BUSINESS ENVIRONMENT PRESENTATION

EVIDENCE AND IMPLICATIONS FOR POLICY

FLOW OF THE PRESENTATION

INTRODUCTION
APECS OBJECTIVES APECS ACTIVITIES

APEC SUMMITS
ACHIEVEMENTS APEC AND OTHER TRADE BLOCS UNDERSTANDING OPEN REGIONALISM

FLOW OF THE PRESENTATION

RECOMMENDATIONS
PROTESTS AGAINST APEC WHAT LIES AHEAD????

WHAT APEC CAN DO

CONCLUSION

Asia-Pacific Economic Cooperation (APEC) is a unique international forum composed of 21 member economies of diverse cultural heritage and varying levels of economic development. Since its formation in 1989, APEC has expanded to become the primary vehicle for promoting trade liberalisation and economic cooperation in the Asia Pacific Region. APEC is committed to "open regionalism", striving for regional trade and investment liberalisation as a building block to strengthen the multilateral trading system and expand the global economy.

CONTD..

Is APEC a trade bloc?? Not really Who heads APEC??

Who can become a member?

A consulting not negotiating forum

APEC Member Economies *admitted in 1997

Australia Brunei Darussalam Canada Chile China Hong Kong SAR Indonesia

Japan Korea Malaysia Mexico New Zealand Papua New Guinea Peru*

Philippines Russia* Singapore Chinese Taipei Thailand United States Vietnam*

APECS OBJECTIVES
Moving towards more open markets. Removing barriers to trade and investment. Encouraging stronger communications links in the region. Enhancing cooperation on regional problems

APEC work programs are conducted by the policy-related Committee on Trade and Investment, the Economic Committee and ten sectoral-based Working Groups on: Fisheries Human Resources Development Industrial Science & Technology Marine Resource Conservation Regional Energy Cooperation

Telecommunications Tourism Trade & Investment Data Review Trade Promotion Transportation

Apec activities
Committee on trade & disinvestment
Tariff and non tariff barriers Services investments Standards and conformance Customs procedures Intellectual property rights Competition policy Govt. procurement Deregulation Rules of origin Dispute mediation

Contd
Mobility of business people Implementation of WTO legislation Early voluntary sectoral liberation -Automotive dialogue -Chemical dialogue Trade facilitation ad hoc task force Economic committee Budget and management committee Ecotech sub-committee on SOM - Group on economic infrastructure

FACTS ABOUT APEC

Represent nearly half of all the worlds exports
Intra-APEC trade grew by more than 15 percent from 1992-00 Comprised 55 percent of world trade volume in 2001 Represent about 40 percent of the worlds population and 30 percent of the worlds land mass Nine of every 10 firms in APEC countries are small and medium enterprises

CONTD
Seven APEC economies experienced 100 percent growth in per capita GDP from 1989-00; only three experienced negative GDP growth rates in the 1990s Growth of APEC economies exports outpaced world exports

APEC HISTORY
APEC has come a long way since 1989. It has built steadily on the efforts of the past and looks forward to further progress. The initial years of APEC were focused largely on exchanges of views and projectbased initiatives. The concerns were simply to advance the process of Asia-Pacific Economic Cooperation and to promote a positive conclusion to the Uruguay Round of GATT negotiations. Today, APEC has evolved with the needs of its members to be a forum of greater substance and higher purposeit aims to build the Asia-Pacific community through achieving economic growth and equitable development through trade and economic cooperation.

The Blake Island Economic Vision

The vision of the was for an Asia-Pacific that harnesses the energy of its diverse economies, strengthens cooperation, and promotes prosperity, in which the spirit of openness and partnership deepens and dynamic growth continues, contributing to an expanding world economy and supporting an open international trading system. They envisioned continued reduction of trade and investment barriers so that trade expands within the region and with the world,

The Bogor Declaration of Common Resolve

On 15 November 1994, Indonesian President Soeharto hosted the second meeting of APEC economic leaders who discussed where the economies of the region need to go in the next 25 years. In their Declaration of Common Resolve, the economic leaders agreed to achieve the goal of free and open trade and investment in the region no later than 2010 for the industrialized economies and 2020 for developing economies.

The Osaka Action Agenda

Osaka on 19 November 1995, APEC economic leaders initiated the work of translating the Blake Island vision and the Bogor goals into reality. They adopted the Osaka Action Agenda, a blueprint for implementing their commitment to free and open trade and investment, business facilitation, and economic and technical cooperation. Part I of the Action Agenda deals with trade and investment liberalization and facilitation. Part II deals with economic and technical cooperation in areas such as energy and transportation, infrastructure, small and medium enterprises, and agricultural technology.

Manila Action Plan for APEC

Manila action plan was prepared to include the following:
Developing human capital

Fostering efficient and safe capital markets

Strengthening economic infrastructure Harnessing technologies of the future

Promoting environmentally sustainable growth

Encouraging the growth of small and medium enterprises

The Vancouver : Connecting the APEC Community

The Leaders at the summit endorsed their Ministers' agreement that action should be taken with respect to early voluntary sectoral liberalization (EVSL) in 15 sectors, with nine to be advanced throughout 1998 and implementation to begin in 1999. The emphasis in Vancouver was on a selfimposed obligation on the part of APEC to attain its avowed objectives

Kuala Lumpur: Strengthening the Foundations for Growth

The APEC Leaders in Kuala Lumpur in November 1998 reaffirmed their confidence in the strong economic fundamentals and prospects for recovery for the economies of the Asia-Pacific. They agreed to pursue a cooperative growth strategy to end the financial crisis. They pledged efforts to strengthen social safety nets, financial systems, trade and investment flows, the scientific and technological base, human resources development, economic infrastructure, and business and commercial links so as to provide the base and set the pace for sustained growth into the 21st century.

