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This article was originally published in the Fall 2011 print issue of The Diplomatic Courier.

While discussions about debt have consumed Washington, the Asia-Pacific Economic Cooperation (APEC) forum has received little attention. But U.S. businesses and trade officials alike should pay close attention to this important gathering hosted by the United States in Honolulu this November.

APEC is the premier economic organization in the Asia-Pacific region, consisting of 21 economies—economies because it includes non-countries like Hong Kong and Taiwan (for a full list of APEC members, see http://statistics.apec.org/). APEC members account for roughly half of world trade and two-thirds of the world’s GDP. With a market of 2.7 billion consumers, APEC economies absorb some 58% of U.S. exports. Since its inception in November 1989, APEC has been the primary vehicle for advancing economic cooperation and trade and investment liberalization in Asia. APEC is also important to the U.S. as it has been the only regional forum that meets at the leaders level that includes the U.S. And for the first time since 1993, the United States is hosting APEC.

APEC 2011

Over the years, APEC has evolved into a year-long series of government discussions and public-private meetings on a range of trade and investment-related subjects. This year the U.S. is hosting the most important of these events, which are grouped into four clusters. The first two have already taken place, in Washington, DC February 27 – March 12, and in Big Sky, Montana, May 7-21. Big Sky included a joint Meeting of APEC trade ministers and ministers responsible for small and medium enterprises (SMEs), at which the ministers identified the most significant barriers faced by SMEs, and pledged to “undertake specific and concrete actions to address each of these barriers by the APEC Economic Leaders’ Meeting in November 2011.”

The [last] cluster of meetings [was] in San Francisco, September 12 – 26. Among the many activities that [took] place there, U.S. Secretary of State Hilary Clinton [chaired] an “APEC Women and the Economy” summit. There [was] also a Transportation and Energy Ministerial Conference (on transport sustainability and efficiency), an Intellectual Property Rights Experts' Group Meeting, and a number of other conferences and panel discussions.

The final cluster of events for the year will take place in Honolulu, November 7-13, including a CEO Summit, Finance and Trade Ministers Meetings, and will culminate in the Leaders Meeting hosted by President Obama.

APEC Priorities

APEC's core objective is trade and investment liberalization and facilitation. Towards that end, APEC has set three priority objectives for 2011:

  • Strengthening Regional Economic Integration and Expanding Trade. Achieving a “Free Trade Area of the Asia-Pacific” (FTAAP) has long been a core goal of APEC. Long considered a long-term, aspirational goal, the FTAAP has been given new life by the Trans-Pacific Partnership (TPP) discussions that are underway. The TPP is a regional free trade agreement currently being negotiated among the United States and eight other partners, including Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam.  Although there is no formal linkage between the TPP and APEC, all nine countries participating in TPP negotiations are APEC members, and the TPP is widely seen as the first step towards achieving APEC’s long-term goal of achieving the FTAAP. President Obama and the leaders of the other eight TPP countries hope to announce a framework agreement for the TPP in November at the APEC Leaders Meeting in Honolulu.
  • Promoting Green Growth. Senior officials have been discussing how APEC can facilitate trade and investment in environmental goods, technology and services. APEC is also trying to tackle illegal logging and associated trade. And APEC senior officials are developing a work plan on fossil fuel subsidy reform, focusing on technical assistance and capacity building, including how to phase out subsidies while providing essential energy services to vulnerable populations.
  • Advancing Regulatory Cooperation and Convergence. The aim here is to reduce the negative effects of differing standards and conformance arrangements from country to country. APEC also works to encourage greater alignment of APEC member economies’ standards with international ones.

Significance for U.S. Business

It’s easy to find fault with APEC – complaints range from the “soft and squishy” voluntary nature of the organization (commitments and agreements are non-binding), to the excessive use of technical jargon by the army of officials who make it very hard for outsiders to penetrate. Nevertheless, APEC’s work is important. Member countries devote considerable time and money because they recognize that tackling trade and investment barriers is in their interest, and because of the opportunities that APEC presents to connect with the movers and shakers from the world’s most dynamic economies. And there is a real attempt to work with businesses to identify practical, real-world issues that affect bottom lines.

APEC has played an important role in reducing tariffs, most notably in environmental goods and services. And in recent years, its focus has turned to non-tariff barriers and “behind the border” issues (regulatory cooperation, increased transparency, etc). To cite a specific example, one head of a small business identified the need for information on tariffs and regulations for trading across borders that is transparent, consistent and easy to understand. “I’m talking about very simple mechanisms, tools, and information that can really help all small businesses,” he said. To address that need, APEC has developed a Web site on tariffs and rules of origin (ROOs) that aims to serve as a portal to the region for such information.

Continuing this pragmatic approach to tackle issues of immediate concern to businesses, this year APEC officials have identified three “next generation trade and investment issues” for focus: facilitating global supply chains; enhancing SMEs participation in global production chains; and, promoting effective, non-discriminatory, and market-driven innovation policy. For those who have followed the controversy over China’s “Indigenous Innovation” policies, this one should have particular resonance.

The bottom line is that APEC represents the best opportunity for companies to raise issues that have a direct impact on their business in this hugely important region; and to discuss these issues with economic and trade leaders who are interested in tackling these problems, because they recognize that is in their own interest to do so. /p>

Dr. Isa Kasoff is the former Deputy Assistant Secretary for Asia at the U.S. Department of Commerce's International Trade Administration (ITA).

Photo courtesy of the APEC Summit.

The views presented in this article are the author’s own and do not necessarily represent the views of any other organization.

