Economic integration in Asia-Pacific
Three years after the financial crisis, the global economy remains weak, and fears of another recession persist. The euro zone debt crisis, a slowdown in the United States economy and volatile food and energy prices threaten to send shockwaves around the world. Institutions such as the International Monetary Fund have cut growth forecasts, including for economies in Asia-Pacific.
In the current context, work by Asia-Pacific Economic Cooperation (APEC) economies to strengthen economic integration in the Asia-Pacific region has never been more vital to aiding in building a sustainable recovery. Regional integration clears away barriers to trade in goods and services and allows capital, people and even knowledge to flow across borders, promising enormous benefits to all. Free trade and investment can drive economic growth by allowing businesses to make inroads into new markets, creating jobs and lifting people out of poverty. It also means cheaper goods and services for consumers. And liberalization and reform of trade-related policies can strengthen open and competitive markets in the region, making economies more resilient to future global shocks.
Since it was founded in 1989, APEC has made achieving prosperity through free trade and investment its primary goal. APEC has grown to comprise 21 diverse economies from both sides of the Pacific, and now accounts for 44% of global trade and 55% of global GDP. It has a 22-year history of achieving results in the region through open dialogue and cooperation on multiple levels (from leaders to ministers, senior officials and working groups) and through partnerships with the private sector. APEC’s efforts have contributed to a reduction in members’ average tariffs from 17% in 1989 to 6.2% in 2009. Substantial progress has also been made to reduce non-tariff barriers.
On the ground, it has a strong record of building the capacity of its members, particularly developing economies, through economic and technical cooperation, with projects around the region. These projects – on everything from standards and conformance issues to micro-finance and customs procedures – transfer skills, knowledge and best practices between officials, encouraging reform and turning APEC strategies into concrete action.
With the United States chairing APEC this year, the organization is building on the vision that leaders set out in Yokohama at the end of 2010 to promote stronger and deeper integration by advancing shared trade and investment interests. Specifically in 2011, APEC has focused on defining, shaping and addressing next-generation trade and investment issues that have emerged as a result of changes in the global trading environment. The APEC Trade Ministers meeting in May identified three issues for immediate action: reducing the time, cost and uncertainty of moving goods through regional supply chains; encouraging small- and medium-sized enterprises to conduct more international trade; and promoting market-based innovation.
These are among the issues likely to be included in high-standard trade agreements negotiated in the region in the future – and may provide the foundation for a Free Trade Area of the Asia-Pacific (FTAAP). Although creating an FTAAP has been an aspirational goal for APEC since 2006, APEC leaders have agreed that now is the time to translate this into a more concrete vision. They have said an FTAAP should be pursued as a comprehensive, high-quality free trade agreement by developing and building on regional structures such as the ASEAN+3, ASEAN+6 and the Trans-Pacific Partnership. APEC has therefore been tasked with acting as an incubator for FTAAP by providing leadership and intellectual input into its development and by playing a critical role in addressing these next-generation issues.
Promoting green growth is another APEC priority this year, through technical cooperation and reducing barriers to trade in environmental goods and services. The third priority is working together to strengthen the implementation of good regulatory practices to prevent technical barriers to trade, particularly to assist small- and medium-sized businesses and to increase regulatory cooperation and coherence across the region.
Private sector involvement
Engaging the private sector is, and always has been, important for APEC, so that the needs and concerns of businesses trading in the region are taken fully on board. APEC is one of the few organizations that reserves a seat for business at all of its meetings, including at the very top. Every year, business representatives, through the APEC Business Advisory Council, hold talks with APEC leaders at their annual gathering to shape a vision for the future.
The APEC Policy Partnership on Food Security is just one example of APEC’s collaboration with business. Formed in September this year, the public-private partnership aims to strengthen cooperation in the region to address food security policy concerns in the wake of recent spikes in global food prices.
APEC brings together the public and private sectors to address issues to ensure that member economies continue to benefit from an expanding global market. Breaking down barriers to trade and investment and forging stronger connections across the region are key to building sustainable economic growth and prosperity for all.