APEC

Last updated March 2005

Official Name:
Asia-Pacific Economic Cooperation

Editor's note: The information in this article has been compiled and edited from Fact Sheets and Background Notes available from the Bureau of East Asian and Pacific Affairs of the U.S. Department of State

OVERVIEW

The Beginning

The APEC forum was established in 1989 to promote economic cooperation and integration in the Pacific region. The United States was a driving force in APEC's creation, as a means of anchoring the United States more firmly in the region in the post-Cold War era. APEC has grown to 21 members, including four other economies in the western hemisphere (Canada, Chile, Mexico and Peru). The first APEC Leaders' Meeting occurred in 1993 when the United States invited member economies' leaders to Blake Island, Washington. In 1995, APEC established a business advisory body, called the APEC Business Advisory Council (ABAC), which consists of three business executives from each member economy.

The Bogor Goals

At Blake Island, Leaders called for continued reduction of trade and investment barriers, envisioning an "Asia-Pacific community" that promotes prosperity through cooperation. In 1994, Leaders at Bogor, Indonesia, set the goals of reaching free trade and investment by 2010 for developed economies, and 2020 for developing economies.

Strengthening Multilateral and Regional Trade

APEC's early successes included helping to build consensus for conclusion of the Uruguay Round in 1994 and its role in pioneering the 1996 Information Technology Agreement. In Shanghai (2001), APEC's strong push for a new trade Round and support for a robust program of trade capacity-building assistance was critical to the successful launch of the Doha Development Agenda a few weeks later.

APEC has taken a number of steps to liberalize regional trade. For example, in 1999 it launched the APEC Open Skies Agreement, the first multilateral air services liberalization agreement in the world. In 2001, Leaders endorsed the U.S.-proposed "Shanghai Accord" that emphasizes implementation of APEC's commitments to open markets, structural reform, and capacity building. As part of the Accord, Leaders committed to develop and implement APEC transparency standards, reduce trade transaction costs in the Asia-Pacific region by 5 percent over 5 years, and pursue trade liberalization policies relating to information technology goods and services.

Counterterrorism

Following the September 11, 2001, terrorist attacks, leaders in Shanghai pledged counterterrorism cooperation. In Los Cabos this year, Leaders will build on the Shanghai Statement through commitments designed to protect key Pacific Rim infrastructure —trade, finance and information systems—from terrorist exploitation and attack.

APEC GROUPS

APEC senior officials oversee the 10 following working groups, covering broad areas of economic, educational, and environmental cooperation. In addition, APEC has a Committee on Trade and Investment with customs and standards and conformance subcommittees, and an Economic Committee.

Trade and Investment Data

Develops consistent and reliable data in merchandise trade, trade in services, and investment.

Trade Promotion

Develops proposals to exchange trade and industrial information and to promote economic and trade missions among economies of the region. Organizes international seminars and meetings to promote trade, an Asia-Pacific trade fair, and a training course on trade promotion.

Industrial Science and Technology

Promotes economic growth by expanding technology flows and focusing on science and technology issues that network potential partners together in the Asia-Pacific region.

Human Resource Development

Seeks ways to exchange information among Asia-Pacific economies in such areas as business administration, industrial training and innovation, project management, and development planning. In this working group, the United States hosted an APEC education ministerial in Washington, DC, in August 1992 and sponsors the APEC Partnership for Education Program, which promotes university partnerships among U.S. and Asian/South Pacific universities, outreach and cooperative education activities, and private sector training.

Energy Cooperation

Develops cooperative projects, such as a regional database on energy supply and demand, and exchanges views on, among other things, coal utilization, technology transfer, and resource exploration and development.

Marine Resource Conservation

Exchanges information on policy and technical aspects of marine pollution and advancement of integrated coastal zone planning. Exchanges information on and develops recommendations for dealing with red tide/toxic algae pollution problems.

Telecommunications

Compiles annual survey on APEC telecommunications development activities, including a description of each member country's telecommunications environment. Explores ways to establish and develop regional networks, initially by encouraging electronic data interchange. Exchanges information on policy and regulatory developments in each member's telecommunications sector. Disseminates a manual on how to approach training in a telecommunications organization, followed by a pilot project reviewing needs and recommending solutions in a selected organization.

