Background of Asia-Pacific Economic Cooperation (APEC)

APEC - Advancing Free Trade for Asia-Pacific Prosperity

What is APEC?

APEC is an informal forum set up in 1989 for high level government-to-government dialogue on trade and economic issues. APEC aims to build a dynamic and harmonious Asia-Pacific community by championing free and open trade and investment, promoting and accelerating regional economic integration, encouraging economic and technical cooperation, enhancing human security, and facilitating a favourable and sustainable business environment.

APEC operates on the basis of non-binding commitments, open dialogue and equal respect for the views of all participants. Unlike the World Trade Organization or other multilateral trade bodies, APEC has no treaty obligations required of its participants. Decisions made within APEC are reached by consensus and commitments are undertaken on a voluntary basis.

The annual highlight of APEC is the Economic Leaders' Meeting at which Economic Leaders meet informally to exchange views and to give political attention and support at the highest level to the APEC process. An APEC Ministerial Meeting is also held each year right before the Economic Leaders' Meeting to take stock of APEC's work in the past year and decide on the future work programme.

The Nineteenth APEC Economic Leaders' Meeting (AELM) was held in Honolulu, the United States on 12-13 November 2011. Following the meeting, Leaders issued a declaration with the theme "Toward a Seamless Regional Economy".

APEC's Membership

APEC comprises 21 member economies, namely, Australia; Brunei Darussalam; Canada; Chile; China; Hong Kong, China (HKC); Indonesia; Japan; Korea; Malaysia; Mexico; New Zealand; Papua New Guinea; Peru; the Philippines; Russia; Singapore; Chinese Taipei; Thailand; the United States and Viet Nam. APEC also has three observers, namely the ASEAN Secretariat, Pacific Islands Forum and Pacific Economic Cooperation Council.

APEC Chairmanship

The APEC Chairmanship each year is decided by APEC member economies by consensus. The Economic Leaders', Ministerial and Senior Officials' Meetings in the year are hosted by the Chair. APEC 2012 is chaired by Russia and Indonesia will chair APEC in 2013.

APEC's Agenda

Strengthening Regional Economic Integration and Expanding Trade

Bogor Goals

As agreed in the 1994 Economic Leaders' Meeting held in Bogor, Indonesia, APEC's goal is to achieve free and open trade and investment in the Asia-Pacific region by 2010 and 2020 for industrialised and developing economies respectively. This is known as the Bogor Goals.

All APEC member economies implement Individual Action Plans (IAP) to guide them in their efforts to achieve APEC's Bogor Goals. The IAP review process provides each member economy with the opportunity to have their progress towards APEC's goals assessed by Independent Experts.

2010 was the target year for industrialised economies in APEC to achieve the Bogor Goals. While we do not regard ourselves as an industrialised economy in APEC, HKC has committed to achieving the Bogor Goals by 2010. As such, we voluntarily joined the relevant assessment conducted in 2010. The assessment report gave due recognition to HKC's tariff-free treatment for all imports, open services market, and liberal investment regime. APEC endorsed the Bogor Goals Progress Report Guidelines to give direction to the process of reviewing APEC economies’ progress towards achievement of the Bogor Goals by 2020.

Next Generation Trade and Investment Issues

APEC is discussing practical, concrete, and meaningful actions that can take towards the achievement of the Free Trade Area of the Asia-Pacific (FTAAP). As an incubator of an FTAAP, APEC will address "next generation trade and investment issues" that an FTAAP should contain. Specifically, a set of policies to promote effective, non-discriminatory, and market-driven innovation policy will be advanced and areas of co-operation that could be included in the trade agreements to enhance small and medium-sized enterprises participation in global production chains have been decided.

Trade Facilitation

APEC recognises that business is the driver of economic growth in the region. Removing obstacles that hinder trade to create an environment in which business can flourish has therefore been a top priority.

The APEC Principles on Trade Facilitation, developed by a taskforce led by HKC in 2001, are a useful reference for policy makers and executors in the formulation and implementation of trade-related policies and measures in creating a pro-business environment. The Trade Facilitation Action Plan (TFAP I) introduced in 2002 set the goal of reducing trade transaction costs across the region by five percent between 2002 and 2006. The goal was achieved, thanks to improvements in the movement of goods, standards alignment, business mobility and e-commerce. The Second Trade Facilitation Action Plan (TFAP II) endorsed in 2007 with the aim of reducing business transaction costs by a further five percent between 2007 and 2010 has also been achieved.

Improving Supply Chain Performance

APEC is also bolstering efforts to improve the efficiency and security of supply chains in the region under the Supply-Chain Connectivity Framework Action Plan. Activities in enhancing supply chains include identifying ways to simplify customs procedures and to reduce costs for importers and exporters; increasing the efficiency of the customs clearance and release process; completing the APEC Authorised Economic Operator Best Practices Guidelines Document; enhancing the capacity of local and regional logistics sub-providers in the region; and developing practical guidelines that assist customs authorities in APEC economies in combating infringement of intellectual property rights.

