substance, and accessibility of the Individual Action Plan Process (used to track progress toward liberalization)
- Encourage implementation of Electronic IAPs
- Tackle the growing issue of Non-Tariff Measures within the IAPs
- Use the IAP process to encourage E-Commerce readiness
- Ensure free trade areas complement the multilateral trading system
- Implement the APEC Food System.
Give Substance to Capacity Building
- Remove impediments associated with standards and conformance
- Support sectoral government-business dialogues to promote APEC's facilitation agenda
- Promote business mobility.
Build Stronger Financial Systems:
Improve Access to New Opportunities Through Technological Progress:
- Undertake benchmarking to assess APEC economies' financial institutional frameworks and organizations against internationally recognized standards
- Support development of an Institute of Directors Network
- Facilitate the development of bond markets
- Strengthen the world financial architecture
- Facilitate the development of second board markets.
You can read the ABAC report in its entirety at http://www.apecsec.org.sg/abac/reports/ABAC_Report_2000.pdf. Past recommendations from ABAC have been adopted as APEC goals. Electronic Individual Action Plans, the APEC Food System, an E-Commerce Readiness Assessment and many other APEC initiatives owe their genesis to ABAC recommendations.
- Undertake the E-Commerce readiness assessment initiative
- Develop action plans for E-Commerce
- Implement "Government Online" as a catalyst for E-Commerce
- Adopt a regulatory framework conducive to the development of E-Commerce
- Harness the Internet for Human Resources Development
- Adopt a science-based approach to biotechnology.
The CEO Summit
As an added opportunity for top business leaders to participate in the APEC Leaders' meeting, a CEO Summit is organized each year. At this year's CEO Summit in Brunei, Presidents Bill Clinton, Vladimir Putin, Ricardo Lagos, Premier Jiang Zemin, and WTO Director General-Designate Supachai Panitchpakdi spoke, along with other leading political, academic and business representatives, to a gathering of over 400 top business executives.
Business Advising APEC at the Working Level
Below the level of the APEC Leaders and ABAC, business is active at many levels in APEC and in many of the APEC Ministerial and working-level groups. At the level of the Ministers, the APEC Finance Ministers established the APEC Financiers Group, which consists of representatives of financial institutions from each APEC economy, in 1995. This year, the APEC Energy Ministers held a full-day public and private sector dialogue and a separate dialogue with the Energy Business Network, a grouping of energy-related private sector companies. The APEC SME Ministers hold joint meetings with the SME Business Forum and also, last year, met as well with the Women Leaders' Network and an E-Commerce Workshop.
At the working level of APEC, there are many different ways in which business advises APEC officials. For example, business representatives have participated in meetings of the Intellectual Property Rights Experts Group since 1996 and the Fisheries Task Force of the Pacific Economic Cooperation Council (PECC) has worked with the Fisheries Working Group since 1991. Other working level APEC groups hold annual dialogues with the private sector: the Infrastructure Workshop, the Sub-Committee on Customs Procedures, and the Trade Promotion Working Group. As noted earlier, other APEC working groups have established a private sector arm such as the Energy Business Network of the Energy Working Group. Many other groups have ad hoc contacts with business and others, such as the Informal Experts Group on the Mobility of Business People and others include business representatives as members of their delegations. These include the Industrial Science and Technology Working Group, the Marine Resources Conservation Group, and the Telecommunications Working Group.
IV. WHAT APEC DOES FOR BUSINESS
The direct and extensive involvement of business in the deliberations of the Asia-Pacific Economic Cooperation Forum is critical for APEC's work and for staying on track to achieve the Bogor goals of trade liberalization in the Asia-Pacific region by the year 2020. Business provides APEC officials with a cutting-edge view of entrepreneurial developments and high-technology and helps point APEC the right way in removing impediments to doing business in the region. The business sector has been instrumental in detailing how APEC economies can best make themselves ready for the new economy and e-commerce. With the head-spinning changes taking place not only in technology but the structure of commerce itself, APEC officials would be hopelessly behind the curve keeping up with the changes without the direct ties with those in the business sector at the forefront of these revolutionary changes.