Transportation

Studies and recommends ways to improve infrastructure, facilitate movement of passengers and freight, collect and exchange data, and enhance transportation safety and security. This U.S.-led working group is one of three added in March 1991. The United States proposed it because of the importance of improved transportation links to continued economic growth in the region. In June 1995, the United States hosted an APEC transportation ministerial.

Tourism

Studies one of the region's most important industries, focusing on tourism data exchange, barriers to expansion, training programs, and current projects in APEC member economies.

Fisheries

Surveys the pattern of APEC fisheries cooperation to develop fisheries resources. Reports on the role of APEC in coordinating and complementing the work of existing organizations and promoting cooperative relations among APEC participants.

U.S.-APEC RELATIONS

The economies in the East Asia and Pacific region were the most dynamic in the world during the 1980s and most of the 1990s and for most of recorded human history.

Japan is the world's second-largest economy, our largest trading partner after Canada and Mexico, and the world's leading aid donor. It is struggling to implement reforms needed to pull out it out of 10 years of economic stagnation.

China is a growing economic power that has been able to achieve impressive overall economic growth and poverty reduction at the same time it tackles the challenges of transition from a command to a market based system. China however faces problems of managing growing rural/urban imbalances, fundamentally restructuring its financial and state owned enterprise sectors, and environmental sustainability.

A severe reduction in exports, particularly IT goods to the U.S., has throttled the recovery of ASEAN and Korean economies since the 1997-98 crisis.

Throughout the region accelerated reforms are needed to address the weaknesses revealed by the Achilles' heel of the Asian miracle: weak financial systems, crony capitalism, and dysfunctional and non-transparent domestic markets that grossly misallocated resources. Economic reforms to address these problems have shown some results, but more must be done.

Participating Economies

Australia; Brunei Darussalam; Canada; Chile; People's Republic of China, Hong Kong, China; Indonesia; Japan; Republic of Korea; Malaysia; Mexico; New Zealand; Papua New Guinea; Peru; Republic of the Philippines; Russia; Singapore; Chinese Taipei; Thailand; USA; Vietnam.

The United States, in cooperation with international institutions and other partners, is helping the economies of the region resume growth and prosperity by:

• Supporting economic reforms.
• Maintaining strong U.S. growth with open markets for the region's exports.
• Promoting an open international trade and financial system.
• Supporting economic assistance to the countries hit by the financial crisis, and
• Providing a military security umbrella that contributes to the confidence needed to expand international business.

The U.S. advances this agenda bilaterally, including through the Economic Partnership for Growth with Japan and annual economic dialogues with China and Taiwan, and regionally, thorough leadership in APEC, our participation in annual ASEAN Ministerial meetings and revival of the U.S.-ASEAN trade dialogue. The United States has a great interest in continuing to assist Asia-Pacific economies, which are increasingly integrated with our own. Over one-third of U.S. total trade is now conducted with the region. However, this dramatic expansion has been accompanied by the development of recurring and growing U.S. trade deficits. In 2000, the United States had trade deficits with most economies of the region, totaling $186 billion. The largest deficit was with Northeast Asia (China, Hong Kong, Chinese Taipei, and South Korea) ($125 billion); the second largest was with Japan ($85 billion).

The United States played a key role in forming the APEC forum. The United States works actively with its APEC partners to promote the forum as a vehicle for regional economic cooperation. In 1993, the United States invited APEC Leaders to Blake Island, Washington. Leaders have met annually since, providing a new drive and momentum for economic cooperation in the region. In addition to the annual Leaders' Meetings, the annual Ministerial, Trade Ministerial and other APEC meetings cover topics ranging from e-commerce and energy to tourism and marine resource conservation. The United States provides leadership in many of the APEC fora

UPDATE

Summary of U.S. Actions at the APEC Leaders' Meeting

November 20, 2004

Presidential Action

President Bush and other APEC leaders took a determined step in fighting corruption throughout the APEC region by launching the Santiago Commitment to Fight Corruption and Ensure Transparency and the APEC Course of Action on Fighting Corruption and Ensuring Transparency. They also commenced the APEC Anticorruption and Transparency Capacity Building Program to help developing economies meet their anticorruption commitments.

