The body is a significant inter-governmental forum for promoting open trade and practical cooperation in the Asia-Pacific region.
Headquarters – Singapore
Observer Members – ASEAN, PECC and SPF
Official Language – English
Origin and Development
The necessity of a permanent body to coordinate the economic relations among the market- oriented nations of the Pacific rim was voiced by the then Australian Prime Minister, Robert Hawke, in January 1989. The Pacific Economic Cooperation Council (PECC), which consisted of a group of business, academic and government representatives and had been holding informal discussions since 1980, endorsed this proposal, and the first meeting of the Asia-Pacific Economic Cooperation (APEC) was held in Canberra, Australia, on November 6-7, 1989. The meeting was attended by five Pacific industrial economies (Australia, Canada, Japan, New Zealand and the US), the then members of ASEAN (Indonesia, Malaysia, Thailand, Singapore, the Republic of Korea and Brunei) and South Korea.
In the beginning, the forum remained an informal and unstructured arrangement for ‘dialogue’ among participating countries, primarily because ASEAN nations were concerned about being overshadowed by economic giants such as Canada, Japan and the US in a regional organization.
However, as the concept of regional economic groupings gained ground throughout the world, it was decided to institutionalize the grouping. The 1991 Ministerial Meeting at Seoul, South Korea, adopted a declaration outlining the objectives and organizational structure of APEC, and approved the membership of China, Hong Kong (Hong Kong at that time was still under lease to the UK) and Taiwan. The institutionalization of APEC was completed in 1992 when the Bangkok Ministerial Meeting decided to establish a permanent Secretariat in Singapore.
By 1998, APEC had 21 members, which are considered more of economies than countries. The membership was frozen in 1998 at the existing level for the next ten years.
The broad objectives are to provide a forum for discussion on a wide range of economic issues, and to promote multilateral cooperation among the market-oriented economies of the region.
Specifically, APEC aims to promote economic and technical cooperation among the members by stimulating flow of goods, services, capital and technology; to develop a liberalized trade and investment regime; to encourage private investment, and to support ‘open regionalism’.
APEC consists of Annual Ministerial Meetings, Senior Officials Meeting Working Groups and a Secretariat.
The governing body of APEC is the Annual Ministerial Meeting of the foreign and trade ministers of all the member-states. The chairmanship of the meetings rotates every year among the members. The Senior Officials Meetings, consisting of representatives of all the member-states, are held annually and are responsible for the implementation of policies framed by Ministerial Meetings.
There are ten Working Groups dealing with Telecommunications, Trade and Investment Data, Fisheries, Tourism, Transportation, Trade Promotion, Investment and Technology, Human Resource Development, Regional Energy Cooperation and Marine Resource Conservation, and two adhoc groups dealing with Regional Trade Liberalization and Economic Policy. The Secretariat is headed by the Executive Director who holds a term of one year.
– APEC has often taken the lead in discussing new issues confronting the member countries. Important negotiations have been carried out and though there have been repeated references to ‘voluntary’ and ‘non- binding commitments aimed at achieving open trade and investment in the region, the pledge to liberalise has moved gradually from the political to the legal plane.
There are however, several hurdles in the way to fulfilling the objectives. To begin with, APEC is made of economies at differing levels of development. The developed countries often tend to force the change on the developing ones, which are not domestically ready for swift transition. Political and cultural traditions of member countries also vary.
There are recurrent trade tensions between major partners. As such, the consensus centric approach slows down the pace of progress. Till the mid 1990s, when East Asia was at its economic high, the agenda for serious regional trade and investment liberalisation was also high. But the agenda quickly faltered and almost collapsed in the wake of the 1997 East and South East Asian financial crisis.
There is a view that the more powerful members of APEC have not contributed enough to energise the grouping, with the result that summits end with multiple statements of intent, with few members really intent on carrying them out. Also, APEC’s contribution to strengthening regional economic ties is far from satisfactory. Many APEC members have begun resorting to bilateral free trade agreements rather than implement multilateral FTAs.