Addressing Barriers to SMEs Trading in the Region

APEC will undertake specific actions in 2012 to address the top barriers that SMEs face in trading in the region to boost the capacity of these companies to contribute to economic growth and job creation in APEC economies.

Facilitating Investment

Given the importance of foreign direct investment to the regional economy, APEC is also implementing an Investment Facilitation Action Plan (IFAP) aimed at improving the investment environment. Current priority themes for IFAP are: e-transparency, reducing investor risk and simplifying business regulations. Specific plans to establish a long-term framework for advancing work under APEC's IFAP and to credibly demonstrate progress achieved in IFAP implementation will also be carried out.

APEC New Strategy for Structural Reform

APEC has been implementing activities to facilitate structural reform. In 2011, member economies identified specific reform priorities through 2015 under the APEC New Strategy for Structural Reform.

Facilitating Regional Travel

APEC will also launch the APEC Travel Facilitation Initiative to work over the long-term towards expediting the flow of growing numbers of travelers in the Asia-Pacific region, and facilitating departures and arrivals for international passengers, while ensuring the security of the overall travel system.

Ease of Doing Business

APEC has set an APEC-wide aspirational target to make it 25 percent cheaper, faster and easier to do business within APEC economies by 2015 in five priority areas, determined with reference to the World Bank's Ease of Doing Business indicators. The five areas are: Starting a Business, Getting Credit, Enforcing Contracts, Trading Across Borders, and Dealing with Permits.

Promoting Green Growth

APEC member economies are committed to advancing their shared green growth objectives. APEC will address both the region's economic and environmental challenges by speeding the transition toward a global low-carbon economy in a way that enhances energy security and creates new sources of economic growth and employment. Efforts will be made to promote liberalisation of trade and investment in environmental goods and services, streamline import procedures for energy-efficient demonstration vehicles, and facilitate trade in remanufactured products.

Rationalising and Phasing-Out Fossil Fuel Subsidies

APEC will rationalise and phase out inefficient fossil-fuel subsidies that encourage wasteful consumption, while recognising the importance of providing those in need with essential energy services, and set up a voluntary reporting mechanism on progress, which would be reviewed annually.

Reducing Energy Intensity

APEC member economies aspired to meet a new APEC-wide regional goal of reducing energy intensity of economies by at least 45 percent by 2035, using 2005 as a base year. APEC will further promote energy efficiency by taking specific steps related to transport, buildings, power grids, jobs, knowledge sharing, and education in support of energy-smart low-carbon communities.

Developing Low-Emissions Strategies

APEC member economies will incorporate low-emissions development strategies into its economic growth plans and leverage APEC to push forward this agenda, including through the Low-Carbon Model Town and other projects.

Combating Illegal Logging

An experts group has been established to promote trade in legally-harvested forest products, combat illegal logging and associated trade, and build capacity as well as to identify measures to address the problem of illegal logging.

Advancing Regulatory Convergence and Cooperation

As addressing non-tariff barriers to trade and improving the business environment in the Asia-Pacific becomes an increasing focus of APEC's work, it is critical that APEC takes action to improve the quality of regulatory procedures and systems in the region. Open and transparent regulatory systems prevent the emergence of unnecessary technical barriers to trade by allowing stakeholders to engage appropriately in the process of policy making, and by enabling governments to produce high-quality regulations. APEC is focusing on steps that both individual economies and APEC as an organisation can take to further these goals.

Strengthening Implementation of Good Regulatory Practices

Good regulatory practices improve both the effectiveness and the efficiency of regulations in achieving their objectives, facilitate trade, and improve the investment environment. APEC member economies will take specific actions to develop, use, and strengthen implementation of Good Regulatory Practices, including by ensuring internal coordination of rule-making, assessing the impact of regulations, and conducting public consultations, as a critical contribution to advancing regulatory coherence and cooperation in the region.

Establishing an APEC Regulatory Cooperation Action Plan

APEC has also mapped out the APEC Regulatory Cooperation Plan to ensure that APEC's regulatory cooperation efforts support and advance the multilateral trading system; focus on tangible and practical outcomes; encourage implementation of the APEC-OECD Integrated Checklist on Regulatory Reform; promote better alignment to international standards and conformance systems, where appropriate; and engage key stakeholders. The Plan will serve as guidance for APEC committees and fora in formulating their work plans.

More information on APEC's work and achievements can be found in the APEC website at www.apec.org.

Private/Business Sector Participation in APEC

The APEC Business Advisory Council (ABAC) was established by the Economic Leaders in November 1995 to provide advice to APEC on business sector priorities, and to respond to requests from various APEC fora for information about business perspective on specific areas. ABAC presents annual reports to APEC Economic Leaders. They contain specific recommendations for improving business conditions and expanding trade and investment facilitation and liberalisation in the region.

ABAC comprises up to three members of the private sector from each APEC economy, to be appointed by their respective Economic Leaders.

The ABAC Chair rotates annually in consonance with the APEC Chair. The host economy for the year is to designate one of its ABAC Members to serve as ABAC Chair. There are two ABAC Co-Chairs, one from the immediate past ABAC Chair, and another from the immediate future ABAC Chair.