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Facilitating Trade and Economic Engagement in the Pacific Rim

The Asia–Pacific Economic Cooperation forum works to liberalize trade and to promote economic cooperation among its 21 member economies. As it prepares for its annual Leaders’ Summit in Singapore in November, its efforts are helping members face new economic challenges.

by Brenda J. Fisher

Today, U.S. companies doing business in the Pacific Rim are the beneficiaries of declining average tariffs, reduced business transaction costs, and a strong commitment to international trading norms. Those benefits are in no small part due to the Asia–Pacific Economic Cooperation (APEC) forum.

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Map of APEC member economies.
Current APEC member economies are Australia, Brunei Darussalam, Canada, Chile, 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 Vietnam.


APEC began as an informal group of 12 Asia–Pacific economies that saw the need for increased economic cooperation. It has since grown into a more formalized institution that involves all major economies in the region, with 21 members. APEC is now home to more than 2.7 billion people, and it represents approximately 53 percent of world gross domestic product and 49 percent of world trade.

With the challenges that exporters in the region face today, such as a decline in trade during the past 12 months and the threat of protectionism, U.S. engagement in APEC is more important than ever.

Beginnings in Canberra and Seattle

APEC was founded in 1989 when Australian Prime Minister Bob Hawke invited leaders from 11 Asia–Pacific nations to meet in Canberra. Four years later, the first meeting of the APEC leaders was held in November 1993. President Bill Clinton hosted the representatives from 17 economies on Blake Island, near Seattle, Washington. Since then, APEC leaders have met annually, with the next meeting scheduled for November 14–15, 2009, in Singapore.

APEC is a unique, consensus-driven regional grouping that brings policymakers and the private sector together to openly discuss and voluntarily commit to market-opening actions that will ensure the continuing dynamism of the Asia-Pacific region. Its chairmanship rotates annually among its members. This year, the chair is Singapore, which is also the location of the organization’s executive secretariat.

“Three Pillars” Define Agenda

APEC’s vision is embodied in the Bogor Goals, which were signed by APEC leaders in 1994 when they met in Bogor, Indonesia. The goals commit the signatories to implement free and open trade and investment in the Asia–Pacific region by 2010 for industrialized economies and by 2020 for developing economies.

Since that declaration, APEC has focused on three broad areas, its so-called three pillars: (a) trade and investment liberalization, (b) business facilitation, and (c) economic and technical cooperation. Its 24 committees, working groups, and task forces promote cooperation and capacity building on specific issues, encouraging further regional economic integration.

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The APEC working group on small and medium-sized enterprises, shown here at a seminar on innovation management that was held in Chiclayo, Peru, in August 2008, is one of 24 such APEC groups that are working toward maintaining the economic vitality of the Pacific Rim. (APEC photo)
The APEC working group on small and medium-sized enterprises, shown here at a seminar on innovation management that was held in Chiclayo, Peru, in August 2008, is one of 24 such APEC groups that are working toward maintaining the economic vitality of the Pacific Rim. (APEC photo)


Sector-Specific Initiatives

The Department of Commerce plays an important role in many of APEC’s committees and working groups, including those on automotive issues, food safety, intellectual property rights, data privacy, and small business development.

The Department of Commerce helps develop other APEC efforts, including an environmental goods and services exchange tool, a new product safety initiative for motorcycles, and anticounterfeiting measures for medical products.

For all APEC projects and working groups, input and new ideas from the private sector are not only vital to their success, but also actively sought by the Department of Commerce. (For more information, see sidebar, “The Role of the Private Sector in Developing APEC Policy Initiatives.”)

Benefits to U.S. Exporters

U.S. businesses and consumers directly benefit from APEC in a variety of ways. For example, compliance with different national inspection and testing standards represents a major cost to both businesses and consumers. APEC has worked to align national and international standards, thus allowing the easier flow of products within the region.

APEC has also undertaken efforts to transfer goods, services, and people across borders more efficiently by harmonizing and simplifying customs procedures. That change has encouraged members to establish a paperless trading environment for customs and other cross-border transactions. Use of such modern technology helps to achieve faster, more predictable, and transparent customs clearance and inspection. At the same time, APEC promotes risk management techniques that better target customs enforcement efforts while facilitating the movement of low-risk shipments.

Yet another effort has involved e-commerce. APEC has adopted appropriate legal and policy regimes that make e-commerce a priority. E-commerce will better foster business and consumer trust and confidence because predictability, transparency, consistency, and dispute handling are vital to the protection of data and online transactions.

Achievements and Challenges

The results of those efforts can be seen in several areas. According to APEC, transaction costs were reduced by 5 percent between 2002 and 2006. The average tariff rates of member states declined, from 16.9 percent in 1989 to 5.0 percent in 2007. And 19 members participate in the APEC Business Travel Card initiative, which allows frequent business travelers fast-track entry through special lanes at major international airports.

With a worldwide decline in global trade during the past 12 months, APEC can help overcome the many challenges to international trade in the Asia–Pacific region. Those challenges will be on the agenda when President Barack Obama and the leaders of the other 20 APEC member economies convene this year.

Brenda J. Fisher is the APEC Affairs Coordinator in the Market Access and Compliance unit of the International Trade Administration.

The Role of the Private Sector in Developing APEC Policy Initiatives

The APEC Business Advisory Council (ABAC) consults directly with the private sector to design and implement policy initiatives. The council is composed of up to three senior executives from each APEC economy, who represent small and large enterprises from a diverse range of sectors. ABAC’s members provide recommendations to better facilitate business in the region during its annual meeting with APEC leaders. APEC also engages the business community through industry dialogues for the automotive, chemical, and life sciences sectors. The dialogues improve mutual understanding of future policy imperatives and enhance the competitiveness of the sectors. For more information, contact the Department of Commerce’s APEC Affairs Coordinator, Brenda J. Fisher, at tel. (202) 482-5334; e-mail: