What can APEC accomplish?

The 21 member economies of the Asia-Pacific Economic Cooperation will be meeting in Honolulu this November for their annual Economic Leaders’ Meeting. APEC seeks to achieve sustainable economic development through trade and investment liberalization, business facilitation, and economic and technical cooperation. However, APEC is limited in scope to that of a forum for discussion. Without the ability to legally set member economies’ economic policy, can APEC accomplish their intended goals? Or isAPEC nothing more than a collection of talking heads?

As an APEC communications intern and a student in the APECcourse that was offered over the summer, I have been able to learn how APEC accomplishes its goals despite its inability to legally bind its members into agreements. APEC strives to reach its goals using “Individual Action Plans,” as well as “Collective Action Plans”. Economies annually submit an IAP detailing its individual steps toward free and open trade and investment. CAPs are the collective steps to which the member economies agree. But these agreements are still not legally binding. So how do APEC member economies achieve economic growth and development?

Member economies choose to participate because they have learned it will benefit them. Since APEC began in 1989, average trade barriers have fallen from 16.9 percent to 5.5 percent. Trade barriers refer to any type of restriction that prevents markets from operating at an openly competitive level. They include tariffs, import and export restrictions, subsidies, and embargoes.

APEC strives to reduce anything that hinders free trade in the region. This has led to increased trade between member economies, as well as trade with the rest of the world, at a rate outpacing economies outside of APEC. According toAPEC’s website, the cost of business transactions within member economies has been reduced by roughly 5 percent. In addition, involvement in APEC includes the promotion of free movement of innovation and technology throughout the region. APEC also promotes small-to-medium enterprises, spurring innovation, growth and job creation. These results persuade member economies to willingly participate in the agreements reached in the discussion forums.

Critics of APEC claim that the laissez-faire attitude of APEC makes it a weak, even irrelevant, institution. With a world economy so highly integrated, it is hard to separate the benefits derived directly from APEC as opposed to several other regional organizations. However, this should not downplay the importance of APEC and its crucial role in international trade.

The three activities of APEC (liberalization, facilitation, and economic and technical cooperation), benefit member economies greatly, despite the difficulty in pinpointing specific results to APEC. The nature of Asia-Pacific economies requires the use of consultation and persuasion, as opposed to forceful binding agreements. In a region with vast differences in values, politics, cultures and economic systems, APEC’s approach to economic development fits perfectly. It does not restrict member economies in any way, as they can choose not to follow policies they feel should not apply to their economies.

Even though tracing the benefits member economies receive proves tough in a world so highly integrated, this does not mean they don’t exist. APEC provides member economies with access to research and consultation, and thus is much more than just a “dog and pony show.”

The Ka Leo version of this article can be found here

Learn more about APEC and be up to date with the latest news at the UHERO website:http://uhero.hawaii.edu
Also check out the UH Manoa student-run blog ‘APEC 101’ to find out what’s happening with APEC in the community: http://blog.hawaii.edu/apec101



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