APEC’s Approach to Trade Liberalization
APEC began in 1989 as an Australian initiative—backed by Japan and New Zealand—in
recognition of the growing interdependence among Asia-Pacific economies and in response to the
free-trade areas that had developed in Europe and North America. From that initiative, APEC has
grown into an association of 21 “member economies” bordering the Pacific Ocean that are
working cooperatively to promote economic growth and prosperity in the Asia-Pacific region.9 It
is the only international trade organization, besides the World Trade Organization, in which
China, Hong Kong, and Taiwan are members.
During the 1994 meetings in Bogor, Indonesia, APEC established the “Bogor Goals” of “free and
open trade and investment in the Asia-Pacific by 2010 for industrialized economies and 2020 for
developing economies.”10 These goals have been reaffirmed at the Leaders’ Meeting each
subsequent year.
In contrast to most other multilateral organizations, APEC is a cooperative forum in which
members arrive at decisions via consensus. All commitments made by members are voluntary;
APEC has no formal enforcement mechanisms to compel members to comply with any trade
liberalization policies previously declared at APEC meetings—an approach often referred to as
“open regionalism.”11 Point 9 of the 1994 “APEC Economic Leaders’ Declaration of Common
Resolve” states, “APEC economies that are ready to initiate and implement a cooperative
arrangement may proceed to do so while those that are not yet ready to participate may join at a
later date.”12
The underlying notion of the APEC approach to trade liberalization is that voluntary
commitments are easier to achieve and more likely to be implemented than obligatory
commitments derived from agreements negotiated by more traditional—and potentially,
confrontational—methods. By establishing a common vision or goal for the organization, the
belief is that future APEC discussions can make more rapid progress towards the organization’s
goals by seeking consensus views with which members are willing to comply.
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By contrast, trade agreements negotiated according to more traditional approaches tend to foster
confrontation and expectations of reciprocal concessions. Lacking a shared goal or objectives, it
may be difficult to resolve differences among the parties and complete a trade agreement. Later
on, if any party to the agreement feels that it was inequitable, they may fail to comply with the
terms of the agreement, or withdraw from the agreement in its entirety, even if there are formal
sanction or grievance provisions within the agreement.
Critics of the APEC approach warn that its voluntary nature can lead to inaction, with slow and
marginal movement to the achievement of the Bogor Goals. In addition, because APEC lacks
compliance requirements, members could reverse trade and investment liberalization
commitments during economic downturns.
APEC strives to meet the Bogor Goals in three “broad areas” of cooperation. First, members
consult with each other to formulate individual and collective actions to liberalize merchandise
and service trade, as well as international investment. Second, members discuss their domestic
regulations and procedures to find ways of facilitating international business. Third, the members
engage in “Economic and Technical Cooperation,” or ECOTECH, to provide training and foster
greater cooperation among APEC members.
In 1995, APEC created a template to achieve the Bogor Goals in its “Osaka Action Agenda.”13
The Osaka Action Agenda emphasizes APEC’s “resolute opposition to an inward-looking trading
bloc that would divert from the pursuit of global free trade” by accepting a set of fundamental
principles for APEC’s trade and investment liberalization and facilitation. These principles
include comprehensiveness; WTO consistency; comparability; non-discrimination; transparency;
flexibility; and cooperation.
Results of the 2009 Meetings in Singapore
The November 2009 APEC meetings in Singapore were the first for President Obama, and came
in the midst of an extended trip to Asia that included stops in China, Japan, and South Korea. The
trip provided President Obama with an opportunity to present his vision for U.S. policy towards
Asia in general and APEC in particular, as well as to announce his decision to enter into
negotiations with the members of the TPP.
Besides President Obama, the 2009 delegation included Secretary of State Hillary Clinton,
Treasury Secretary Tim Geithner, and USTR Ron Kirk. Over the last few years, some APEC
members had been critical of the Bush Administration’s seeming disregard for the trade
organization, and the lack of high-level representatives in the U.S. delegation.14 The strength of
the U.S. delegation in 2009 was a symbolic act that was generally well received by other APEC
members.
