What is the Asia-Pacific Economic Cooperation (APEC)?
The Asia-Pacific Economic Cooperation (APEC) is an economic group, currently with 21 members, that promotes and facilitates trade, economic growth, and the improvement of living standards for the Asia-Pacific region. With a growing interdependence of the region, APEC was established in 1989 as a way to leverage the growth to move members forward, where it was a “win-win” for all.
While members are committed to the overall group, APEC does not require its members to enter into legally-binding obligations. As for operations, the economic forum promotes dialogue within the 21 members and uses consensus-based decision-making, lending equal weight to all members, no matter the size of the country or economy.
Requiring consensus is beneficial for representing all members, but you can imagine that achieving unanimity between 21 members can be quite difficult. As a result, APEC’s effectiveness is limited by how fast the group can come together and agree.
The APEC’s 21 members are described as “economies” since it is primarily concerned with trade and economic dealings. Additionally, not all members are countries, per se. For example, Hong Kong and Chinese Taipei are members.
- The Asia-Pacific Economic Cooperation (APEC) is an economic group focused on promoting and facilitating trade and economic growth for its 21 members.
- The 21 members are not necessarily 21 countries. Each member is considered an “economy” since APEC is primarily concerned with trade and economic dealings.
- APEC uses consensus-based decision-making, which allows for all members to be heard but also can slow down the group’s effectiveness.
Asia-Pacific Economic Cooperation Membership
APEC was established in 1989 in Canberra, Australia with 12 members. Currently, APEC is comprised of 21 economies, including:
Functions of the Asia-Pacific Economic Cooperation
The primary function of APEC is to promote and facilitate trade and economic growth between members of the group. Under that large umbrella, it will aim to achieve its objectives through two primary actions:
1. Liberalizing trade and investment
APEC will liberalize trade and investment by ensuring goods, services, and investments can flow easily across borders. It can be done by reducing the costs of imports and exports and promoting free trade.
2. Facilitating economic growth
After the liberalization of trade and investment, economic growth can be facilitated through faster customs procedures, aligned regulations and standards, creating favorable business climates, improving logistics, and overall accelerating economic integration between the regions.
Additional Focus Areas
To complement the two actions above, APEC will also do the following:
1. Raise living and education standards
APEC focuses on raising the standard of living and education for the people of its member economies. By doing so, it will help lift people out of poverty and build an educated middle class that will contribute to the future success of each economy and APEC as a whole.
2. Focus on Inclusivity
Economy members within APEC range from developing economies to fully developed and thriving economies. APEC makes it a priority to be inclusive of all of its members in decision-making and with the allocation of funds and services. The goal is to help assist residents of Asia-Pacific to participate in the collective growing economy. Being inclusive and helping developing economies close the gap between developing and developed.
3. Focus on sustainability
Sustainability continues to rise in importance nowadays, and members of APEC are known for helping increase energy efficiency and promoting sustainable practices.
APEC Funding Sources and Uses
APEC and its activities are mainly funded through annual contributions from the 21 member economies currently totaling $5 million. The amount is used to fund a Secretariat in Singapore and support projects that adhere to APEC’s economic and trade goals.
Members also provide voluntary contributions to the forum for additional aid and support of APEC’s projects. The goal of funding APEC is to provide liberalization of trade and advance economies so all members can benefit. With the Pacific Rim consisting of a vast catchment area for trade, it is in the best interest of everyone if each economy is uplifted.
APEC: A Success or Not?
Since its establishment in 1989, the Asia-Pacific Economic Cooperation’s been working to integrate a region that accounts for well over 50% of the world’s GDP and over three billion of its population. According to the APEC website, real GDP grew from $19 trillion in 1989 to $42 trillion in 2015.
Here are a few additional achievements and benefits that the region realized in a few decades:
- Millions lifted out of poverty
- A growing middle class
- Trade growing 6.7 times between 1989 and 2015 in APEC’s economies, compared to 5.6 times for the rest of the world during the same time
- Tariffs dramatically decreasing
- More synchronized regulations and standards
- Streamlined customs procedures
- Supply chain connectivity
- Heightened focus on sustainability
While it is difficult to pinpoint what magnitude of the benefits are attributable to APEC directly, the group is widely considered a success, promoting and facilitating trade and economic benefits.
The Asia-Pacific Economic Cooperation (APEC) is a group primarily focused on trade and economic growth for the 21 members of the economic forum and their people. In addition to trade and economic goals, APEC focuses on improving living standards, inclusivity, and sustainability.
APEC members make up over 50% of the world’s GDP, with member economies seeing substantial growth since the group’s creation in 1989. It appears that APEC’s been successful thus far in its goals.
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