APEC Economies Score High Marks in Lead-up to Mid-Term Assessment

APEC's final report card prior to this year's mid-term stock-take has been presented and it's good news for the forum as it reaches the halfway point to achieving the Bogor Goals of free and open trade and investment in the Asia-Pacific region. The Individual Action Plan (IAP) Peer Review Reports of Brunei Darussalam; Indonesia; Malaysia; Papua New Guinea; the Philippines; Russia and Viet Nam were presented on the margins of the recent Senior Officials' Meeting in Seoul, Korea, and all economies received positive assessments from independent experts.

The seven IAP Peer Review Reports presented in early March this year were the last of 21 assessments made by impartial experts, evaluating the progress of APEC economies towards fulfilling the objectives set out in the Osaka Action Agenda (OAA) to meet the Bogor Goals. Through their IAPs, economies report on their progress in the OAA policy areas of Tariffs; Non-tariff Measures; Services; Investment; Standards and Conformance; Customs Procedures; Intellectual Property; Competition Policy; Government Procurement; Deregulation/Regulatory Review; WTO Obligations(including Rules of Origin); Dispute Mediation; Mobility of Business People; and Information Gathering and Analysis. The IAP Peer Review process involves independent on-site research and analysis by expert teams, who prepare reports on economies under review. These economies then field comments and questions from other APEC members and the APEC Business Advisory Council.

The IAP Peer Review of Brunei Darussalam was compiled by Dr. Tze-Wei Chen, Assistant Professor of the Graduate Institute of Translation and Interpretation at the National Taiwan Norman University. Chen concluded that Brunei Darussalam's Progress in relation to tariff issues is cumulatively substantial. According to Chen, "Information verified during the in-economy visit (suggests that) Brunei Darussalam's perception of free and open trade is eliminating all tariffs. With this spirit, Brunei Darussalam is moving towards this goal. Currently 79% of Brunei Darussalam's import tariff lines, or 5,130 out of 6,489 lines, are already zero and the average applied rate is lower than 2%."

Chen's report also highlighted the Brunei Economic Development Board's Strategy to kick-start Brunei Darussalam's economic diversification, which will create at least 6,000 new jobs by 2008. The strategy includes accessing and attracting investment to develop downstream and manufacturing industries and the development of foreign direct investment clusters with growth potential for Brunei Darussalam. The four priority areas identified by the government in this strategy cover business services, financial services, hospitality and tourism, and transportation services.

Domestic and foreign investment in Indonesia is predicted to expand as the government's reform efforts are realized and confidence in the economy grows, according to the IAP Peer Review of Indonesia. Compiled by Dr. Inkyo Cheong, from the Inha University of Korea, the Indonesian IAP Peer Review Report noted that Indonesia can meet its commitments of trade and investment liberalisation by 2020 if the current pace of policy and structural reforms continue.

Cheong commented in the IAP Peer Review, "To achieve the Bogor Goals, Indonesia is in the process of eliminating tariffs and barriers to trade on services and investment, as well as advancing business facilitation. As the government's will for reform is realized, the efforts for liberalization in Indonesia will accelerate and the trade-investment environment will improve. Then, domestic and foreign investment in Indonesia will expand and the economy will be back on the growth track that will bring about low unemployment and stabilization in consumer price levels."

Cheong also noted in the report that, "Indonesia has carried out systematic efforts to remove government-based restraints on trade, industry and the empowerment of the private sector. There has been a consistent process of deregulation, de-centralization and de-bureaucratization."

According to the Malaysian IAP Peer Review Report, Malaysia deserves high credit for its actions to achieve APEC's free and open trade and investment goals. The report also described Malaysian policy-makers as demonstrating considerable flair for policy innovation in their pursuit of new export industries.

Mr. William A. Dymond, Senior Executive Fellow of the Centre for Trade Policy and Law at Carleton University in Canada compiled the Malaysian IAP Peer Review Report on behalf of the APEC forum. In the report, Dymond highlighted Malaysia's cross-sectoral approach to meeting development goals in areas such as tariffs, service industries and government procurement. Dymond noted, "Malaysia's fulfilment of the APEC goals flows from its national objectives of sustained political and social stability, balanced economic growth among regions and ethnic groups, and the eradication of poverty. These policies are enabling Malaysia to meet the challenges of sustainable economic development in an environment of rapidly changing rules of global trade, resource flows and competition arising from globalization."

In highlighting the skills of policy-makers in developing growth sectors, the report noted Malaysia's reputation for setting standards to foster export industries. "The development of measurement tools, for example, regarding the knowledge-based economy adds rigor and ambition to innovation policy making," stated Dymond. The report also praised Malaysian policies to promote and incorporate the development of local entrepreneurs into the national and global economies.

