Group 17Sayak Gupta (49)Srinivas (54)Sujit Mishra (56)
Agenda Introduction History Objective Member Economies APEC relations Demographics APEC Structure Bogor goals How APEC operates APEC summits Strengths & weaknesses Achievements Implications for MNE’s
APEC Forum APEC is the premier forum for facilitating economic growth, cooperation, trade and investment in the Asia-Pacific region. It is an inter-governmental forum, which operates on the basis of non binding commitment and open dialog. No treaty obligations APEC has 21 member economies with a population of over 2.6 billion which accounts for more than 40% of the world’s population. APEC countries have a combined GDP of 21 trillion US dollars which is more than half of world GDP. APEC accounts for nearly half of world trade.
Member Economies* Australia * Malaysia* Brunei Darussalam * Mexico* Canada * New Zealand* Chile * Papua New Guinea* Peoples Republic of China * Peru* The Republic of the Philippines * Hong Kong, China* The Russian Federation * Japan* United States of America * Indonesia* Chinese Taipei * Singapore* Republic of Korea * Viet Nam
History of APEC APEC begins as an informal Ministerial-level dialogue group in Canberra, Australia in 1989. It is a 21 member economic forum at present. Founding members are Australia, New Zealand 6 ASEAN economies Japan and South Korea Canada and the United States Later the co-operation expanded to China, Taiwan, & Hong Kong in1991 Mexico & Papua New Guinea in 1993 ,Chile (1994 ) , Russia, Vietnam, Peru in 1998. India, Mangolia, Pakistan, Laos, Bangladesh, Costa Rica, Colombia, Panama and Ecuador are among a dozen countries seeking membership in APEC.
Mission and Vision To support sustainable economic growth and prosperity in Asia-Pacific region To build a dynamic and harmonious Asia-Pacific community Decrease number of obstacles in trade and also reduce tariffs across APEC nations Set it’s eye on achieving ‘Bogor goals’ by the year 2010 To encourage the flow of goods, services, capital, and technology To develop and strengthen the multilateral trading system; and
APEC Relations ASEAN and APEC ASEAN has been at APECs core from the very beginning and is doing its part to advance APECs purposes and is consistent with APEC goals. ASEAN Free Trade Area (AFTA) can be said to be a building block for the fulfillment of the goals that APEC set for eventual free trade among its members. It can be said that the two organizations could be seen as complementing, and not competing with each other. NAFTA and APEC Accomplishment of Bogor goals and free trade among APEC member economies leads to significant trade diversion from western countries to APEC member economies. Western economies trying to maintain balance of power between east and west in APEC decisions by restricting Asian countries into economic co-operation.
APEC and India India tried for membership in APEC. It was initially supported by United States, Japan Australia but was denied later. India would have been had an undue advantage in trade if it is a member of APEC. Reasons :o Decision was made not to admit more members until 2010 till Bogor goals are accomplished.o India does not border the Pacific Ocean, which all current members doo There is a concern among Western countries that Indias entry might tilt the balance of power shifts in favour of India.
APEC Secretariat APEC secretariat operates as the core support mechanism for the APEC process. It provides coordination, technical and advisory support as well as information management, communications and public outreach services. It performs a central project management role It is based in Singapore The APEC Secretariat is headed by an Executive Director and a Deputy Executive Director Muhamad Noor Yacob is the present Executive Director
BOGOR GOALS APEC Economic Leaders Declaration Of Common Resolve (1994) Free and open trade and investment in the Asia-Pacific by 2010 for developed economies by 2020 for developing economies
THREE PILLARSThree specific areas crucial to achieving the Bogor Goals: Trade and investment liberalization Business facilitation Economic and technical cooperation
Trade and Investment liberalization Reducing and eliminating tariff among member countries Reducing and eliminating non-tariff barriers to trade and investment Opening of marketsAchievements :1) Changes in the global trade of APEC industrialized and volunteering economies.
Cont ..2) Stocks of inward and outward FDI in APEC industrialized and volunteering economies.3) Real GDP/capita for APEC industrializedeconomies and volunteering economies
Business facilitation Reducing the costs of business transactions Improving access to trade information Bringing into line policy and business strategies to facilitate growth Free and open tradeAchievements :1. The Single Window Strategic Plan, adopted in 2007, provides a framework for the development of Single Window systems which will allow importers and exporters to submit information to government once, instead of to multiple government agencies, through a single entry point.
Cont ..2. As a result of the APEC Trade Facilitation Action Plan (TFAP I) the cost of business transactions across the region was reduced by 5% between 2002 and 2006.3. In 2008, a groundbreaking Investment Facilitation Action Plan was endorsed which aims at improving the investment environment in Member Economies.4. The APEC Business Travel Card (ABTC) provides substantial time and cost savings to business people and facilitates their travel in the region, by allowing visa free travel and express lane transit at airports in participating economies.
