Asia Pacific Economic Cooperation

Publication Date :

15 Jun, 2023

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Table Of Contents

What Is Asia Pacific Economic Cooperation (APEC)?

Asia-Pacific Economic Cooperation (APEC) is an economic community with 21 member nations intending to ensure sustainable economic growth, free trade, and prosperity among these countries. It has proven to bolster trade, regional economic integration, and social equality among the participating economies over the years.

The formation of this regional economic forum can be traced back to 1989 when the 12 Asia-Pacific economies, which include Australia, Japan, Canada, Malaysia, Brunei Darussalam, Indonesia, New Zealand, Thailand, Singapore, Korea, the Phillippines, and the United States, came together in Canberra. APEC strives to form a harmonious and dynamic Asia-Pacific community through the overall development of the participating nations.

What Is Asia Pacific Economic Cooperation (APEC)?

The Asia-Pacific Economic Cooperation is an intergovernmental economic forum founded in 1989 to foster sustainable economic development, prosperity, and free trade among the participating economies.
The member countries include Australia, Brunei Darussalam, Canada, Chile, China, Hong Kong (China), Indonesia, Japan, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, the Philippines, Russia, Singapore, South Korea, Taiwan, Thailand, the United States, and Vietnam.
Its various objectives include trade and investment liberalization, business facilitation, economic and technical cooperation (ECOTECH), sustainable development, human resource development, and information and communication technology.
The APEC headquarters is located in Singapore, and it conducts annual economic leaders' meetings, forms working groups, and takes other initiatives to promote its agenda.

Asia Pacific Economic Cooperation Explained

The Asia-Pacific Economic Cooperation (APEC) is an intergovernmental forum to promote economic cooperation and trade among countries in the Asia-Pacific region. Comprising 21 member economies, including nations from East Asia, Southeast Asia, and the Pacific Rim, APEC aims to create open and prosperous regional economies.

The member economies of APEC include Australia, Brunei Darussalam, Canada, Chile, China, Hong Kong (China), Indonesia, Japan, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, the Philippines, Russia, Singapore, South Korea, Taiwan, Thailand, the United States, and Vietnam. APEC operates based on non-binding commitments and consensus among its members. It serves as a platform for dialogue and cooperation on various trade, investment, economic growth, and regional integration issues.

The forum brings together leaders, ministers, and officials from member economies to discuss economic challenges, coordinate policies, and collaborate on initiatives. APEC's ultimate objective is to achieve the Bogor Goals, a set of ambitious targets for free and open trade and investment in the Asia-Pacific region by 2020 for developed economies and 2025 for developing economies.

APEC holds an annual Economic Leaders' Meeting, where heads of states or governments from member economies assemble to discuss regional economic issues and set the direction for future cooperation. Additionally, ministerial meetings, working groups, and other initiatives occur throughout the year to advance APEC's objectives. The APEC headquarters is located in Singapore.

Objectives

The Asia-Pacific Economic Cooperation has established the following aims for the economic growth and prosperity of the Asia-Pacific region:

Trade and Investment Liberalization: APEC encourages open and unrestricted trade and investment within the Asia-Pacific region. It seeks to minimize trade barriers, such as tariffs, non-tariff barriers, and regulatory restrictions, to facilitate the smooth flow of goods, services, and capital across member economies.
Economic and Technological Cooperation: It promotes collaboration among member economies to share knowledge, best practices, and experiences in various areas. This ensures economic growth, human resource development, innovation, better infrastructure, and digital trade practices and faces global challenges.
Sustainable, Balanced, and Inclusive Economic Growth: Such a forum encourages member economies to implement policies that support environmental sustainability, poverty reduction, gender equality, and social safety.
Regional Economic Integration: APEC facilitates the member economies to explore and pursue initiatives such as free trade agreements (bilateral and regional trade agreements), regional economic frameworks, and connectivity projects to integrate the economies of the Asia-Pacific region further and enhance economic cooperation.
Prosperity: When the participating nations have friendly relations and harmony while heading towards overall sustainable growth, it flares regional prosperity within the Asia-Pacific economies.

Functions

Given below are the key functions that revolve around promoting free trade and economic cooperation among APEC members while fostering sustainable and inclusive growth:

Bring social equality to the Asia-Pacific region
Encourage member economies to adopt renewable energy sources and limit non-renewable energy.
Eliminate the trade barriers like the tariffs on the movement of goods and capital among the participating countries to ease cross-border trade.
Make small and medium enterprises more competitive by exchanging technology, innovation, funds, and ideas.
Develop the APEC privacy framework for deciding the privacy rules and their enforcement while exchanging critical information among the nations.
Build a robust transport and logistics network between the countries to facilitate international travel and a strong supply chain for the flow of goods.
Develop physical infrastructure and linkages in the Asia-Pacific region to promote trade and economic growth.
Streamline business facilitation to reduce costs and time associated with trade transactions, customs procedures, and regulatory compliance.
Encourage policy dialogue and exchange of information on economic and trade-related matters through ministerial meetings, working groups, and forums where policymakers, business leaders, and experts can discuss and share experiences and best practices.
Conduct economic research and analysis to support evidence-based policymaking and deepen understanding of regional economic trends and challenges.
Support and strengthen the multilateral trading system by committing to the World Trade Organization (WTO) principles.