Fighting Corruption in APEC: Proposed by the United States together with Chile and South Korea, the Santiago Commitment and the Course of Action on Fighting Corruption and Ensuring Transparency commit APEC members to:

• Deny safe haven to officials and individuals guilty of corruption, those who corrupt them, and their assets
• Implement anticorruption policies and practices consistent with the UN Convention Against Corruption
• Implement the APEC Transparency Standards, with particular emphasis on government procurement and customs procedures
• Encourage collaboration to fight corruption and ensure transparency, including through cooperation with other multilateral and regional intergovernmental institutions
• Develop innovative training and technical assistance programs to fight corruption and ensure transparency

Assisting Developing Economies in Fighting Corruption: President Bush joined leaders from Australia, Chile, China, Japan, and South Korea in helping APEC developing economies fight corruption through the newly-established Anticorruption and Transparency (ACT) Capacity Building Program. This program provides assistance to help APEC developing economies achieve the anticorruption commitments announced today. In support of this initiative, the United States will contribute $2.5 million over four years, and add a regional APEC Anticorruption Advisor to assist APEC's efforts in promoting the rule of law and a culture of integrity.

Background—Presidential Leadership in Fighting Corruption: Corruption is the single greatest obstacle to economic and social development, according to the World Bank. The direct costs of bribery alone to national economies are estimated to be over one trillion dollars each year. Today's actions by APEC members, led by the United States, build upon President Bush's leadership in implementing a robust international transparency and anticorruption agenda, including:

• Denying safe haven to corrupt officials
• Launching the Millennium Challenge Account that provides U.S. development assistance to those countries that fight corruption, rule justly, invest in their people, and encourage economic freedom
• Launching the G-8 Sea Island Fighting Corruption and Improving Transparency Initiative (promoting high standards of transparency in public financial management, procurement, the letting of public concessions, and the granting of licenses)
• Leading international efforts to gain agreement on the United Nations Convention Against Corruption
• Strengthening the OECD monitoring of the Anti-Bribery Convention Initiating and supporting the Global Forum on Fighting Corruption and Safeguarding Integrity process

Expanding Trade, Fighting Corruption

President Bush and other APEC Leaders took action to increase global and Asia-Pacific trade, promote policies that spur economic growth, and fight corruption. Leaders discussed the importance of these issues and agreed to take action in the following areas.

Why APEC Matters to Americans     October 16, 2001

Released by the Bureau of East Asian and Pacific Affairs, U.S. Department of State

In 1989 when former President George Bush was President of the United States the Asia-Pacific Economic Cooperation (APEC) forum was established to promote economic integration around the Pacific Rim and to sustain economic growth. APEC currently has 21 members: Australia; Brunei Darussalam; Canada; Chile; People's Republic of China, Hong Kong, China; Indonesia; Japan; Republic of Korea; Malaysia; Mexico; New Zealand; Papua New Guinea; Peru; Republic of the Philippines; Russia; Singapore; Chinese Taipei; Thailand; USA; Vietnam.

The United States, recognizing the value of top-level meetings to advance the work of creating a Pacific community, invited member economies' leaders to Blake Island, Washington, to meet informally to discuss major issues in the APEC region. This gathering of economic leaders has become the single most important institution in the Asia Pacific region. It brings top level attention to APEC's vision of free trade and investment as well as providing a forum for Leaders to meet on a regular basis both as a group and bilaterally to discuss current issues and resolve disputes.

The economic health of the APEC region is vitally important to America's continued prosperity. Economic growth across the APEC region waned this year, largely in response to the slowing U.S. economy and the weakening global demand for many of the Asian members' exports (particularly electronics). Many members have lowered their 2001 growth projections in light of poor performance during the first half of the year, although most will still post positive results.

APEC is home to our biggest customers in the world, with a total of $500 billion in exports in 2000. APEC remained a powerful trading group accounting for about half of the world exports and imports. We in turn have played a critical role in Asian recovery, providing a market that bought nearly $700 billion worth of goods and services from other APEC economies last year.

APEC has played an important role in promoting trade and investment liberalization in the region. As a result of these efforts, APEC markets are considerably more open today than they were ten years ago, creating new opportunities for American business and creating new employment for American workers.

The challenge posed by the higher profile APEC launched at Blake Island was also widely seen as galvanizing a successful conclusion of the Uruguay Round Table negotiation by demonstrating an alternative path to liberalizing trade talks if global talks were to fail.

APEC has also played a complementary role to the International Monetary Fund and other international financial institutions in fostering a rapid Asian economic recovery. APEC encourages its members to pursue appropriate macroeconomic policies that stimulate domestic demand, and microeconomic polices to promote financial and corporate restructuring and attract investment.

