APEC
October 2002

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
APEC GROUPS
U.S.-APEC RELATIONS
UPDATE

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 Summit: Day One
October 20, 2003

Presidential Action

President Bush came to the APEC Leaders Meeting to encourage increased efforts to combat security threats and promote economic growth.

In a significant development today, the 21 APEC Leaders agreed to reenergize the Doha negotiations by working off the text developed at Cancun. President Bush also welcomed Leaders' commitment to fight corruption and promote transparency.

WTO and Free Trade

APEC Leaders agreed with President Bush that the Cancun World Trade Organization (WTO) talks were a missed opportunity for all to advance the Doha Development Agenda. The United States went to Cancun prepared to address difficult issues, and has tabled ambitious market access proposals in the three main areas of the Doha talks -- agriculture, goods, and services. Useful work was done in Cancun in developing a Chairman's negotiating text, but the meeting broke down without members endorsing the text. In a significant development today, the 21 APEC Leaders, with U.S. encouragement, agreed to work off of Chairman Derbez' text of September 13, 2003, as a basis for moving the global trade talks forward, recognizing that flexibility and political will from all will be needed.

The United States is prepared to move forward with the Doha negotiations, if all parties are ready to negotiate seriously on substance. At the same time, the United States will proceed with regional and bilateral free trade agreements. Yesterday, President Bush and Prime Minister Thaksin announced their intent to launch negotiations on a U.S.-Thailand Free Trade Agreement. This is the latest in a series of U.S. market opening initiatives in the Asia-Pacific region, including:

• Free trade with Canada and Mexico;
• Recently signed free trade agreements with Chile and Singapore;
• Ongoing free trade agreement negotiations with Australia;
• The Enterprise for ASEAN Initiative to encourage free flow of commerce and investment; and
• Trade and Investment Framework Agreements with Australia, Brunei, Indonesia, New Zealand, the Philippines, and Thailand.

Promoting Transparency and Fighting Corruption

• President Bush believes the Asia-Pacific region should be a leader in global efforts to combat corruption, which the World Bank has identified as the single greatest obstacle to economic and social development, cutting growth rates by 0.5 to 1 percent. He endorsed Leaders' agreement to implement by 2005 transparency standards in investment, intellectual property rights, and customs procedures, and to take action on trade facilitation. At U.S. urging, APEC Leaders also agreed to develop specific actions to combat corruption.

U.S. Accomplishments at the APEC Summit: Day Two
October 21, 2003

Presidential Action

President Bush came to the APEC Leaders meeting to urge decisive action to ensure both prosperity and security. He welcomed Leaders agreement to seek an ambitious outcome in the Doha global trade negotiations, and to accelerate economic reforms to spur growth. Leaders also endorsed a U.S.-driven energy security initiative. They urged action to bridge the digital divide, and the United States announced Indonesia and Peru as new partners in the Digital Freedom Initiative.

Recognizing that terrorism and proliferation of weapons of mass destruction are "direct and profound challenges to APEC's vision of free, open and prosperous economies," Leaders agreed on new security commitments. They pledged to dismantle transnational terrorist groups, eliminate the threat posed by the proliferation of weapons of mass destruction, and confront other direct threats to the region. These security commitments will complement APEC's economic goals. Leaders also endorsed action to protect civil aviation, build counterterrorism capacity, and enhance health security.

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 "prosperthy neighbor." The United States is committed to ensuring APEC plays that constructive role.

Economic Growth: Structural Reform

President Bush has taken decisive action with his Jobs and Growth Plan to spur economic growth at home. Today, APEC Leaders agreed on the need to accelerate economic reforms to ensure sustained growth and development in the Asia-Pacific region.

Energy

APEC Leaders endorsed an action plan on energy to help ensure the long-term growth of regional economies. They agreed specifically to:

• Facilitate natural gas trade and promote private sector investment;
• Enhance emergency response mechanisms, including strategic oil stocks; and
• Promote investment in clean energy technologies and sources, such as hydrogen and methane hydrates.

Digital Freedom Initiative

• The United States announced the expansion of the Digital Freedom Initiative (DFI) to two APEC countries, Peru and Indonesia. DFI promotes transfer of information and communications technology to benefit entrepreneurs and small businesses in developing countries. With this expansion of DFI, the United States will advance APEC's goal of bridging the digital divide and generating growth and opportunity.

Security

Recognizing that prosperity and security are inseparable, APEC Leaders agreed to "dedicate APEC not only to advancing the prosperity of our economies, but also to the complementary mission of ensuring the security of our people." Specifically, the 21 Leaders committed 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 our region."

These commitments on security will complement APEC's 1994 Bogor Goals on free trade and investment. Leaders pledged to discuss progress toward these commitments and take specific actions in pursuit of them at their annual meetings. To that end, Leaders this year endorsed initiatives on civil aviation, counterterrorism, and health security.

Protecting Civil Aviation

APEC Leaders took steps to protect international aviation by committing to combat the proliferation of shoulder-launched missiles (or man-portable air defense systems, MANPADS). Leaders agreed to adopt strict domestic export controls on MANPADS; secure stockpiles; regulate MANPADS production, transfer, and brokering; ban transfers to non-state end-users; and exchange information in support of these efforts. Leaders will continue efforts to strengthen controls and review progress at next year's Leaders meeting in Chile.

Counterterrorism (CT) Capacity-Building

APEC Leaders agreed to coordinate counterterrorism capacity-building activity in the Asia-Pacific region with the Counter Terrorism Action Group (CTAG), launched by the G-8 in June 2003. CTAG will initially focus its efforts on Southeast Asia.

New Asian Development Bank CT Facility

With U.S. leadership, APEC also agreed to establish a regional trade and financial security initiative within the Asian Development Bank -- the first of its kind to be housed at a multilateral development bank. The initiative will support projects to enhance port security, combat terrorist finance, and achieve other counterterrorism objectives. The United States agreed to help launch this facility by contributing funds and in-kind support totaling $5.4 million. Japan and Australia have also pledged to contribute to this initiative.

Promoting Health Security

The APEC Leaders adopted a Health Security Initiative to enhance APEC members' ability to prevent and respond to the outbreak of disease and the threat of bioterrorism. Specifically, they agreed to:

• Pursue focused efforts to monitor disease, contain outbreaks and coordinate responses;
• Increase pathogen security;
• Establish a strict code of ethical and operational conduct for bio-scientists; and
• Strengthen export controls and criminal laws against offensive biological weapons.

APEC Leaders welcomed the establishment of the Joint U.S.-Singapore Regional Emerging Disease Intervention (REDI) Center to enhance regional efforts to prevent and respond to disease.