Not a few have made the observation that the Asia-Pacific Economic Cooperation, which began well over three decades ago as an idea broached by former Australian Prime Minister Bob Hawke in a speech he made while on a visit to Seoul, Korea on 31 January 1989, is just a “social club” comprised of certain specific nations that meet each year to talk about a wide range of topics that haven’t progressed to any genuine substantial impact on the region.
“Not so,” stressed Guillermo M. Luz, who has been a member of the APEC Business Advisory Council or ABAC since 2018. “Much has developed since the APEC economic ministers’ meeting in Bogor, Indonesia when they all first made a commitment to realize an APEC free trade area.”
ABAC, where Luz belongs, is comprised of private sector representatives from each of APEC’s 21 member economies (including seven of 10 members in the ASEAN – Vietnam, Malaysia, Singapore, Indonesia, Thailand, Brunei, and the Philippines), advising APEC heads of state and minsters on issues and matters pertaining to sustainability; inclusive growth, micro, small, and medium enterprises; economic integration; finance; and other pertinent matters of relevance to the region.
Ten months after then Prime Minister Hawke made mention of his vision in Seoul of an inter-governmental regional economic institution that would promote security, stability, and prosperity in the Asian Pacific region, state officials from a dozen countries – Australia, Brunei, Canada, Indonesia, Japan, Korea, Malaysia, New Zealand, and the Philippines — met in Canberra for an informal ministerial-level dialogue.
That initial meeting was followed by another in Seoul in 1991 with Hong Kong and both the People’s Republic of China and Chinese Taipei joining the original APEC founding members.
APEC’s vision
A subsequent meeting in Blake Island, US in 1993 saw the APEC economic ministers outline APEC’s vision of stability, security and prosperity for the region, and in a meeting that followed in Bogor, Indonesia in November 1994, the so-called Bogor Goals were drafted in a commitment to form an APEC “free and open trade and investment” area.
Over the years, APEC has grown to become an engine of economic growth as well as a principal regional forum in Asia Pacific. Currently, the 21 member, economies mainly located in Southeast Asia and East Asia comprising APEC are home to nearly 3 billion people or about 38 percent of the world population. The region’s economic output is about $58.49 trillion annually, representing 61 percent of the global economy. As of last count, the value of total exports for all of APEC’s 21 member economies was some $13 trillion.
Moreover, Luz says APEC member economies (the word “economies” is used to describe APEC members because APEC is mainly concerned with trade and economic issues) account for “64 percent of foreign direct investments, 84 percent of exports, and 63 percent of our overseas Filipino workers” in 2018 when the first meeting of ABAC was convened in New Zealand.
For Luz, the annual meetings of APEC’s member economies discussing and resolving issues to advance regional cooperation have not at all been in vain, and have, in fact, over time, resulted to real growth in the Asia Pacific region.
He showed data which indicated that nearly three decades since it was launched in 1989, APEC’s work brought about substantial growth, with real GDP in the region increasing from $19 trillion to $46.7 trillion overall in 2018. People in Asia Pacific saw their per capita income rise by 74 percent.
Average tariffs fell from 17 percent in 1989 to 5.3 percent in 2018. That same period saw overall trade in the APEC region grow seven times, outpacing the rest of the world with two-thirds of such trade taking place between member economies.
Bogor goals
Since APEC’s pledge to realize the Bogor Goals of free and open trade by investment through a reduction of trade barriers in the region and promoting the free flow of goods, services, and capital among APEC economies, members have established measurable progress in achieving these goals.
For instance, APEC’s Trade Facilitation Action Plan, which includes streamlining customs procedures, attained its target of region-wide reduction in costs at the border by five percent between 2004 and 2006.
A further five percent decrease was achieved between 2007 and 2010, saving businesses in the Asia Pacific region a total of $58.7 billion. In 2009, APEC launched its Ease of Doing Business Action Plan, with the goal of making it cheaper, easier, and faster to do business in the region. Between 2009 and 2013, member economies improved ease of doing business in the Asia Pacifc by 11. 3 percent across all areas, including starting a business, getting credit, or applying for permits. Opening a company in the Asia Pacific region is also simpler with the number of procedures dropping by 20.2 percent since 2009.
At the border, APEC economies have centralized export-import processes online, accelerating the time it takes for goods to travel across borders. Known widely as Single Window, this virtual system links all government agencies involved in the export-import process, allowing business firms to submit documents electronically one time, from anywhere. Gone are the many forms, long queues, and going from one agency to another, while goods spoil in warehouses.
Since the APEC Sub-Committee on Customs and Procedures launched the Single Window initiative in 2007, APEC capacity building workshops have provided training on software coding or legal issues to help APEC members implement their own Single Window systems. By 2013, 14 APEC economies have adopted various stages of the Single Window system.
APEC is working to connect the region through the improvement of physical infrastructure linkages, mobility, and institutional ties across Asia Pacific. APEC’s Connectivity Blueprint maps out initiatives from improving information technology and transportation infrastructure to making it easier for students, businessmen, and tourists to travel around the region.
