Giving U.S. Business a Voice in the Asia-Pacific
The National Center for APEC (NCAPEC) is dedicated to advancing the U.S. business community’s views in the dynamic Asia-Pacific region. Established in Seattle, Washington in 1994, NCAPEC is the only U.S. business association focused exclusively on facilitating private sector engagement in the Asia-Pacific Economic Cooperation (APEC) process.
APEC 101: What You Need to Know
What is APEC?
The Asia-Pacific Economic Cooperation (APEC) is a group of 21 economies located in the dynamic Asia-Pacific region that are dedicated to promoting greater trade and investment globally. Officials from APEC economies formally convene throughout the year to discuss ways to remove market barriers, facilitate trade, and promote sustainable development that enables economic growth.
APEC economies represent one of the most valuable economic regions in the world. In 2013, APEC economies collectively represented more than half of global GDP, and trade among APEC economies accounted for more than half of all global trade.
Trade also plays a significant role in the United States' economy. Nearly six million jobs were supported by U.S. exports to APEC in 2013, according to the U.S. Department of Commerce, and more than 60 percent of all U.S. exports were shipped to APEC countries that same year.
When did APEC start and why?
APEC was founded in 1989, with the goal of promoting free and open trade and advancing sustainable economic growth in the Asia-Pacific. At the time of its founding, the dialogue was informal, held only among senior officials and Ministers, and included just 12 Asia-Pacific countries.
That changed in 1993. That year, U.S. President Bill Clinton established the practice of an annual APEC Economic Leaders' Meeting during APEC's summit in Seattle, Washington. The APEC Leaders' Meeting remains a permanent, annual part of APEC today. In addition, a key theme of that 1993 summit was expanding business engagement in APEC's dialogues and working groups. As a result, the National Center for APEC (NCAPEC) was established the following year to serve as the voice of U.S. business in APEC.
Top APEC objectives were enunciated the year following the Seattle meeting. In 1994, APEC Leaders established the "Bogor Goals" in Bogor, Indonesia. The Bogor Goals state that APEC economies will work toward securing free and open trade and investment in the Asia region by reducing trade and investment barriers and promoting the free flow of goods, services, and capital. The Bogor Goals set out a timeline to achieve these targets: 2010 for industrialized economies and 2020 for developing economies. Since being established, the Bogor Goals have played an important role in guiding APEC's agenda and objectives.
Who are the APEC economies?
APEC economies includes Australia; Brunei Darussalam; Canada; Chile; People's Republic of China; Hong Kong, China; Indonesia; Japan; Republic of Korea; Malaysia; Mexico; New Zealand; Papua New Guinea; Peru; The Philippines; Russia; Singapore; Chinese Taipei; Thailand; the United States; and Viet Nam.
Why is APEC important?
APEC is important to American interests. It is the only head-of-state level forum in the Asia-Pacific region where the world's largest and smallest economies work side-by-side to develop workable solutions to trade and investment barriers.
APEC is different from other fora, like the World Trade Organization (WTO) and Organization for Economic Development. How? APEC is a consensus-driven organization and its outcomes are not binding on economies. Instead, APEC works on the basis of concerted unilateral liberalization –meaning that each APEC member voluntarily agrees to liberalize in a particular area of trade and investment. This difference makes APEC unique from other organizations, because it gives its 21 members a platform to raise emerging or sensitive issues before introducing them in a binding forum, such as the WTO or a trade agreement negotiation, like the Trans-Pacific Partnership (TPP).
APEC is also an incubator of ideas. Only APEC brings together policy-makers, business leaders, and academics from North and South America, Oceania, and Asia to meet on a regular basis and work toward a common goal of improving economic conditions for the benefit of their societies. Through APEC's non-binding discussions, participants seek to address behind-the-border issues by proposing guidelines, best practices, and initiatives to make steady progress toward their shared economic goals.
How does APEC work?
Officials from APEC economies meet regularly throughout the year to discuss pressing industry and trade issues that are of interest to member economies and the private sector.
APEC maintains a cyclical, hierarchical structure of meetings, which spans from the working level to senior government leaders. At the most technical level, APEC has established working groups focused on a broad range of issues, including anti-corruption, digital trade, finance, food safety, foreign investment, intellectual property, mining, services, and trade facilitation, among other issues. At working group meetings, officials discuss ways to eliminate trade and investment barriers, promote the use of international regulatory best practices, consider capacity building initiatives, and advance consensus-based solutions to top issues.
APEC working groups report and make recommendations to APEC Senior Officials, who meet regularly at Senior Officials Meetings (SOMs), which convene four times per year. Senior Officials act as a coordinating body for all APEC activity, including APEC Ministerial Meetings.
