APEC economies agree on path to free trade - Asia Pacific Economic Cooperation - includes related articles on Pacific Basin Economic Council, Pacific Economic Cooperation Council views and the National Center for APEC

Leaders from 18 Asia Pacific Economic Cooperation (APEC) economies vowed to pursue with "unwavering resolve" a detailed plan to eliminate all trade and investment barriers in the Asia Pacific region by 2020 during their meeting in Osaka, Japan on November 19. The "Action Agenda" adopted by the Leaders, which is regarded as the blueprint for implementing free trade and investment, covers 15 broad areas for liberalization, and sets out 135 specific actions that APEC members should take to open their markets and reduce the cost of doing business. In addition, it identifies economic policy goals for broad cooperation to enhance regional integration in 13 areas, such as telecommunications, transportation, human resources development, energy, and small and medium enterprises. The Action Agenda will help spur economic growth, support the effective implementation of the Uruguay Round results, and generally make it easier for American firms to do business in the Asia-Pacific region.

Origins of Agreement

APEC was formed in 1989 as an informal group of twelve economies, organized to increase economic cooperation in the region. President Clinton hosted the first meeting of APEC Leaders (previously only Ministers met), setting a precedent for years to come. In November 1993, the United States hosted the APEC summit at Blake Island in Washington State. The President's goal in convening this meeting was to help provide the organization with a clear direction -- to infuse it with a purpose and a vision, making it relevant to the everyday problems of businesses doing business in the region. At Blake Island, Leaders embraced President Clinton's vision of a Pacific community based on shared strength, shared peace, and shared prosperity.

Having set their course in 1993, APEC Leaders met for the second time in Bogor, Indonesia, in 1994. The "Bogor Declaration" which emanated from this meeting embodied a truly historic commitment -- to dismantle virtually all barriers that have impeded trade and investment between their economies by 2010 for developed countries and 2020 for developing members. The Declaration called for the creation of a blueprint or "Action Agenda" which would detail how members would achieve the vision of free trade by the 2010 and 2020 dates.

Developing the Action Agenda to achieve the Bogor vision was the focus of APEC work over the past year. That Leaders were able to endorse a detailed and comprehensive blueprint in Osaka demonstrates just how far APEC has come since the first Ministerial meeting six years ago in Australia. What began as a forum for an annual dialogue among Ministers has genuinely become a major catalyst for trade and investment liberalization, growth, and integration in this booming region.

The Osaka Action Agenda

The Action Agenda adopted by the Leaders is broad in scope, covering market access issues such as tariffs, non-tariff measures, quotas, and services. It also addresses new areas that are increasingly the source of some of the most pernicious market barriers in Asia, including intellectual property rights and investment, and issues of growing importance to the region such as competition policy and deregulation. Other issue areas covered by the Action Agenda include: customs, standards, government procurement, rules of origin, dispute mediation, mobility of business persons, and implementation of the Uruguay Round.

In each of these areas, the agenda spells out overall liberalization and facilitation objectives, guidelines for actions that economies will take on an individual basis, and agreed steps to be taken collectively. A set of overarepire principles apply to the entire liberalization and facilitation process. These principles ensure that liberalization is fully comprehensive (i.e., all sectors, all barriers), consistent with the WTO, balanced and comparable, transparent, and begins simultaneously with continuous, substantial contributions from all members throughout the liberalization process. Members also agreed to endeavor to apply the principle of non-discrimination between and among them in the process of liberalization, refrain from using any measures which could increase current levels of protection, and actively pursue economic and technical cooperation contributing to liberalization and facilitation of trade and investment. Flexibility will be permitted in the process of liberalization through both the pace of activity and the modality utilized, but the final implementation date for all action stands at 2010/2020.

The process of liberalization in APEC will employ four coequal approaches: individual actions, collective actions, actions to support multilateral liberalization, and actions which some in APEC begin and others embrace at a later stage. Members will each submit plans outlining actions to be taken employing these approaches by next fall at the next Ministerial Meeting which will be held in the Philippines.