The Meetings
As in previous years, the main focus of attention was on the Leaders’ Meeting, which was held on
November 14-15, 2009, and its associated statements. However, the event’s more substantive
outcomes came from the Ministerial Meeting, held on November 11-12, 2009. President Obama
also held three bilateral meetings with leaders from other APEC members.
Both the Leaders’ Meeting and the Ministerial Meeting focused on the same themes—supporting
balanced growth, resisting protectionism, fostering trade and investment liberalization,
accelerating regional economic integration, and enhancing human security. The meetings were
principally concerned about economic and trade issues, but there was limited discussion of nontrade
issues, such as countering terrorism, preparing for natural disasters, and ensuring that people
have sufficient access to safe food.
In their post-meeting declaration, the APEC leaders endorsed the G-20 goals of strong,
sustainable, and balanced growth.15 However, the APEC leaders added an additional criteria—
economic growth must also be inclusive. In their efforts to achieve these goals, the leaders agreed
to: “gradually unwind global imbalances;” adopt fiscal, monetary, trade, and structural policies
consistent with the new growth paradigm; broaden access to economic opportunities; and “protect
the environment and mitigate climate change.” The leaders also agreed to resist protectionism,
support the conclusion of the Doha Development Agenda (DDA) in 2010, continue to explore
ways forward with a possible Free Trade Area of the Asia Pacific (FTAAP), strengthen economic
and technical cooperation, enhance human security, combat corruption, and improve governance
and transparency. In their joint declaration, the leaders mentioned the 2007 APEC Declaration on
Climate Change, Energy Security, and Clean Development, that set out a APEC-wide target of
reducing energy intensity by at least 25% by 2030.16
The joint statement issued following the Ministerial Meeting provided more detail to the general
principles contained in the Leaders’ Declaration. For example, in APEC’s efforts to foster more
inclusive growth, each member pledged to focus more resources on education, worker retraining,
and greater assistance to small and medium sized enterprises (SMEs). In addition, APEC
members said they would strengthen their social safety nets to enhance economic security.
Similarly, to promote sustainable growth, APEC members pledged to reduce barriers to trade and
investment for environmental goods and services (EGS), as well as to facilitate the diffusion of
climate-friendly and other EGS technologies.
As evidence of APEC’s efforts to promote greater regional economic integration, the ministers
cited various existing and new initiatives. As part of APEC’s “At the Border” integration
program, the members were developing more “business-friendly” rules of origin and adopting
more consistent policies towards the trade in services. On the subject of “Behind the Border”
integration, the ministers pointed to programs designed to lower the cost of starting a business,
facilitating investment, strengthening intellectual property rights protection, and aligning national
standards with international-recognized specifications. “Across the Border” connectivity was to
involve increasing interconnectivity of transport, logistical, and digital systems; enhancing trade
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facilitation programs to reduce transaction costs; and improving the security of trade routes and
the exchange of trade data.
Much of the ministers’ concerns about human security centered on food security and safety.
During the last few years, there were periodic reports of food shortages in Asia that contributed to
some nations prohibiting the export of staple grains (such as rice). While the food shortage
reports were generally false, APEC members are concerned about the retreat from trade
liberalization that occurred during this period. In addition, there have been repeated incidents of
unsafe food products exported by APEC members. In their joint declaration, the APEC ministers
agreed to enhance efforts to avoid unwarranted restrictions of food exports, while at the same
time taking steps to ensure that food exports were safe.
Other topics addressed in the ministers’ joint statement included: continued regional cooperation
to combat the H1N1 virus; improving governance; promoting gender equality and maximizing
economic opportunities for women; greater development for the region’s tourism industry; and
strengthening the APEC Secretariat.
A separate and concurrent finance ministers’ meeting also issued a joint statement detailing the
efforts APEC members would take to “support strong, sustainable, and balanced growth.”17 There
was consensus that the pace of implementing “exit strategies” should consider the pace of
recovery in the different APEC eco