Economic and technical cooperation ECOTECH is dedicated to providing training and cooperation to build capacities in all APEC Member Economies to take advantage of global trade. This area builds capacity at the institutional and personal level to assist APEC Member Economies and its people gain the necessary skills to meet their economic potential.Achievements : APECs Economic and Technical Cooperation (ECOTECH) activities are designed to build capacity and skills in APEC Members at both the individual and institutional level, to enable them to participate fully in the regional economy and liberalization process Since APEC first began to undertake capacity building work in 1993, more than 1200 projects have been initiated; and in 2008, APEC was implementing a total of 212 capacity building projects with a total value of US$13.5m. A network of 41 APEC Digital Opportunity Centers (ADOC) now operate in seven Member Economies.
APEC BUSINESS ADVISORY COUNCIL 1995 with the aim of providing advice to the APEC Economic Leaders on ways to achieve the Bogor Goals Each economy nominates up to three members from the private sector to ABAC These business leaders represent a wide range of industry sectors
HOW APEC OPERATES APEC operates as a cooperative, multilateral economic and trade forum. It is a voluntary association in which participants do not cede powers of regulation or enforcement to a supra-national institution; Every year one of the 21 member economies plays host to APEC meetings, Serves as the APEC Chair Chairs the annual economic Leaders meeting & ministerial Meetings Fills Executive Director of the APEC Secretariat.
CONT .. Member Economies take individual and collective actions to open their markets and promote economic growth Activities are centrally funded by small annual contributions from member Economies Member economies provide considerable resources to assist in the operations APEC’s project database contain all project related information
ANNUAL MEETINGS OF THE ASIA-PACIFIC ECONOMIC COOPERATIONSummit Year Place Summit Year Place 1 1989 Australia 13 2001 Peoples Republic of China 2 1990 Singapore 14 2002 Mexico 3 1991 Republic of Korea 15 2003 Thailand 4 1992 Thailand 16 2004 Chile 5 1993 United states 17 2005 Republic of Korea 6 1994 Indonesia 18 2006 Vietnam 7 1995 Japan 19 2007 Australia 8 1996 Philippines 20 2008 Peru 9 1997 Canada 21 2009 Singapore 10 1998 Malaysia 22 2010 Japan 11 1999 New Zealand 23 2011 United states 12 2000 Brunei Darussalam
STRENGTHS OF APEC A supporter of the of the multilateral trade negotiations, apply pressure to key countries, suggest visionary initiatives and monitor compliances. APEC has considerable experience in the reform process and can act as a model or demonstration to the rest of the world. APEC is a large group of countries that could be extremely influential if adopted a common approach and joint bargaining objectives.
WEAKNESSES OF APEC Absence of priorities- The effort in trade reform within APEC has been diffused across too many areas and there is need for more focus. Shortfalls in member commitments- Many countries have gone no further than their existing pledges. Weak evaluation procedures- there is lack of outside scrutiny of individual members’ progress in implementing reforms Dearth of specific APEC incentives- APEC operates by consensus and there is no mechanism for enforcing group decisions.
IMPLICATIONS FOR THE MNES Share in World GDP, The group of five APEC industrialized 2011 economies — Australia, Canada, Japan, New Zealand and United States — has made good progress towards the Bogor Goals of free and open trade and investment by 2010. Contributions to Global GDP Growth The 21 APEC members account for 55 percent of world GDP; 45 percent of global trade; and 40 percent of the world’s population. Sixty percent of U.S. goods exports go to APEC economies.
IMPLICATIONS FOR THE MNES The industrialized economies have • cut tariffs • increased the proportion of goods imported tariff free • reduced non-tariff measures • opened up services trade • liberalized investment and • actively promoted greater trade and investment through facilitation initiatives.• The average applied tariff rate for the industrialized economies fell from 7.0 per cent in 1996 to 3.9 per cent in 2008.• The share of imports entering duty free has increased from 42.6 per cent in 1996 to 60.1 per cent in 2008.
IMPLICATIONS FOR THE MNES• The assessment of progress has highlighted the areas where more work is needed, including in the reduction of high tariffs and trade-distorting non-tariff measures on agricultural and textile, clothing and footwear products, and an increased focus on services and investment.• The gathering pace of globalization poses real challenges for trade and economic policy makers in the region.• Global dynamics have created the impetus for APEC economies to tackle a broader set of issues in their efforts to foster and reap the gains from greater economic integration.