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ASIA-PACIFIC ECONOMIC COOPERATION (APEC)
Fact Sheet released by the Bureau of East Asian and Pacific Affairs

U.S. Department of State, October 26, 1998

The Asia-Pacific region, comprising some of the most dynamic economies in the world, has experienced unprecedented growth in the last two decades. Economic relations among economies of the region also have increased dramatically, fueled by growing trade and financial flows. However, the ongoing financial crisis in the region has also caused severe economic and social problems in several APEC member economies, prompting many of them to resort to facilities of the International Monetary Fund and other international assistance to begin to revamp their financial and economic systems. Most of the economies in crisis are making progress in overcoming the problems related to the economic downturn, but much work remains to be done to stabilize the region and put it back on the path of economic growth and prosperity.

The Asia-Pacific Economic Cooperation (APEC) forum was established in 1989 to promote economic integration in the Pacific region and to sustain economic growth. Originally, APEC was an informal group of 12 Asia-Pacific economies. In November 1991, APEC admitted China, Hong Kong, and Chinese Taipei (Taiwan). In November 1993, Mexico and Papua New Guinea joined. Chile joined in November 1994, bringing membership to 18. Peru, Russia and Vietnam have been sending observer delegations to most APEC meetings this year and will be seated as full participating members at the Ministerial and Leaders meeting this year in Kuala Lumpur.

APEC provides a forum for discussing a broad range of important regional economic issues. The APEC chair rotates annually among members and is responsible for hosting the annual ministerial meeting. Foreign and economic ministers from the members first met in Canberra, Australia, in November 1989. Since then, annual ministerial meetings have been held in Singapore, Seoul, Bangkok, Blake Island (near Seattle), Bogor (near Jakarta), Osaka, Manila and Vancouver. Upcoming ministerial meetings will be held in Malaysia (1998), New Zealand (1999), Brunei (2000) and China (2001). Malaysia has been the host to periodic meetings throughout this year to lay the groundwork for the ministerial meeting in November.

In 1993 President Clinton invited APEC Leaders to meet at Blake Island, Washington. Leaders have since met annually immediately following the annual Ministers meeting.

U.S.-APEC Relations

The United States views APEC as the preeminent multilateral regional economic forum and an integral part of U.S. engagement in the Asia-Pacific region. President Clinton has underscored that the United States is "committed to making [APEC] a vehicle for liberalization in the region."

In 1997, U.S. trade with APEC totaled $955.9 billion, roughly 65% of U.S. trade with the world. U.S. exports to APEC have increased 70% since 1990. U.S. imports from APEC have increased 69% since 1990.

APEC Progress

APEC has grown from an informal dialogue group to a more formalized institution that involves all major economies of the region. At Blake Island, during the APEC Ministerial Meeting in 1993, ministers agreed to the Declaration on an APEC Trade and Investment Framework and action plan and set up the Committee on Trade and Investment.

APEC Economic Leaders, invited by President Clinton to meet for the first time on Blake Island near Seattle, Washington, on November 20, 1993, set forth a vision which recognizes that in the post-Cold War era:

"We have an opportunity to build a new economic foundation for the Asia-Pacific that harnesses the energy of our diverse economies, strengthens cooperation and promotes prosperity."

The leaders also:

• Called for a successful conclusion to the Uruguay Round of the General Agreement on Tariffs and Trade;
• Called on APEC to expand its economic dialogue and advance its work program;
• Agreed to convene a meeting of APEC finance ministers;
• Asked business leaders to establish a Pacific Business Forum;
• Asked APEC to strengthen its policy dialogue on small and medium-sized business enterprises; and
• Agreed to establish an APEC Education Program and a Business Volunteer Program.

In Bogor, Indonesia, in November 1994, APEC Economic Leaders reached agreement on expanding economic cooperation within the region for the purpose of strengthening the open multilateral trading system, enhancing trade and investment liberalization in the Asia-Pacific region, and intensifying Asia-Pacific development cooperation.

Leaders announced their commitment to achieve "free and open trade and investment in the Asia-Pacific" whereby all barriers to trade and investment are to be dismantled before 2010 or 2020 by developed and developing participants, respectively.

In Osaka, Japan, in November 1995, APEC member economies adopted an Action Agenda to work toward APEC's common goals. The Action Agenda serves as the blueprint for implementing free trade and investment, covers 15 broad areas for liberalization, and sets out 135 specific actions that APEC members should take to open their markets and reduce the cost of doing business in the region. In addition, it identifies economic policy goals for broad cooperation to enhance regional integration in 13 areas, such as telecommunications, transportation, human resources development, energy, and small and medium-sized enterprises.

Member economies prepared concrete and substantive Individual Action Plans (IAPs) which were submitted to the 1996 APEC Ministerial Meeting in the Philippines for assessment. The Manila Action Plan for APEC (MAPA) also included elaborated collective action plans. Overall implementation of the action plans began in January 1997 and will be reviewed annually.

