1.   Introduction

The Asia-Pacific Economic Cooperation (APEC) is
a regional premier economic forum which is established in 1989 to leverage the
growing interdependence of the Asia-Pacific. It has 21 members from five continents and
three observers. Its primary goal is to create greater prosperity for the
people of the region and support sustainable economic growth by advancing Free
Trade for Asia-Pacific Prosperity.

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

1.1.         
History

Asia Pacific Economic Cooperation was formed in 1989 in Canberra, Australia with 12 members as an informal forum. The founding
members were: Australia, Brunei Darussalam, Canada, Indonesia, Japan, Korea,
Malaysia, New Zealand, the Philippines, Singapore, Thailand and the United
States (Michigan State
University, 2017).

The member countries can discuss free trade and economic cooperation.

Between 1989 and 1992, APEC met as an informal
senior official and Ministerial level dialogue. In 1993, former United States
President Bill Clinton, established the practice of an annual APEC Economic
Leaders’ Meeting to provide greater strategic vision and direction to
cooperation in the region. (APEC, n.d.) During the meeting
on Blake Island in the United States, “stability, security and prosperity
for our peoples” was outlined as APEC’s vision. In 1994 in Indonesia, APEC
set the Bogor Goals of “free and open trade and investment in the
Asia-Pacific by 2010 for developed economies and 2020 for developing economies”
which is also the main objectives of APEC through its working progress (APEC, n.d.).

1.2.         
Participants

Since 1989, APEC has expanded from its original
12 members to include 21 member economies. The word ‘economies’ is used to
describe APEC members because the APEC cooperative process is predominantly
concerned with trade and economic issues, with members engaging with one
another as economic entities (APEC, n.d.). There are much diversity
in member economies as there are developing countries and developed countries,
countries and area. It consists of three North American countries, two South American
countries, three Oceanian countries,
12 Asian countries and one European country. Three observers of APEC
are Association of Southeast Asian Nations Secretariat (ASEAN), Pacific Economic Cooperation Council(PECC)
and Pacific Islands Forum (PIF)
secretariat (APEC, n.d.). Representatives
from these three observers participate in APEC meetings and have full access to
documents and information related to the work of member economies which help to
track progress and provide guidance in support of APEC objectives (APEC, n.d.).

1.3.         
Domicile

The secretariat of APEC is based in Singapore and operates as the
core support mechanism for the APEC process. It supports APEC with
coordination, technology, advisory and public services. It performs a central
project management role, assisting APEC Member Economies with overseeing more
than 250 APEC-funded projects. APEC’s annual budget is also administered by the
APEC Secretariat (APEC, 2017).

1.4.         
Function

APEC operates
at five levels: Leaders, Ministers, Senior Officials, committees and working
groups. Leaders’ Meeting, Ministerial
Meeting, Sectoral Ministerial
Meetings, and APEC Business Advisory Council (ABAC) are conducted each
year, which help to shape APEC’s policy
direction.

Its activities and projects are guided by APEC Senior Officials
from the 21 APEC member economies. These activities and projects are carried
out by four high-level committees: Committee on Trade and Investment, Senior
Officials’ Meeting Committee on Economic and Technical Cooperation, Economic
Committee and Budget and Management Committee (APEC, 2017).

The 21 APEC
member economies jointly work towards the realization of free and open trade and investment in the
Asia-Pacific by 2020 and the establishment of a greater regional
community to address the economic and social dimensions of development–a
commitment made by APEC Leaders in 1994 known as the Bogor Goals (APEC, 2017).

The Three Pillars of APEC’s agenda focus
on Trade and Investment Liberalization, Business Facilitation and Economic and
Technical Cooperation (ECOTECH) (APEC, 2017).

APEC recognises that Regional Trading Agreements (RTAs) and
Free Trade Agreements (FTAs) can
play important roles in trade liberalisation in the APEC region. The implementation of
APEC New Strategy for Structural Reform (ANSSR) is now in progress.

Instead of a
donor organization, APEC’s activities are financed by annual contributions from
its participating economies. Those contributions from its members are used to
fund its Singapore office and different projects which support APEC’s operation.

Not only the annual contributions are provided by its members, but also many voluntary
contributions which are aim at financing projects of APEC. These projects are implemented
to promote APEC’s
trade and investment liberalization and to help APEC’s developing economies.

In general, APEC does
projects which are related to the priorities of APEC Economic Leaders and APEC Ministers.

Also, those projects which cover the interest of at least several APEC member
economies will be put into practice by APEC (APEC, 2017).

APEC projects are functioning
as building capacity, improving economic efficiency and encouraging the
participation of the business sector, nongovernmental institutions and women.

