APEC Looks At Regional Economic Integration

by Leroy Baker, Tax-News.com, New York

17 November 2011

Under the chairmanship of US President Barack Obama, the leaders of the Asia-Pacific Economic Cooperation group (APEC), at their recent meeting in Hawaii, adopted the ‘Honolulu Declaration’, which looks towards a “seamless regional economy”, by strengthening regional economic integration and expanding trade, promoting green growth, and advancing regulatory convergence and cooperation.

The leaders agreed to address key next generation trade and investment issues facing the region, including by action through the countries’ free trade agreements (FTAs) and a Free Trade Area of the Asia-Pacific, which is a major instrument to further APEC’s regional economic integration agenda.

Specifically, they committed to the promotion of effective, non-discriminatory and market-driven innovation policies and also decided on areas of cooperation that could be included in FTAs to enhance the participation of small- and medium-sized enterprises in global production chains.

In addition, it was agreed that the APEC countries would establish commercially-useful de minimis values in their economies that would exempt low-value shipments from customs duties and streamline entry documentation requirements, as a key contribution to APEC’s goal of a 10% improvement in supply-chain performance by 2015.

The leaders made a commitment to develop by 2012 a list of environmental goods that contribute to green growth and sustainable development on which it was resolved to reduce applied tariff rates to 5% or less by the end of 2015. Economies will also eliminate non-tariff barriers, including local content requirements, that distort environmental goods and services trade.

The APEC economies also decided to phase out inefficient fossil fuel subsidies, setting up a reporting mechanism to track progress, and raised their APEC-wide energy intensity reduction target to 45% by 2035.

Leaders committed to take specific steps by 2013 to implement good regulatory practices in their economies, including by ensuring internal coordination of regulatory work, assessing regulatory impacts, and conducting public consultation.

Leaders also expressed deep concerns regarding the impasse confronting the Doha Development Agenda (DDA). They considered that a conclusion of all elements of the Doha agenda is unlikely in the near future, and have therefore instructed their officials, when involved in future DDA negotiations, to look for “fresh thinking and a determination to begin exploring fresh and credible approaches". These include possibilities that involve advancing specific parts of the Doha agenda where consensus might be reached on a provisional or definitive basis.

The Declaration contained a pledge to re-extend the commitment on a standstill, originally made in 2008, to refrain from raising new barriers to investment or to trade in goods and services until the end of 2015.

A statement from the United States Administration pointed out that APEC serves as the premier forum for US engagement with the Asia-Pacific region, and that APEC’s 21 countries comprise a market of 2.7bn consumers, account for 44% of world trade, and represent 55% of global economic output (more than USD35 trillion in 2010).

Furthermore, six of the US’s 10 largest trading partners are in APEC. In 2010, APEC economies purchased 61% of total US goods exports (USD774bn in 2010), and over 37% of US private services exports (over USD205bn in 2010), supporting 5m American jobs.

As President Obama declared in a subsequent news conference, “no region will do more to shape our long-term economic future than the Asia Pacific region. As I've said, the United States is, and always will be, a Pacific nation. Many of our top trading partners are in this region. This is where we sell most of our exports. And since this is the world's fastest growing region, the Asia Pacific is key to achieving my goal of doubling US exports.”

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