APEC is promoting increased transparency, openness and predictability based on the rule of law. APEC seeks to eliminate impediments to trade and investment by encouraging member economies to reduce barriers, adopt transparent, market-oriented policies and address such issues as unequal labor productivity, restricted mobility of business persons and outdated telecommunications regulatory practices.

APEC can serve a crucial role in advancing long-term projects and initiatives that will assist its members to reform their economies and implement the policy changes that will sustain the economic recovery. It also can help foster development of the physical and human capital necessary to sustain growth in the 21st century.

APEC also promotes discussion among Leaders and undertakes programs to assure that the social infrastructure exists to allow APEC economies to take advantage of trade and investment opportunities and that economic growth translates into real social progress. For example, APEC works to advance environmental and labor standards, improve basic education, fight disease, promote the growth and development of small business, and integrate women into economic life.

APEC works directly with the private sector to produce results with broad benefits. Public-private collaboration on customs projects is becoming a model for the benefits that the public sector can derive from partnership with business constituents. Other public-private partnerships this year in APEC focuses on developing e-commerce and region-wide information technology training programs.

A revived Asia-Pacific region means more exports from and investments by U.S. companies, more jobs for Americans and more U.S. economic growth. APEC's motto could be "prosper thy neighbor." The United States is committed to ensuring APEC plays that constructive role.

Moving Forward on the WTO's Doha Negotiations: Under President Bush's leadership, APEC leaders and ministers last year played a critical role in getting the Doha negotiations back on track after negotiations had derailed at the Cancun Ministerial. This year, President Bush again led APEC Leaders in agreeing to take actions to move the negotiations forward. Specifically, Leaders agreed to: Move forward on Doha with a sense of urgency to achieve a result that meets high levels of ambition Instruct ministers to seek substantial results in the negotiations by the Sixth WTO Ministerial Conference in December 2005 Contribute to the Doha trade facilitation negotiations by sharing APEC's expertise in this area with other WTO members Renew efforts to ensure participation of all WTO Members in the Doha negotiations

Expanding Asia-Pacific Trade: APEC leaders agreed to launch the Santiago Initiative for Expanded Trade in APEC. Proposed by the United States, the initiative has two important components: Trade Liberalization: Leaders instructed ministers to provide recommendations at next year's APEC meeting in South Korea on ways to further liberalize trade and investment in the region Trade Facilitation: Leaders agreed to build upon and elevate APEC's work to reduce business transaction costs by cutting red tape, embracing automation, harmonizing standards, and eliminating unnecessary barriers to trade

Ensuring High Standard Free Trade Agreements: President Bush joined other APEC leaders in welcoming the APEC Best Practices for Regional Trade Agreements (RTAs) and Free Trade Agreements (FTAs). These best practices will help ensure that the growing number of FTAs in the Asia Pacific region meet a high standard and contribute to liberalizing trade in the region. The APEC Best Practices include: Consistency with WTO disciplines Comprehensiveness in scope, including substantially all trade Simplicity of rules of origin to reduce compliance costs for business Transparency by ensuring that the provisions are readily available on the Internet

Strengthening Intellectual Property Rights (IPR) Protection: Leaders welcomed the ministers' agreement to take actions next year to reduce piracy and trade in counterfeit goods, address online piracy issues, and increase IPR cooperation and capacity building. This U.S.-driven APEC commitment complements the Bush Administration's recently launched Strategy Targeting Organized Piracy (STOP) to shut down global trade in counterfeit and pirated products and crack down on criminal networks that traffic in these goods.

Fighting Corruption: President Bush and other APEC Leaders committed to significantly raise the stakes in the fight against corruption by launching the Santiago Commitment to Fight Corruption and Ensure Transparency and the APEC Course of Action on Fighting Corruption and Ensuring Transparency. These commitments require APEC economies to: Deny safe haven to officials and individuals guilty of corruption, those who corrupt them, and their assets Implement anticorruption policies and practices consistent with the UN Convention Against Corruption Implement the APEC Transparency Standards, with particular emphasis on government procurement and customs procedures Encourage collaboration to fight corruption and ensure transparency, including through cooperation with other multilateral and regional intergovernmental institutions Develop innovative training and technical assistance programs to fight corruption and ensure transparency

President Bush joined leaders from Australia, Chile, China, Japan, and South Korea in backing up these commitments by establishing an APEC Anticorruption and Transparency Capacity Building Program, to which the United States will contribute $2.5 million over four years.