2.   Objectives of APEC

Participating economies of APEC are united to build a dynamic and harmonious Asia-Pacific community by
championing free and open trade and investment, promoting and accelerating
regional economic integration and facilitating a favorable and sustainable
business environment.

The Bogor Goals of APEC is targeted to realize free and open trade in
Asia-Pacific agreed by member economies. This goal will be achieved by further
reducing barriers to trade and investment and by promoting the free flow of
goods, services and capital among APEC economies. Initiatives that fall under
these goals include efforts to improve the time and costs for goods, people,
investment and services to cross borders (APEC, 2017).

In order to achieve those objectives, APEC should not only be fair
to the views of all participants but also be open to all international trades.

As the member economies are very diverse, APEC should take the
differences in the stages of economic development and socio-political systems
into consideration as well as give due consideration to the needs of those
developing economies.

3.   Achievements of APEC

Since its establishment, APEC’s role in facilitating regional
integration has shown the importance of promoting trade and economic growth in
the Asia-Pacific region.

APEC has grown to become a dynamic engine of economic growth and one
of the most important regional forums in the Asia-Pacific. Its 21 member
economies are home to around 2.8 billion people and represent approximately 59
percent of world GDP and 49 percent of world trade in 2015 (APEC, 2017).

As a result of APEC’s work, growth has soared in the region, with
real GDP increasing from USD 19 trillion in 1989 to USD 42 trillion in 2015.

Meanwhile, residents of the Asia-Pacific saw their per capita income rise by 74
percent, lifting millions out of poverty and creating a growing middle class in
just over two decades (APEC, 2017).

APEC implements a wide variety of initiatives to help integrate the
region’s economies and promote trade while addressing sustainability and social
equity.

The trade among the region of Asia-Pacific has been dramatically
increased thanks to APEC’s missions which are bringing the region of
Asia-Pacific closer together, decreasing trade barriers, and smoothing out differences
in regulations. Average tariffs fell from 17 percent in 1989 to 5.2 percent in
2012. During that same time period, the APEC region’s total trade increased
over seven times—outpacing the rest of the world with two-thirds of this trade
occurring between member economies (APEC, 2017).

4.   Critical Reflection

Nowadays, APEC is confronted with a series of issues
when implementing free and open trade and investment, reducing trade barrier,
and building one economic community in the Asia Pacific area.

Firstly, more member economies are losing
interest in APEC and shifting their attention to sub-regional cooperative
arrangements (Liu, 2005). This has a negative
impact on the roles APEC was originally expected to play.

Furthermore, Non-FTA economies need to face
much discrimination of trade policy when doing international trading with FTA
economies. This will lead to the increase of transaction costs of non-FTA
economies. In APEC, FTA members and non-FTA members have to deal with a variety
of arrangements and treatments when engaging in trade and investment. The FTA
members do their trades and achieve their self-trade interest in partial at the
expense of the non-FTA members (Liu, 2005).

Thirdly, the time for
liberalization of Bogor goals is upcoming, nevertheless, there is still conflict
in comprehension of the goals. The lack of a clear-cut definition for the
goals, different attitudes and inadequate progress towards the goals make
people doubt if the goals can ever be achieved in time (Liu, 2005).

Fourthly, a weak point of APEC is that it has
been too exclusively concentrating on trade liberalization in promoting
regional economic integration. Nevertheless, Ecotech has not received attention
as expected. The results have not been satisfactory and even it dampens the passion
of the developing economies in regional cooperation. Even though Ecotech is commonly
considered to be one of the two important pillars of APEC, its importance in
economic and social development and narrowing the gap between developed and
developing economies has not been fully realized (Liu, 2005).

5.  
Personal
Suggestions

With the purpose of revitalizing APEC, a series
of measures should be taken to improve its efficiency and effectiveness.

Only with its reforms, APEC can work better to achieve
its goals as supporting sustainable economic growth and prosperity the Asia
Pacific region. There should be a long-term goal and action plan of APEC accepted
by all participating members. Therefore, it can strengthen cohesiveness between
those member economies.

Since there have been more and more trading
conflicts and disagreements happening in the Asia Pacific region, a fast-response
mechanism within the framework of APEC is needed to be established. Therefore,
the working efficiency of APEC will be increased.

Evaluation and coordination are two important
tasks for APEC in the near future. The organization should not produce major
new initiatives consistently, rather it ought to take a stab at a record of accomplishment
in managing the growing plan of economic and social issues.

Because of its weak secretariat, APEC’s agenda
and operation depend heavily on the initiatives proposed by its participating economies, particularly the annual host economies. The reinforcing and
strengthening of the Secretariat will provide APEC with a better administration
and the forums can concentrate more on substantive issues.