It is often hard to point out a "top ten" of APEC achievements that benefit the private sector. APEC works in so many different areas that it would be impossible to rank order such a diversity of initiatives. The best approach would be to highlight a few examples from a number of the areas that benefit businesses most directly. The next section, "Recent APEC Success Stories," attempts to do just that.
Recent APEC Success Stories
Standards and Conformance
APEC members have committed to align domestic standards with relevant international standards in four priority sectors by 2005 (electrical and electronic appliances, food labeling, rubber gloves and condoms, and machinery). Member economies have also agreed to align all electrical safety and electromagnetic compatibility standards by 2008.
APEC is eliminating the need for separate testing for compliance with product standards in each importing economy through the adoption of Mutual Recognition Arrangements (MRAs) on Conformance Testing. Manufacturers will be able to test importing country standards in approved facilities in their home economy. Key sectors include:
Telecommunications Equipment: The Telecommunications MRA covers trade worth an estimated US$ 50 billion per year. It is estimated that the MRA will save five percent of the cost of new product placement, cut six months off the placement of new products in markets and reduce marketing costs for new products by up to thirty percent.
Food and Food Products: The APEC Food MRA is designed to facilitate trade by minimizing food inspection controls at the point of entry into import economies on the basis of assurances provided through pre-export conformity assessment using official and officially recognized inspection and certification systems. It is an umbrella arrangement under which the implementing elements of sectoral arrangements relating to specific foods or food product sectors are to be included.
Electrical and Electronic Equipment: The Electrical MRA will be the first truly multilateral arrangement of its type. Unlike the Food and TEL MRAs, it does not require the approval of testing facilities and recognition of test results to be based on a bilateral agreement within a multilateral framework. Rather the Electrical MRA contains parts that are implemented multilaterally.
APEC has developed guidelines and arrangements for the exchange of information in the following sectors:
Food: The Food Recall Guidelines will help developing members establish their own food recall systems and ensure a consistent approach among all members. As an adjunct to the Guidelines, APEC has endorsed an Arrangement for the Exchange of Information on Food Recalls. The guidelines and arrangement contribute to facilitating trade in food and food products within the APEC region while minimizing the risks to health and safety of consumers.
Toys: The Arrangement for the Exchange of Information on Toy Safety provides a mechanism for the exchange of information on technical regulations dealing with the risks to health and safety of children that may arise from hazards associated with toys.
APEC has made business travel much easier within the APEC region. Expanded granting of multiple entry visas and a greater number of visa waiver arrangements have greatly simplified business travel. Instant access to visa requirements within APEC has also been provided through the APEC Business Travel Handbook website.
The APEC Business Travel Card scheme ensures ongoing visa-free travel and expedited airport processing for holders. After Thailand, Peru, and Brunei Darussalam joined the scheme last year, ten economies now participate in the APEC Business Travel Card scheme and more are expected to join in the future. The APEC Business Advisory Council is a strong proponent of the Travel Card.
Economies are implementing the WTO Customs Valuation Code by the end of this year, to ensure regional consistency in valuing traded goods, and the World Customs Organization's Guidelines on Express Consignment Clearance by 2001. An extensive cooperation program is under way to help all members reach these targets.
The APEC Blueprint for Customs Modernization maps out APEC's strategic direction in the area of customs and enables business to visualize the future changes and the positive impacts they will have.
E-Commerce and "Paperless Trading"
The APEC Blueprint for Action on E-Commerce responds to the Internet revolution by committing APEC members to a goal of paperless trading. The computerization of customs and other trade-related procedures through the adoption of the UN/EDIFACT standard is a key step towards paperless trading. The Blueprint also guides governments on the development of legal, technical, operating and trading environments for e-commerce. The E-Com Legal Guide provides businesses with Internet access to members' current laws on electronic transactions and regulatory barriers affecting e-commerce. The E-Commerce Readiness Assessment Guide, developed with extensive private sector input, advises officials how best to make their economies ready to adopt the new economy.
The APEC Telecommunications Interconnection Framework simplifies the negotiation of telecommunications contracts with detailed, non-prescriptive conditions for inclusion in contracts between telecommunications carriers negotiating the connection of services.
