APEC: The Evolution and Continuation of a Substiantial Agenda

St. Petersburg, Russia, 17 June 2011
  • Remarks by Ambassador Muhamad Noor, Executive Director, APEC Secretariat

Excellencies, esteemed colleagues, distinguished guests, ladies and gentlemen:

First of all, please allow me to thank the organizers for inviting me to speak at this round table on APEC USA 2011 and Russia 2012. I am hopeful that today’s discussions will prove valuable for APEC members going forward – and particularly for Russia, as it develops the agenda for next year.

This morning, I am honoured to share with you some of APEC’s key achievements over the last two decades, outline APEC’s current priorities, and underscore APEC’s economic and strategic significance to Russia.

As we are all well aware, Russia will be taking the mantle of APEC’s host economy in 2012. Already we are seeing great enthusiasm and leadership from the Russian delegation within APEC. I am confident that today’s discussion will serve as a springboard for greater engagement between Russia and the wider APEC community.

Background on APEC
APEC is a unique organization made up of 21 diverse economies bordering the Pacific Ocean – from North and South America, to Asia and Oceania.

Essentially, APEC is a mechanism for international cooperation. It was established in 1989 with the objective of promoting trade, investment and cooperation in the Asia-Pacific. The ultimate goal is to achieve greater prosperity in the region.

APEC has some key features that differentiate it from other international bodies. For example, APEC operates on the basis of non-binding commitments, consensus and open dialogue. Many, if not most, international organizations function on the basis of formal agreements and commitments made by its members.

This absence of binding rules and the presence of an open and consensual environment provide the needed space for innovation and closer collaboration between members and other stakeholders, including business and academia.

This has in turn led to tangible and intangible benefits including: greatly reduced tariffs; cheaper and easier business procedures; and, more generally, better mutual understanding and relations between member economies.

Despite its membership size, APEC is a powerful entity on the world stage, especially in terms of its economic significance.

These three graphs compare APEC members with the rest of the world.
In 2010, APEC members account for:

  • 40% of the world’s population or nearly 2.7 billion people;
  • 44% of world trade or just over US$17 trillion, and
  • 55% of world GDP or around US$32 trillion.

APEC’s Three Pillars
We’ve come a long way in our short history. In 1994, APEC members set 2010 as the deadline for industrialized economies and 2020 for developing economies to reach the Bogor Goals of free and open trade and investment.

To help economies meet the Bogor Goals, APEC works in 3 broad areas:

  • Firstly, APEC’s efforts to support trade and investment liberalization and facilitation focus on reducing, and eventually eliminating, tariff and non-tariff barriers.
  • Secondly, APEC focuses on reducing the cost and improving the ease of doing business, for example, by harmonizing customs procedures in the region.
  • And thirdly, through APEC’s Economic and Technical Cooperation (ECOTECH) program, it provides capacity building at the institutional and individual levels to assist member economies, their businesses and citizens to gain the necessary skills to take advantage of global trade.

APEC’s Achievements
Last year, APEC conducted an assessment to determine what progress has been made against the goal of free and open trade and investment.

The results were positive, showing that member economies have taken concerted action and progressed in a wide array of economic, trade, investment and social areas.

Just two highlights are shown here:

  • Average tariffs in the region have been reduced from about 17% in 1989 to around 6.2% in 2009.
  • Non-tariff barriers have also been reduced thanks to APEC’s work on trade facilitation.

A 5% reduction in trade transaction costs between 2002 and 2006 was reported from APEC’s first Trade Facilitation Action Plan.

Recent calculations to assess the progress of APEC’s second Trade Facilitation Action Plan estimate that costs decreased 1.7% in the 2007-2008 period, which represents savings for APEC member economies equivalent to US$14 billion.

Further assessment is underway, but there are good indications that APEC has reached its target of a further 5% reduction over the 2007-2010 period.

APEC’s progress towards the Bogor Goals also contributed to more than a five-fold increase in members’ total trade (goods and services) between 1989 and 2010 from US$3.1 trillion to US$16.8 trillion.

These figures contribute to real results for people across the entire region. Employment in APEC economies grew by 14% between 1996 and 2009, while poverty was reduced by 42% between 1994 and 2007.