The Action Agenda also defines work to be undertaken collectively, by APEC's ten Working Groups, which cover areas such as cooperation in telecommunications and information, transportation, energy, human resources development, tourism, marine resource conservation, fisheries, industrial science and technology, trade promotion, and trade and investment data. For each of these areas, common policy concepts have been developed to guide work and joint activities have been defined. These activities broadly support steps to advance integration of the region and cross-cultural ties. This work will advance over the next few years.

What APEC Means for U. S. Business

Beyond the broad policy measures agreed to in Osaka, APEC continues to undertake a series of measures designed to have practical, immediate benefits for business in the region. Some examples include:

--APEC is working to streamline and harmonize business visas throughout the region. The goal is to allow business people to travel through all 18 APEC member areas without having to obtain multiple visas. --Work is underway to promote uniform customs classification procedures, and to establish common forms for manifests, travel documents, and electronic transmission of business documents. Instead of wasting time on 18 different customs forms, businesses can look forward to the day when a single form is accepted for all APEC countries. --Achieving cooperative standards arrangements where products can be tested once and accepted throughout the region is one of the primary goals of the standards sub-committee. Work is ongoing in examining the possible establishment of mutual recognition agreements in areas such as food and toys. --A database containing tariff schedules and Customs Guides for all 18 APEC economies is now available on a single CD-ROM (for information on obtaining a copy of the CD-ROM Tariff Database, please contact lan Davis, APEC Affairs Division, on 202-482-5334). This is an extremely valuable tool for firms interested in exporting to multiple countries in the APEC region.

APEC has also published a number of valuable guidebooks on regulations governing business in the region, including a Customs Guide, Guide to Investment Regimes in APEC Economies, The State of Telecommunications Infrastructure and Regulatory Environment, and Regional Economic Outlook, as well as useful reports on issues such as Exemplary Training Models in Industrial Technology and Communications Policy Issues Associated with EDI. For order forms, price lists, and further information on these and other APEC publications, please contact the Director of Public Affairs at the APEC Secretariat in Singapore (Fax: (65) 276-1775; E-mail address: apecsec@technet.sg).

Helping Build the Region's Infrastructure

One of the most exciting areas of APEC activity in the coming years will be work in the area of infrastructure development. In a recent study, the World Bank concluded that during the next decade, developing East Asian economies will have to invest between $1.2 and $1.5 trillion in infrastructure development projects -- equivalent to about 7 percent of their gross domestic product. The industry sectors that will require the greatest investments are transportation ($607 billion), followed by power generation ($493 billion), telecommunications ($256 billion), and water and sanitation ($153 billion). Infrastructure investment in China alone is projected to exceed $700 billion during this period.

APEC has already undertaken a series of initiatives targeted at supporting infrastructure development goals of members' economies, including work towards the development of an Asia Pacific Information Infrastructure (APII); extensive studies on Transportation Congestion Points, creating a public-private sector guidance framework to facilitate investment in electricity infrastructure; and analyses of ways in which to increase the availability of capital -- public and private -- for infrastructure development projects. APEC has also embarked on a project to link electronic databases containing information on infrastructure projects open to international bidding through the internet. The current pilot project (http://www.doc.gov/apec.html) links databases from 5 countries. The goal would be to have all APEC economies' project opportunities accessible on-line by 2000.

The Action Agenda also addresses the issue of infrastructure through its work on government procurement. It calls for enhancing transparency of government procurement procedures and developing non-binding principles on procurement practices.

Involving the Business Community

No other international organization relies quite so heavily on the direct participation of business in its activities. Business involvement has been integral to the work that has taken place in APEC's many sub-committees and working groups, where many of the basic but fundamentally important issues are being addressed (see page 6 for comments from U.S. business organizations on the results of the Osaka meeting).