Auckland Challenge
At their meeting in September 1999 in Auckland, APEC Leaders agreed that the performance and prospects of the APEC economies had improved, but they were not complacent about the risks to recovery In addition to reaffirming their commitment to the Bogor Goals of free and open trade and investment by 2010/2020, Leaders endorsed new APEC Principles to Enhance Competition and Regulatory Reform; further work on an APEC Food System
.

BRUNEI Priorities in 2000

The summit emphasised the importance of openness and interdependence of economics as a means to achieving progress and prosperity. The Asian segment of APEC,in particular ,expressed commitment to do away with policies that led to the oft quoted economic crisis in 1997. The opportunities created by the IT revolution were appreciated and the APEC leaders decided to create strong knowledge based economy in the future.

APEC Achievements
Getting together Asian and non-ASIAN countries After Uruguay round of WTO,APEC has become a key venue APEC has become a key venue for discussing international economic integration, including so-called new issuescompetition policy, investment policy, intellectual property rights, free trade in services.

Tariff reduction on industrial goods Product category All industrial products Raw materials Semi-manufacturers Finished Products All tropical industrial products Raw materials Semi-manufacturers Finished Products Natural resource based products Raw materials semi-manufacturers Finished products Import value($billion)

Pre GATT tariff(%) post-GATT tariff(%

36.6 36.5 96.5

2.1 5.4 9.1

0.8 2.8 6.2

5.1 4.3 4.9

0.1 6.3 6.5

0 3.4 2.4

14.6 13.3 5.5

3.1 3.5 7.9

2 2 9.9

TARIFF REDUCTION ON AGRICULTURAL PRRODUCTS(%) Product category DC's All agricultural products Fruits and vegetables Coffeen and tea Sugar Spices and cereal preparations Grains Animal and products Oil seeds,fats,oils Beverages and spirits Dairy products Others EU 37 36 38 30 38 39 32 40 38 28 48 37 28 41 27 43 44 42 42 28 36 48 USA 39 39 21 23 38 50 34 42 50 15 51 Japan 36 39 33 27 30 31 34 46 40 18 43

DIFFERENT TYPES OF REGIONAL TRADE AGREEMENTS

Preferential Trading Agreements (PTAs)

Free Trade Agreement/Area (FTA )

Custom Union

Regional Free Trade Arrangements (share of world trade, 1994)

European Union

22.8 2.3 7.9 0.3 2.6 1.3

EUROMED NAFTA Mercosur Free Trade Area of the Americas (in addition to its subregionals) AFTA

Australia-New Zealand 0.1 APEC (in addition to its subregionals) 23.7 TOTAL 61.0

Exports within bloc

Exports within bloc(%)

Total exports by bloc

What is open regionalism?

Open regionalism represents an effort to resolve one of the central problems of contemporary trade policy: how to achieve compatibility between the explosion of regional trading arrangements around the world and the global trading system as embodied in the World Trade Organization. The concept seeks to assure that regional agreements will in practice be building blocks for further global liberalization rather than stumbling blocks that deter such progress.

BUILDING BLOCKS OR STUMBLING BLOCKS?

Trade diversion
regional agreements divert trade by creating preferential treatment for member countries vis-a-vis nonmembers. In addition to differential tariffs, members may benefit from preferential rules of origin and regional content requirements Attention diversion-countries may lose interest in the multilateral system when they engage actively in regional initiatives, stalling the evolution of the former and even threatening its vitality.

Contd.

Geopolitical impact
Some historians believe that regional trading arrangements (and economic blocs more broadly) may have contributed to political and even military clashes among nations. Ex. U.S. and nazi Germany

Defining Open Regionalism

Open membership
Any country that indicates a credible willingness to accept the rules of the institution would be invited to join.

Unconditional MFN
APEC trade liberalization would be extended unconditionally to all of the members trading partners. No new preferences or discrimination would be created

Contd..
Conditional MFN
APEC as a group would offer to generalize its reductions of barriers to all nonmembers that agreed to take similar steps.

Growth liberalisation
APEC members to simply continue reducing their barriers on a global basis while pursuing their regional goals

Reconciling the alternatives

APEC has not had to decide among these options because no real APEC liberalization has yet taken place. Beginning in 1996, the APEC members have submitted and will continually update Individual Action Plans (IAPs) that are intended to indicate how they plan to fulfill their Bogor pledges of achieving free trade and investment by 2010 or 2020. The initial compilations, however, simply record the steps that the countries are taking (1) to fulfill their Uruguay Round and other negotiated (e.g., NAFTA and AFTA) commitments and (2) to implement their unilateral liberalization initiatives.

APEC RECOMMENDATIONS
APEC indicate its willingness to extend the benefits of its regional liberalization to nonmembers who are willing to accept similar obligations toward the APEC membership APEC members liberalize their trade and investment barriers unilaterally to the maximum extent possible
Each individual APEC member remain free to extend the benefits of its own APEC liberalization to nonmember countries on either a conditional basis, via the negotiation of free trade arrangements with them, or on an unconditional MFN basis