Papua New Guinea's IAP Peer Review Report, compiled by Mr. Gordon La Fortune from Grey, Clark, Shih and Associates of Canada, praised PNG's reforms to increase transparency. La Fortune was complimentary of the Investment Promotion Authority's efforts to introduce reforms that increase transparency and make PNG more attractive to investors. "The Investment Promotion Authority is working to reduce barriers to investment by eliminating the Reserved Activities List in favour of the more open Cottage Business Activities List. The Authority is also seeking to eliminate 'special arrangements' or 'time factored' incentives and Ministerial discretion in favour of transparent legislated tax incentives that will apply to all investors," said La Fortune.

In the report, La Fortune also highlights the structural reforms introduced in PNG since the mid 1990's that have helped the economy make significant progress toward achieving the free trade and investment objectives. La Fortune stated, "The Tariff Reform Program and the decision to establish the Independent Consumer and Competition Commission are the most important steps taken to date. Although the Commission was only established in 2002, it has made steady progress in regulatory review and deregulation."

The Philippines was described as one of the leading developing economy members of APEC in its IAP Peer Review Report, complied by Professor Junsok Yang of the Catholic University of Korea. Yang said in the report that the Philippines has made substantial progress toward the Bogor Goals, particularly in the area of trade in goods. "For trade in goods, if the current trends and efforts continue at similar levels, the Philippines is likely to achieve the Bogor Goals by 2020. The tariff rates for the Philippines are very low given its developing status, and it has made good progress in the area of non-tariff barriers. Good first steps have been made in the areas of customs procedures, standards and conformance, and competition policy. The Philippines has also established the necessary legal and institutional framework to protect intellectual property rights," said Yang.

The report also praised the Philippines' active participation in the APEC process and the efforts made to develop the economy. "The Philippines is one of the leading developing economy members of APEC. Since the 1990s, the Philippines has made great efforts in liberalizing its economy, and introducing competition into the economy," commented Yang.

The IAP Peer Review Report of the Russian Federation highlights the important role that Russia plays in the APEC process. Professor Sung-Hoon Park from the Graduate School of International Studies at Korea University compiled the Russian IAP Peer Review Report and noted that, "The fact that the Intergovernmental Commission on Economic Integration has adopted APEC as one of the three priority integration partners suggests that the Russian Government attaches a significant level of importance to cooperation with APEC economies. The activities of Russia in the APEC process have been versatile and have become incrementally important. Especially in the area of facilitation, Russia has been able to strengthen its profile in diverse APEC activities."

In the report, Park praised Russia's moves to achieve APEC's free trade and investment goals in the set timeframe and made the assessment that the positive developments in Russian have by far outpaced negative developments. "Over the past few years, the Russian economy has become increasingly open and substantially more liberal. Tariffs are the action area in which Russia has progressed most substantially towards the Bogor Goals. The trade-weighted average tariff rates of Russia were reduced from 17.7% to 10.8% over the period 1996-2003. A number of English-language websites, which provide up-to-date information on the government's activities have been established. Also, many government agencies publish Newsletters on a regular basis, which should contribute to making the Russian trade policy more transparent and Russia's trading partners better understand the state of Russian trade policy regime," stated Park.

Viet Nam has made good progress on tariff reform and in removing the pervasive system of administrative controls and restrictions on trade, according to the IAP Peer Review Report of Viet Nam. The report also highlights Viet Nam's success in achieving economic growth and improving the well-being of the people.

Compiled by Mr. Bob Warner of the Director Centre for International Economics in Australia, the report notes that Viet Nam's reform and development agenda over the last decade and a half has been extraordinarily wide ranging, reflecting the challenge of a transition from a central planning to a market economy. According to Warner, "Viet Nam has confirmed that it will eliminate all trade related investment measures that are prohibited by the Agreement on Trade Related Investment Measures upon accession to the WTO. The Government has also undertaken to remove some remaining measures, for example import surcharges and export subsidies upon accession to the WTO. Viet Nam has been remarkably successful in achieving economic growth and improvements in the well-being of its people since it began its comprehensive program of restructuring and renovation, or doi moi, in the late 1980s."

Warner also points out that Viet Nam's government agencies such as the Vietnamese Customs Agency have undertaken significant reforms and that there have been significant improvements to government statistics and information. "Viet Nam's customs system has come a long way in a relatively short period of time and in the face of some difficult geographical, infrastructural and capacity constraints. A Customs Modernisation Strategy that is receiving donor support should provide the basis for significant improvements in customs procedures and processing. There have also been significant improvements in the quality and availability of information on laws, economic and social statistics and the operations of government in recent years. This reflects some important policy changes and also increasing use of information and communications technology."

The outcomes of the final seven IAP Peer Reviews, combined with the excellent results present in the first 14 reviews, suggests that this year's historic mid-term stock-take of progress towards achievement of the Bogor Goals should demonstrate that APEC is on track to achieve its objective of free and open trade and investment in the Asia-Pacific region.