APEC's two formal private sector advisory bodies -- the Pacific Business Forum (two business representatives from each economy) and the Eminent Persons Group (one representative from each economy) -- both issued reports to APEC Leaders in Osaka which called on APEC members to ensure that the vision of Bogor is fully and effectively implemented. While it was decided in Osaka that the Eminent Persons Group will be dissolved and re-established as needed at a later date, APEC Leaders supported the establishment of a new permanent private sector Business Advisory Council (ABAC). Each APEC member will appoint up to three representatives to the ABAC from the private sector. Representatives from other regional private sector organizations, such as PECC and PBEC, will also be included in ABAC discussions. ABAC's primary mission will be to provide input on the implementation of the Action Agenda and other business sector priorities.

Even with the establishment of ABAC, APEC Ministers agreed on the need to continue active, regular consultations with their respective national business communities on the full range of issues under the APEC umbrella. The U.S. government maintains an ongoing dialogue with business representatives from throughout the country on APEC issues, and will consult closely with the private sector as we move to implement the Action Agenda.

Conclusion: Sustaining Prosperity and Stability

Not all of the developments in APEC can be measured in dollars and cents or directly linked to specific export opportunities. President Clinton's vision of an Asia Pacific community, enunciated in Seattle, goes further than the Bogor Declaration calling for free trade by 2010/2020. Indeed, the Bogor Declaration and the package of "downpayments" on the Action Agenda at Osaka (which included commitments by China, Indonesia, and others to lower tariff rates on thousands of items; please contact Stuart Allen at the State Department on 202-647-4835 for more information on downpayments of APEC members) makes clear that progress in liberalizing and facilitating trade and investment flows moves concurrently with a strengthening of the broader bonds that characterize the emerging sense of an Asia-Pacific community.

APEC activities promote development, deepen ties throughout the region, and by their success, help sustain economic growth and progress towards the 2010/2020 free trade and investment goal. Strand by strand a web of interdependence is being woven in the Asia Pacific region that will provide stability and peace over the longer term, and lead to ever greater commercial opportunities for American firms.

RELATED ARTICLE: Six Steps to Free Trade

[check] Seattle, United States, 1993-Agree to a broad vision of free trade and investment to be defined over the next year.

[check] Bogor, Indonesia, 1994--Agree to free trade and investment by specific dates of 2010/2020.

[check] Osaka, Japan, 1995--Leaders endorse action agenda which represents a blueprint for implementation of free trade.

[check] Osaka, Japan, 1995-Individual members publish "downpayments," or first, immediate steps they will take towards the Bogor goal.

[check] Subic, Philippines, 1996-Individual members publish short-/medium-term action plans which contain concrete details and timeframes, while outlining the basic direction of actions toward 2010/2020.

[check] 1996-2000--Progress from medium-term action plans to final goal. Ongoing consultations to ensure transparency and comparable contributions to liberalization by all parties.

RELATED ARTICLE: The National Center for APEC

The National Center for APEC is a private, non-profit organization dedicated to serving as liaison between the U.S. private sector and U.S. Government representatives to the APEC process, encouraging greater U.S. involvement in APEC, and working to expand public understanding of the benefits of APEC to the U.S. economy and society. Incorporated just 18 months ago, the National Center has established an office in Seattle and cuffently maintains a four-member staff.

The Center has hosted a series of APEC-related events since its inception. This year, it sponsored an Executive Roundtable that brought business leaders and academics together with U.S. Government officials for a broadranging discussion on APEC's future (papers presented at the conference and a set of policy recommendations are contained in a publication, APEC at the Crossroads, which is available through the Center; please see telephone numbers below). In June, the National Center, co-hosted, with U.S. PECC, a tour for APEC Transportation Ministers to Denver and Seattle following the first meeting of Transport Ministers which was held in Washington, D.C. The trip showcased American transportation infrastructure and technology. At the request of Secretary Christopher, the National Center also hosted the APEC "Next Generations Program." This event brought together government officials, academics, and business representatives from 18 APEC economies for a week-long event focused on broadening cooperation among up-and-coming young leaders. The Center has been asked to serve as. the Secretariat to support U.S. representatives to the APEC Business Advisory Council (ABAC).

The National Center for APEC continues to play a key role in fostering interest in APEC and expanding U.S. private sector involvement in the

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