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APEC Roadmap Ahead

Closing Remarks by Ambassador Muhamad Noor, Executive Director, APEC Secretariat Singapore | 15 August 2010

Organised by the Pacific Economic Cooperation Council, the Singapore National Committee for Pacific Economic Cooperation and the Asian Development Bank Institute
Over the course of today, we have had the privilege of knowledge being shared by distinguished speakers on key areas of concern impacting on the economic development of Asia, ranging from quality of life, inclusive growth, education, "balanced growth", the environment or achieving "green growth" as well as the question of regional architecture, which includes APEC. These are very pertinent issues and the convening of this Conference to discuss these issues is timely. I would like to thank the organizers for the opportunity to participate as well as share some thoughts on the APEC Roadmap Ahead.
To a large extent, my task pertaining to the topic assigned to me has been made easy by the preceding discussions. This is because, the issues that have been deliberated on in the preceding Sessions are the very issues that concern the member economies in charting the Roadmap Ahead for APEC.
Before delving into the future, please allow me to take a step back to gauge where APEC has gone on its road trip and where it stands. In this connection, it will be recalled that in 1994, APEC Economic Leaders announced their commitment to complete the achievement of our goal of free and open trade and investment in the Asia-Pacific no later than the year 2020, with the industrialized economies achieving that goal no later than this year.
It might be worthy of note that while 2010 is the target year for developed countries, it might be noted that apart from the five developed members, eight developing members have volunteered to be reviewed as to where they stand vis-à-vis the Bogor Goals. A report is planned to be submitted to the Leaders in Yokohama in November.
Based on the data gathered thus far, the following are some indications of the progress to date:
  • Average tariffs in the region have fallen from 17 percent when APEC was established in 1989 to 6.6 percent in 2008. The average for APEC's industrialised members - at 3.9 percent - is even lower. This compares very favourably with a world MFN-applied average tariff of 10.4 percent (as calculated by the WTO);
  • Non-tariff barriers have also substantially reduced across the APEC economies, with most of those reported being WTO-consistent;
  • And in addition to advancing region-wide liberalisation, APEC has also been a facilitator of bilateral free trade. By the end of last year, there were 43 free trade agreements between members;
  • Targets have also been reached in the area of trade and investment facilitation, which is APEC's second pillar:
  • Between 2002 and 2006, APEC's Trade Facilitation Action Plan resulted in a five percent reduction in business transaction costs across the region;
  • A second Trade Facilitation Action Plan looks on track to achieve the same reduction by the end of 2010;
  • A preliminary assessment of APEC's Investment Facilitation Action Plan also shows that APEC's industrialised members are close to best practices on investment;
  • Importantly, this progress on liberalisation and facilitation has created a much greater level of regional economic integration than would otherwise be expected:
  • APEC members are three times more likely to export to, and two times more likely to import from, a fellow member than a non-member. As a consequence, APEC economies enjoy a higher share of intra-regional trade than the EU, and a much higher share than NAFTA and ASEAN-7 economies;
  • The impact of APEC membership on trade among members is comparable to that of a free trade agreement, even though APEC members are not bound by formal rules or trade treaties.
  • Less quantifiable but no less important, APEC has also had a role in advancing structural reform in the region. With tariffs at record low levels, more economic benefit can be gained by advancing structural or behind-the-border reform. Thus, APEC has been focusing on reforms in the five priority areas of: regulatory policy, competition policy, public sector governance, corporate governance and strengthening economic and legal infrastructure.

Let me quote Prof Peter Drysdale on the wider meaning of these achievements: "East Asia is now a force of stability and dynamism at a turbulent time in the global economy. At it is important to be absolutely clear that the evidence is that APEC has mattered to securing this outcome."

To turn to the question of the Roadmap Ahead, many of us will recall that APEC Economic Leaders at their meeting in Singapore last November recognized the necessity to develop a new growth paradigm for the changed post-crisis landscape, and an expanded trade and investment agenda that will strengthen regional economic integration (REI) in the Asia-Pacific region. We cannot, the Leaders instructed, go back to "growth as usual". Accordingly, over the course of this year, APEC has focused on developing on a New Growth Strategy, the latest being the High Level Policy Dialogue in Beppu on 7 - 8 August.

In developing the New Growth Strategy, the following are the priority considerations:

  • Recognition that the APEC region has become the world's growth center by promoting free and open trade and investment and strengthening regional economic integration (REI) and that liberalization and facilitation of trade and investment will contribute to the growth in the APEC economies;
  • On the other hand, in recent years, new challenges have come to the forefront, such as energy and environmental constraints, human security concerns, the necessity of constant innovation, and economic performance and opportunity disparities within and across the economies. Therefore, APEC needs to greater attention to these new issues in the quest for further prosperity and collective well-being through long-term and sustained growth;
  • As the world's leading growth center, the APEC region has a great responsibility for the future course of the global economy beyond the region as well as for the welfare and prosperity of its own people. APEC should contribute to improving the quality of growth in the global economy as well.

The Ministers Responsible for Trade declared in Sapporo this year that "the Growth Strategy aims to achieve economic growth that is balanced, inclusive, sustainable, innovative and secure." They are being emphasized in the APEC Growth Strategy to ensure that the next generation will be able to enjoy sustained growth. APEC should address all five Attributes collectively and comprehensively, as they are interrelated and mutually reinforcing and thus require collective commitment and implementation to be realized.

The five Attributes for economic growth are intended as guidance for APEC economies on how to pursue high quality growth. At the same time, the general sense is that the APEC Growth Strategy should have sufficient action-oriented elements such as an action plan and follow-up mechanisms, with progress reviewed on an annual basis and reported to the Leaders in 2015.

While focusing on the Growth Strategy, APEC will continue with its Regional Economic Integration agenda. This includes work on investment, standards and technical regulations, trade facilitation, rules of origin (ROOs), intellectual property rights (IPR), environmental goods and services (EGS), and Ease of Doing Business.

There is recognition that Structural Reform will play an integral role in the Growth Strategy, as it is essential in achieving sustained economic growth and advancing REI. The progress of implementation of the five designated areas under the Leaders' Agenda to Implement Structural Reform (LAISR) is being reviewed in the context of developing a new structural reform agenda that is ambitious, yet practical and supports the New Growth Strategy.

In sum, the roadmap ahead is a broadening of the APEC agenda from trade and investment liberalization per se, towards wider social, economic and environmental objectives. This new paradigm in the context of the recognition of a "changed post-crisis landscape" underlines an APEC that is dynamic and that will remain relevant in the fast-changing economic environment.

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