Recognizing that business is the source of vitality for the Asia-Pacific and the driving force for regional economic development, APEC leaders called for the creation of the APEC Business Advisory Council (ABAC) to provide insight and counsel to APEC's work program. Each member economy has nominated three business representatives to the body. ABAC representatives are expected to meet with APEC Economic Leaders to discuss their most recent report and recommendations prior to the annual Leaders Meeting.

APEC's priority is to remove impediments to business and promote cooperative solutions to common regional problems.

APEC made significant contributions to negotiations during the Uruguay Round in 1993 and to the approval of the Information Technology Agreement in 1996.

An important step toward making the Bogor commitments of free and open trade a reality was the decision by Ministers in 1997 in Vancouver to pursue early liberalization in key APEC economic sectors. Based on an assessment of mutual economic benefit APEC Ministers identified fifteen economic sectors to be developed for eventual endorsement by Ministers and Leaders this November in Kuala Lumpur. Now called Early Voluntary Sectoral Liberalization (EVSL), the initiative comprises nine "priority" sectors -- Chemicals, Energy Goods and Services, Environmental Goods and Services, Fish, Forestry Products, Gems and Jewelry, Medical Equipment, a Telecommunications Mutual Recognition Agreement (already completed), and Toys - and six "non-priority" sectors -- Aircraft, Automobile Standards, Fertilizer, Food, Oilseeds and Rubber. The EVSL initiative is economically substantial, encompassing goods and services worth U.S. $1.5 trillion in global trade.

Ministers and Leaders in Kuala Lumpur will also discuss ways in which APEC can address the short term and long term effects of the financial crisis and assess efforts to put the Asia-Pacific region back on the road to economic growth and prosperity. Various initiatives to assist APEC economies reform their financial and economic policies, including a set of programs to enhance "economic good governance" and "capacity building" are being discussed and developed.

APEC Groups

APEC Senior Officials oversee 10 working groups, covering broad areas of economic, educational, and environmental cooperation. They also direct the work of APEC's Committee on Trade and Investment with customs and standards and conformance subcommittees, an Economic Committee, and a Budget and Administrative Committee. The working groups are configured as follows:

• Trade and Investment Data. Develops consistent and reliable data in merchandise trade, trade in services, and investment.
• Trade Promotion. Develops proposals to exchange trade and industrial information and to promote economic and trade missions among economies of the region. Organizes international seminars and meetings to promote trade, an Asia-Pacific trade fair, and a training course on trade promotion.
• Industrial Science and Technology. Promotes economic growth by expanding technology flows and focusing on science and technology issues that network potential partners together in the Asia-Pacific region.
• Human Resource Development. Seeks ways to exchange information among Asia-Pacific economies in such areas as business administration, industrial training and innovation, project management, and development planning. In this working group, the United States hosted an APEC education ministerial in Washington, DC, in August 1992 and sponsors the APEC Partnership for Education Program, which promotes university partnerships among U.S. and Asian/South Pacific universities, outreach and cooperative education activities, and private sector training.
• Energy Cooperation. Develops cooperative projects, such as a regional database on energy supply and demand, and exchanges views on, among other things, coal utilization, technology transfer, and resource exploration and development.
• Marine Resource Conservation. Develops policy and technical responses to a wide range of marine pollution and marine environmental protection issues.
• Telecommunications. Develops policy and technical measures to liberalize trade and investment policy and regulatory measures in this sector. Compiles annual survey on APEC telecommunications development activities, including a description of each member country's telecommunications environment. Explores ways to establish and develop regional networks, initially by encouraging electronic data interchange. Exchanges information on policy and regulatory developments in each member's telecommunications sector. Disseminates a manual on how to approach training in a telecommunications organization, followed by a pilot project reviewing needs and recommending solutions in a selected organization.
• Transportation. Studies and recommends ways to improve infrastructure, facilitate movement of passengers and freight, collect and exchange data, and enhance transportation safety and security. This working group is one of three added in March 1991. The United States proposed it because of the importance of improved transportation links to continued economic growth in the region. In June 1995, the United States hosted the first APEC transportation ministerial.
• Tourism. Studies one of the region's most important industries, focusing on tourism data exchange, barriers to expansion, training programs, and current projects in APEC member economies.
• Fisheries. Promotes policy and technical measures and information exchange to protect fish and marine resources, facilitate fisheries trade, and protect human health. Reports on the role of APEC in coordinating and complementing the work of existing organizations and promoting cooperative relations among APEC participants.

Participating Economies

Australia, Brunei Darussalam, Canada, Chile, China, Hong Kong, Indonesia, Japan, South Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Philippines, Singapore, Chinese Taipei, Thailand, United States

New Members

Leaders decided in 1997 in Vancouver to admit three new member economies in 1998, bringing APEC membership to 21. Peru, Russia, and Vietnam have been sending observer delegations to most APEC meetings this year and will be seated as full participating members at the Ministerial and Leaders meeting this year in Kuala Lumpur. With the expansion of APEC to 21 economies, leaders in Vancouver also decided to place a 10-year moratorium on admitting new members to avoid making APEC too large and cumbersome.

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