Ensuring Security, Promoting Prosperity

Presidential Action: President Bush came to the Asia-Pacific Economic Cooperation (APEC) Summit to urge Leaders to take concrete steps to implement last year's APEC "Bangkok Commitments" in order to ensure security and promote prosperity. These complementary goals were achieved as he and fellow APEC Leaders welcomed progress on a number of important initiatives, including:

Protecting International Aviation: A Man-Portable Air Defense System (MANPAD) attack on a commercial airliner would have devastating human and economic costs on the regional economy. To address this threat, APEC members agreed to MANPADs guidelines to:

• Adopt strict domestic export controls on MANPADs
• Secure MANPAD stockpiles
• Regulate MANPAD production, transfer, and brokering
• Ban transfers to non-state endusers
• Exchange information in support of these efforts

Preventing Proliferation of Weapons of Mass Destruction: President Bush welcomed the commitment by all APEC members to implement, conclude, or aim to conclude an Additional Protocol with the International Atomic Energy Agency (IAEA) by the end of 2005. The Additional Protocol gives the IAEA the tools needed to deter development of weapons of mass destruction and catch proliferators. Additionally, President Bush led APEC Leaders in endorsing a set of Export Control Best Practices that will assist APEC members to facilitate legitimate trade while preventing illicit buyers from obtaining sensitive items that could be used in weapons of mass destruction.

Securing International Shipping and Ports: Leaders agreed to secure international shipping and ports by working toward implementation of the International Maritime Organization's International Ship and Port Facility Security Code (ISPS). The ISPS Code requires port officials to evaluate threats, plan for contingencies, and improve port access controls, and calls for economies to establish standardized ship identification procedures. APEC economies, which account for almost 50 percent of the world's trade and 21 of the world's 30 top container seaports, recognize the urgent need for compliance. In support of the APEC agreement, President Bush and six other leaders launched the ISPS Code Implementation Assistance Program to assist fellow APEC members in complying with the ISPS Code through technical assistance and grants, which will be provided beginning in 2005.

Improving Travel Security: The United States and Australia announced the joint development of a Regional Movement Alert List to check immediately (before or during flights) against records of lost and stolen passports. Additionally, APEC Leaders welcomed progress in implementing business mobility initiatives, including installation of Advanced Passenger Information systems and issuance of machine-readable travel documents.

Strengthening Counterterrorism Cooperation and Capacity: APEC Leaders took actions to improve cooperation to combat transnational terrorist networks by agreeing to take measurable steps toward the ratification and implementation of all basic United Nations counterterrorism conventions, including actions to cut off terrorist financing. Additionally, Australia and Japan joined the United States in contributing to the Asian Development Bank's (ADB) Regional Trade and Financial Security Initiative, which builds ADB member-countries' ability to prevent money laundering, combat the financing of terrorism, modernize customs systems, and improve supply chain and port security. The United States also announced support for an APEC regional bio-preparedness study, and two cargo logistics and security studies.

Promoting Regional Health Security: In order to promote regional health security, the United States and Singapore have established a Regional Emerging Disease Intervention (REDI) Center. The REDI Center is dedicated to providing training and research to build regional capacity to prevent and respond to disease outbreaks and bioterror attacks. Through its programs, the REDI Center will extend the perimeter of defense for emerging infectious diseases and other health security threats such as bioterror, widen the international network for research, and translate these findings into improved public health.

Background—APEC's Bangkok Commitments on Security: Last year President Bush led APEC Leaders in agreeing to the Bangkok Commitments on Security. APEC Leaders agreed to "dedicate APEC" not only to promoting prosperity, but also to the "complementary mission of ensuring the security of our people." Recognizing that terrorism and the proliferation of weapons of mass destruction are direct and profound challenges to APEC's vision of free, open and prosperous economies, Leaders pledged to take "all essential actions" to:

• Dismantle, fully and without delay, transnational terrorist groups that threaten the APEC economies
• Eliminate the severe and growing danger posed by the proliferation of weapons of mass destruction and their means of delivery by strengthening international nonproliferation regimes, adopting and enforcing effective export controls, and taking other legitimate and appropriate measures against proliferation
• Confront other direct threats to the security of the APEC region Leaders pledged to discuss at each Leaders' Meeting their progress toward these security commitments, and to take specific actions in pursuit of them.