Advantages And Disadvantages

The various pros and cons of the APEC are as follows:

Advantages	Disadvantages
APEC reduces trade barriers such as tariffs and facilitates investment among the member nations for overall economic growth and trade expansion. It helps businesses explore new markets and establish connections with potential partners across the Asia-Pacific region to increase market access and avail cross-border trade opportunities. It targets regional economic integration by developing regional supply chains, enhancing competitiveness, limiting trade barriers, and ensuring cooperation among the participants. APEC actively promotes capacity-building initiatives, sharing of best practices, and technical cooperation among member economies to strengthen institutional frameworks, improve infrastructure, and enhance human capital development. It serves as a platform for member economies to engage in constructive dialogue and coordination of economic policies for addressing common challenges, sharing information, and promoting regional policy coherence. It facilitates the exchange of expertise, knowledge, innovation, and technology; promotes research and development; and supports adopting new technologies for better productivity. APEC strengthens social ties, builds mutual understanding, and encourages idea-sharing among the member economies resulting from cultural exchange, educational cooperation, and travel and tourism. It helps in curtailing poverty across the participating nations.	It focuses only on the economic constraints and overlooks the other significant aspects like human rights, social development, and environmental sustainability. APEC poses economic disparity as it comprises both developed and developing nations leading to uneven distribution of benefits from APEC initiatives, with smaller and less developed economies potentially struggling to keep pace with larger and more advanced economies. The influence of major economies, such as China and the United States, can dominate decision-making processes, leading to unequal representation and potential prioritization of powerful countries' interests over those of smaller and less influential APEC members. APEC's membership is limited to economies in the Asia-Pacific region, thus, creating competing economic blocs while compromising the global economic integration and cooperation goals. Its decision-making process often relies on consensus, which can be time-consuming and impede the ability to address economic issues promptly. The member economies may face challenges in effectively implementing meaningful changes due to the lagging of critical initiatives and agreements. APEC lacks robust enforcement mechanisms to ensure compliance with its agreements and commitments. While APEC promotes voluntary cooperation, the absence of stringent enforcement measures may limit the effectiveness and impact of its initiatives.

Advantages

Disadvantages

APEC reduces trade barriers such as tariffs and facilitates investment among the member nations for overall economic growth and trade expansion.

It helps businesses explore new markets and establish connections with potential partners across the Asia-Pacific region to increase market access and avail cross-border trade opportunities.

It targets regional economic integration by developing regional supply chains, enhancing competitiveness, limiting trade barriers, and ensuring cooperation among the participants.

APEC actively promotes capacity-building initiatives, sharing of best practices, and technical cooperation among member economies to strengthen institutional frameworks, improve infrastructure, and enhance human capital development.

It serves as a platform for member economies to engage in constructive dialogue and coordination of economic policies for addressing common challenges, sharing information, and promoting regional policy coherence.

It facilitates the exchange of expertise, knowledge, innovation, and technology; promotes research and development; and supports adopting new technologies for better productivity.

APEC strengthens social ties, builds mutual understanding, and encourages idea-sharing among the member economies resulting from cultural exchange, educational cooperation, and travel and tourism.

It helps in curtailing poverty across the participating nations.

It focuses only on the economic constraints and overlooks the other significant aspects like human rights, social development, and environmental sustainability.

APEC poses economic disparity as it comprises both developed and developing nations leading to uneven distribution of benefits from APEC initiatives, with smaller and less developed economies potentially struggling to keep pace with larger and more advanced economies.

The influence of major economies, such as China and the United States, can dominate decision-making processes, leading to unequal representation and potential prioritization of powerful countries' interests over those of smaller and less influential APEC members.

APEC's membership is limited to economies in the Asia-Pacific region, thus, creating competing economic blocs while compromising the global economic integration and cooperation goals.

Its decision-making process often relies on consensus, which can be time-consuming and impede the ability to address economic issues promptly.

The member economies may face challenges in effectively implementing meaningful changes due to the lagging of critical initiatives and agreements.

APEC lacks robust enforcement mechanisms to ensure compliance with its agreements and commitments. While APEC promotes voluntary cooperation, the absence of stringent enforcement measures may limit the effectiveness and impact of its initiatives.

Frequently Asked Questions (FAQs)

When was the Asia-Pacific Economic Cooperation established?

The economic forum, Asia-Pacific Economic Cooperation (APEC), was formed in November 1989 in Canberra, Australia, by the 12 participating nations of Southeast Asia, East Asia, and the Pacific Rim.

Why was the APEC privacy framework developed?

Since APEC facilitates free trade between the member nations, critical and confidential data is also inter-changed among the trading countries. Thus, the APEC privacy framework was built to impose privacy terms and rules; and to ensure that the participating nations sincerely cooperate and follow these regulations.

What are the three pillars of APEC?

The agenda of the Asia-Pacific Economic Cooperation stands on the following three pillars:

1. Trade and investment liberalization under its regional economic integration agenda;
2. Business facilitation under its structural reform agenda; and
3. Economic and technical cooperation (ECOTECH)

Who is hosting APEC 2023?

On APEC leaders' inaugural meeting's 30th anniversary in 2023, the Asia-Pacific Economic Cooperation is hosted by the United States. Also, in 2024 and 2025, the host nations will be Peru and Korea, respectively.