The Manual of Best Practice Principles for Independent Power Producers promotes a more certain investment environment for energy suppliers by advocating transparency and consistency in institutional and regulatory structures; tender/bid processes and evaluation criteria; power purchase arrangements and associated tariff structures; and financing.
The Road Transport Harmonization Project is a multi-phased effort to reduce barriers to trade in the automotive sector by promoting standards harmonization taking into account traffic safety and environmental protection needs. APEC has endorsed a Model Mutual Recognition Arrangement on Automotive Products to promote bilateral and multilateral arrangements between APEC members on the mutual acceptances of standards.
APEC's Guidelines for Simplification and Standardization of Administrative Procedures for Intellectual Property Protection will lessen the burden on business of complicated procedures when applying to obtain intellectual property rights in different economies. The Guidelines are a step towards standardized APEC trademark applications and, eventually, to "paperless filing." The APEC IPR Information Mall and the Intellectual Property Contact List websites provide business with easy access to information on intellectual property protection regimes, including IPR enforcement systems, and contact details for relevant government officials, business people and academics.
APEC has pursued a cooperation program to assist members in implementing the WTO TRIPS Agreement. Activities undertaken include a symposium to support TRIPS implementation and surveys on the current status of implementation of the Agreement.
One of APEC's tools in stimulating trade has been the holding of APEC Trade Fairs. APEC has held three Trade Fairs, the last one of which was held in Kuala Lumpur on 13-16 November 1998. The 3rd APEC International Trade Fair allowed economies to showcase products, services and technologies of APEC member economies, promote trade and investment, and foster closer business and economic relationships among business communities in the region. The 4th APEC International Trade Fair will be held in Indonesia in October 2000.
Enhancing Access to Market Information
The APEC Tariff Database includes tariff rates from 17 economies at either the 9-digit or 6-digit level of the HS Code on all products on which they levy tariffs. The database is not only useful for APEC members but for all importers and exporters worldwide.
The APEC Directory of Professional Services will facilitate trade in services by increasing transparency, making relevant information more
accessible and contributing to any future development of common professional standards in the APEC region.
The Compilation of Information on Food Labeling Laws, Regulations and Standards in the APEC Region benefits food exporters by providing easy access to such information at minimum cost while ensuring the health and safety of consumers.
The APEC Manual on Air-Shipped Live and Fresh Seafood (available for purchase from the APEC Secretariat website) provides customs, health and technical guidelines on preparing and packaging goods for air shipment in APEC markets. With the demand for these products growing worldwide, the contribution that this makes to facilitating trade for fish harvesters, importers, wholesalers and retailers in APEC economies, particularly recent entrants (most of whom are small enterprises) is significant. The current value for trade in live fish alone is estimated at over US $1.2 billion.
The APEC Investment Guidebook provides information on foreign investment regimes in APEC economies, including regulatory frameworks, investment protection and promotion and incentives.
The APEC Investment Mart and the Cyber Mart provide potential investors with detailed information on investment policies and environments of APEC economies.
The APEC Government Procurement Homepage details members' policies and procedures for bidding on public procurement contracts and, where available, links to domestic sites listing actual bidding opportunities. Government markets typically represent 10-15% of GDP.
APECNet allows businesses to post or identify business opportunities over the Internet. This provides business with a convenient and cost-effective platform to facilitate business exchange. On average, the site records a monthly hit rate of 45,000 with 8,000 monthly requests for information about member economies.
The APEC Ports Database provides business with readily accessible, user-friendly information on port location, administration, capacity, and relevant shipping agents.
APEC Leaders in Auckland endorsed a report by the Pacific Economic Cooperation Council (PECC) to develop a set of competition policy principles. The Competition Policy Group has also held annual workshops, covering issues such as:
- Approaches and exemptions to competition policies and law
- Technical assistance
- Links between competition policy and trade policy
- The objectives and tools of competition policy
- The relationship between competition policy and deregulation
- Regulation of national monopolies
- Occupational regulation, and
- Regulatory reform.