Business travel card
Simplification of travel requirements is APEC’s aim in enabling people to conduct business, trade, and investment more easily through the APEC Business Travel Card, which provides pre-approved frequent business travelers with visa clearance and fast-track entry through special APEC lanes at major international airports in the region. So far, over 340,000 travelers use the card, with 19 (of 21) member economies fully participating in the scheme, with the U.S. and Canada as transitional members.
Currently, APEC is also improving logistics and transport networks to enable component parts and final goods to travel across multiple borders, contributing to a more efficient regional supply chain.
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APEC has addressed chokepoints on trade.[/caption]
To improve efficiency, APEC is addressing eight chokepoints, from regulatory impediments to customs procedures and infrastructure bottlenecks with the goal of an APEC-wide 10 percent improvement in supply chain performance in terms of time, cost, and uncertainty.
Progress has been made towards achieving this goal. For example, between 2009 and 2013, the lead time to import goods dropped by an average 25 percent while lead time to export fell by 21 percent in Asia and Pacific, per an APEC Policy Support Unit assessment.
In a landmark accord, APEC is urging the development of clean technologies and greener growth across the region by lower tariffs on environmental goods. In 2012, in Vladivostok, Russia, APEC leaders agreed to lower applied tariffs on 54 environmental goods to five percent or less. The APEC list of 54 products – from solar panels to wind turbines – accounts for some $600 billion in world trade.
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PRESIDENT Ferdinand Marcos (left) and French President Emmanue Macron work on agriculture, energy and defense cooperation.[/caption]
Less energy intensity
In 2011, APEC member economies committed to lessen energy intensity in the region by 45 percent by 2030. In 2014, APEC members agreed to work toward doubling the share of renewables by 2030 in APEC’s energy mix, including power generation.
Member economies have also pledged to rationalize and phase out inefficient fossil fuel subsidies that encourage wasteful consumption.
Funded through a multi-year project under the APEC Energy Working Group, APEC has helped urban planners develop low-carbon model town plans for a series of cities all over the Asia Pacific. These cities are decreasing their carbon footprints by adopting a set of carbon emissions reduction targets and energy efficient initiatives from solar panels to electric vehicles.
APEC projects also support the development of smart electricity grids that enable sources of clean power to be seamlessly connected to existing structures and distributed to rural communities.
Through the years, APEC, since its inception, has launched a wide variety of initiatives that have helped stimulate small and medium enterprises (SMEs, with over 30 employees, but not more than 250 employees). SMEs and their ability to participate in global supply chains are material elements in APEC’s agenda.
In 2005, the APEC SME Innovation Center was established in South Korea to help improve the competitiveness of SMEs in the region through hands-on business consultation. In 2013, the APEC Start-up Accelerator Network was launched to promote entrepreneurship and innovation by connecting technology start-ups with mentors and funding. In 2014, six Asia Pacific start-ups sponsored by the Start-up Accelerator competed in the Intel Global Challenge and Siemens New Venture Forum in Silicon Valley, USA, clinching both awards and venture capital interest.
Since 2011, APEC has worked to enhance SME business ethics, particularly in the healthcare sector. Three years later, APEC’s initiatives in this area of concern has resulted in codes of ethics adopted and implemented by some 60 biopharmaceutical and medical device industry associations and their member companies from 19 economies, representing over 14,000 firms across Asia Pacific.
SMEs are vulnerable to disasters, with many firms going broke in the aftermath of a disaster which wreak havoc on global supply chains. To improve SME disaster resilience, APEC has trained more than 250 regional experts across the region to assist SMEs with business continuity planning to minimize disaster-caused disruptions.
Digital Opportunity
One important goal of APEC is making sure that all its members can fully participate productively in the region’s growing economy. Toward this end, the APEC Digital Opportunity Center was established in 2004 to provide computer skills training to vulnerable rural and urban communities.
With over a hundred centers in 10 APEC economies offering information technology (IT) training, the ADOC is focused on transforming digital divides into digital opportunities.
Over the years, these Centers have trained over 500,000 people — almost half of them women — throughout the APEC region. Many of those who have received digital training from ADOC have found employment or have started their own businesses, improving livelihoods and income for their families.
Not bad for an organization that’s often mistaken for being just a mere laidback “social club.”
Still, for all that it has accomplished, APEC must continue to strive harder to fully realize its objectives, particularly as it emerges into a world upended by the Covid-19 pandemic. The APEC region is expected to grow moderately by 2.6 percent in 2023, reflecting sharp downgrades in economic growth for all member economies along with the rest of the world.
Reeling from a pandemic marked with virus mutations, the world is also struggling with soaring inflation, a protracted war in Ukraine, and heightened uncertainty. Economic slowdown was already apparent in 2022 when economic and trade activity in APEC grew at a slower pace.
Various difficulties faced by APEC and the world beyond the region emphasizes the importance of preparedness, that is, preparing for the next pandemic or crisis and preparing for a future that is inevitably highly digitized and very much exposed to the negative impacts of climate change.
Taking those into consideration, there is urgent need to work more cohesively toward a sustainability and inclusivity agenda designed to future-proof the member economies in the APEC region.
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