GDP per capita in the vast APEC region has also increased by 43 percent from 1989 to 2009 – from just over US$6,000 in 1989 to nearly US$9,000 in 2009.

APEC and Structural Reform
APEC sees structural reform as essential to achieving sustained economic growth and advancing regional economic integration.

In 2004, an ambitious 5-year work programme called the Leaders' Agenda to Implement Structural Reform (LAISR) was put in place. The agenda covered five areas including: regulatory reform, competition policy, public sector governance, corporate governance, and strengthening economic and legal infrastructure.

Progress on these areas was reviewed last year in the context of developing a new structural reform agenda that expands on earlier work in these areas.

In 2010, APEC Leaders endorsed the APEC New Strategy for Structural Reform (ANSSR) that aims to promote balanced and sustainable growth by fostering transparency, competition and better functioning markets in the Asia-Pacific. In addition, this new strategy emphasizes a social dimension that includes enhancing opportunities for women and pressing for more education and SME development.

In fact, a recent APEC Policy Support Unit found that structural reforms in key infrastructure industries resulted in lower prices and differentiation of services. It also estimated that more competition in these industries could lead to gains that would be almost twice the size of the gains from further liberalization of trade.

APEC economies are also encouraged to undertake regulatory reforms to reduce the cost and complexity of doing business, from modifying taxation and superannuation arrangements to simplifying licensing processes.

In the 2011 World Bank’s Ease of Doing Business Report, 6 APEC economies were ranked in the top 10 positions.

APEC and Russia
APEC’s work and achievements are no doubt significant to Russia. And as focus intensifies on the Asia-Pacific, APEC will become increasingly important for Russia in terms of trade, investment and economic and technical cooperation in the region.

Already within the APEC structure, Russia has hosted wide array of APEC events. Topics have ranged from mining to energy to industrial science and technology. They also include telecommunications, counter-terrorism and anti-corruption and transparency.

All of these issues fall under the umbrella of the Senior Officials’ Steering Committee on Economic and Technical Cooperation and Russia’s Ambassador Ovechko currently serves as the Chair this year.

Russia’s imports from APEC experienced a six-fold increase from US$8.1 billion in 1998 to US$ 51.2 billion in 2009 (most recent data available).

Russia’s exports to APEC also grew by more than three times during the same period from US$13 billion to US$ 42.4 billion. The United States was the main market destination in 1998 but more recently China became Russia’s top APEC export destination in 2009.

The economic and strategic benefits of APEC are clear, and the opportunities presented in APEC 2012 are wide-ranging for Russia. Building on the priorities set by Leaders in November this year, these include strengthening trade relations between members, improving infrastructure and attracting foreign investment.

APEC 2011 and beyond
This year, with the United States as host of APEC, President Obama’s administration is focusing on three priority areas:

  • Strengthening regional economic integration and expanding trade;
  • Promoting green growth; and
  • Advancing regulatory cooperation and convergence in the region.

Progress in these areas has been made throughout the first half of 2011. This includes the implementation of several APEC projects that foster good regulatory practices in various sectors; promote smart grid adoption in urban centers; and develop programs to help small green businesses grow.

APEC Senior Officials met last month in Big Sky, Montana to further deliberate on these three priorities, and also on the path forward for the Doha Round. Significantly, APEC Ministers Responsible for Trade agreed to focus on enhancing SME participation in global production chains, as part of APEC’s focus this year to tackle “next generation” trade and investment issues. Two other issues were also agreed on as priorities for action:

  • Promoting effective, non-discriminatory and market-driven innovation policy; and
  • Facilitating global supply chains.

APEC’s work in these areas answers the call-to-action by Leaders in Yokohama, Japan last year where they said that APEC economies will take concrete and meaningful steps towards establishing a Free Trade Area of the Asia-Pacific.

As you see, APEC’s work carries on from year to year.

There are some new and important issues that APEC will be addressing over the medium and long term. We continue to move forward from the successful Japan host year in 2010 when we witnessed a continuation – and an evolution – of the APEC agenda. And as we move from the US 2011 year to Russia 2012 and beyond, APEC will remain a dynamic global force: responding to new challenges, and advancing free trade for the prosperity of the Asia-Pacific region.

Thank you.