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An Inside Look at the APEC Summit

October 20, 2011

This article was originally published in the Fall 2011 print issue of The Diplomatic Courier.

While discussions about debt have consumed Washington, the Asia-Pacific Economic Cooperation (APEC) forum has received little attention. But U.S. businesses and trade officials alike should pay close attention to this important gathering hosted by the United States in Honolulu this November.

APEC is the premier economic organization in the Asia-Pacific region, consisting of 21 economies—economies because it includes non-countries like Hong Kong and Taiwan (for a full list of APEC members, see http://statistics.apec.org/). APEC members account for roughly half of world trade and two-thirds of the world’s GDP. With a market of 2.7 billion consumers, APEC economies absorb some 58% of U.S. exports. Since its inception in November 1989, APEC has been the primary vehicle for advancing economic cooperation and trade and investment liberalization in Asia. APEC is also important to the U.S. as it has been the only regional forum that meets at the leaders level that includes the U.S. And for the first time since 1993, the United States is hosting APEC.

APEC 2011

Over the years, APEC has evolved into a year-long series of government discussions and public-private meetings on a range of trade and investment-related subjects. This year the U.S. is hosting the most important of these events, which are grouped into four clusters. The first two have already taken place, in Washington, DC February 27 – March 12, and in Big Sky, Montana, May 7-21. Big Sky included a joint Meeting of APEC trade ministers and ministers responsible for small and medium enterprises (SMEs), at which the ministers identified the most significant barriers faced by SMEs, and pledged to “undertake specific and concrete actions to address each of these barriers by the APEC Economic Leaders’ Meeting in November 2011.”

The [last] cluster of meetings [was] in San Francisco, September 12 – 26. Among the many activities that [took] place there, U.S. Secretary of State Hilary Clinton [chaired] an “APEC Women and the Economy” summit. There [was] also a Transportation and Energy Ministerial Conference (on transport sustainability and efficiency), an Intellectual Property Rights Experts' Group Meeting, and a number of other conferences and panel discussions.

The final cluster of events for the year will take place in Honolulu, November 7-13, including a CEO Summit, Finance and Trade Ministers Meetings, and will culminate in the Leaders Meeting hosted by President Obama.

APEC Priorities

APEC's core objective is trade and investment liberalization and facilitation. Towards that end, APEC has set three priority objectives for 2011:

  • Strengthening Regional Economic Integration and Expanding Trade. Achieving a “Free Trade Area of the Asia-Pacific” (FTAAP) has long been a core goal of APEC. Long considered a long-term, aspirational goal, the FTAAP has been given new life by the Trans-Pacific Partnership (TPP) discussions that are underway. The TPP is a regional free trade agreement currently being negotiated among the United States and eight other partners, including Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam.  Although there is no formal linkage between the TPP and APEC, all nine countries participating in TPP negotiations are APEC members, and the TPP is widely seen as the first step towards achieving APEC’s long-term goal of achieving the FTAAP. President Obama and the leaders of the other eight TPP countries hope to announce a framework agreement for the TPP in November at the APEC Leaders Meeting in Honolulu.
  • Promoting Green Growth. Senior officials have been discussing how APEC can facilitate trade and investment in environmental goods, technology and services. APEC is also trying to tackle illegal logging and associated trade. And APEC senior officials are developing a work plan on fossil fuel subsidy reform, focusing on technical assistance and capacity building, including how to phase out subsidies while providing essential energy services to vulnerable populations.
  • Advancing Regulatory Cooperation and Convergence. The aim here is to reduce the negative effects of differing standards and conformance arrangements from country to country. APEC also works to encourage greater alignment of APEC member economies’ standards with international ones.

Significance for U.S. Business

It’s easy to find fault with APEC – complaints range from the “soft and squishy” voluntary nature of the organization (commitments and agreements are non-binding), to the excessive use of technical jargon by the army of officials who make it very hard for outsiders to penetrate. Nevertheless, APEC’s work is important. Member countries devote considerable time and money because they recognize that tackling trade and investment barriers is in their interest, and because of the opportunities that APEC presents to connect with the movers and shakers from the world’s most dynamic economies. And there is a real attempt to work with businesses to identify practical, real-world issues that affect bottom lines.

APEC has played an important role in reducing tariffs, most notably in environmental goods and services. And in recent years, its focus has turned to non-tariff barriers and “behind the border” issues (regulatory cooperation, increased transparency, etc). To cite a specific example, one head of a small business identified the need for information on tariffs and regulations for trading across borders that is transparent, consistent and easy to understand. “I’m talking about very simple mechanisms, tools, and information that can really help all small businesses,” he said. To address that need, APEC has developed a Web site on tariffs and rules of origin (ROOs) that aims to serve as a portal to the region for such information.

Continuing this pragmatic approach to tackle issues of immediate concern to businesses, this year APEC officials have identified three “next generation trade and investment issues” for focus: facilitating global supply chains; enhancing SMEs participation in global production chains; and, promoting effective, non-discriminatory, and market-driven innovation policy. For those who have followed the controversy over China’s “Indigenous Innovation” policies, this one should have particular resonance.

The bottom line is that APEC represents the best opportunity for companies to raise issues that have a direct impact on their business in this hugely important region; and to discuss these issues with economic and trade leaders who are interested in tackling these problems, because they recognize that is in their own interest to do so. /p>

Dr. Isa Kasoff is the former Deputy Assistant Secretary for Asia at the U.S. Department of Commerce's International Trade Administration (ITA).

Photo courtesy of the APEC Summit.

The views presented in this article are the author’s own and do not necessarily represent the views of any other organization.