APEC Ministers of trade, finance, small and medium-sized business (SMEs), and foreign affairs meet twice a year, while Ministers of education, energy, environment, sustainable development, science and technology, telecommunications, and transportation meet every two to three years.
Near the end of each year, APEC Economic Leaders — the heads of government of each APEC economy — convene annually at the Economic Leaders' Meeting. At that meeting, Leaders outlined APEC's achievements for the year and identify priorities for the coming year.
How does the private sector engage in APEC?
APEC gives the private sector a unique platform to raise top trade and investment priorities with senior officials from 21 Asia-Pacific economies, and advocate for sensible policies that promote fair and open trade and investment environments.
APEC has established a formal channel for businesses to share their concerns, priorities, and views on trade and investment with APEC officials. Launched in 1995, the APEC Business Advisory Council (ABAC) brings together senior three business executives from each APEC economy, designated by their respective governments, to develop private sector input into APEC.
The 63 ABAC members engage directly with APEC Senior Officials, Ministers, and APEC Economic Leaders2 throughout the year. ABAC members represent a range of industries and sectors, and include representatives from small and medium-sized enterprises.
NCAPEC has played a critical role in supporting U.S. ABAC members. Since ABAC's establishment in 1996, NCAPEC has served as a Secretariat for the three U.S. ABAC members. In this role, NCAPEC directly staffs U.S. ABAC members and advocates on their behalf in APEC to advance members' priorities and initiatives.
What has APEC accomplished?
APEC has acted as a catalyst for global trade agreements, and a "laboratory for ideas" on strategies to promote greater trade and investment in Asia. For example, APEC helped forge a path for the development of regional trade agreements, like the Environmental Goods Agreement (EGA) and 12-nation TPP. APEC has also supported capacity-building in APEC, helping equip economies so that they may be better able to facilitate and promote open trade and investment. As a result of its work, APEC's Policy Support Unit estimates that intra-APEC trade now tops that of intra-European Union and intra-NAFTA trade.
Top initiatives APEC has helped advance include:
- Information Technology Agreement (ITA): At the 1996 APEC meeting in Manila, Leaders announced their support for an ITA among APEC economies, which would eliminate tariffs of a broad array of information technology goods. Led the APEC agreement, the initiative was later adopted and formalized by the WTO in December 1996. In 2011, APEC Leaders announced their intent to expand and update the ITA, and in December 2015, the ITA was formally expanded to cover 201 new products.
- Environmental Goods Tariff Reduction Commitments: In 2012, APEC Leaders agreed to reduce tariffs on 54 environmental goods by the end of 2015. That collective effort laid the groundwork for the development of the EGA, which remains in negotiation in the World Trade Organization as of July 2016. The EGA builds upon the initial APEC list of goods and proposes removing tariffs on a wide range of environmental goods.
- Tariff Reductions and Trade Growth: In addition to specific agreements aimed at reducing tariffs, APEC's work has helped lower tariffs in the region and boost trade. According to APEC's Committee on Trade and Investment, the average applied tariff in APEC economies has been reduced from nearly 17% in 1989 to 5.2% in 2012. At the same time, trade in goods and services among APEC economies has grown significantly, from $3.1 trillion in 1989 to $20 trillion in 2012. Further, APEC economies have been shown to export 2.8 times more to other APEC members than non-members and import 1.9 times more from other APEC members than non-members.
- APEC Business Travel Card (ABTC): The ABTC was initially tested by three APEC economies in 1997, and later expanded among APEC members. The ABTC allows business travelers pre-cleared, facilitated short-term entry to participating member economies. The ABTC removes the need to individually apply for visas or entry permits and allows multiple entries into participating economies during the three years the card is valid. Card holders also benefit from faster immigration processing on arrival via access to fast-track entry and exit through special APEC lanes at major airports in participating economies.
- Free Trade Area of the Asia Pacific (FTAAP): In early 2004, ABAC proposed developing an ambitious, comprehensive, and region-wide free trade area within APEC –the FTAAP. Such agreement would offer a tremendous economic benefit for APEC members by spurring greater trade and investment among economies. The concept was formally agreed to by Leaders as a long-term vision for APEC in 2006. Since that time, APEC officials have identified other trade agreements, including TPP, RCEP, and the Pacific Alliance, as possible pathways to achieve the FTAAP. In 2014, APEC agreed to launch a study to analyze potential costs and benefits, as well and challenges and opportunities, of developing the FTAAP.
What does NCAPEC do?
NCAPEC is a business association supported by its members companies, dedicated to the proposition that business must have a voice in the development of policies in Asia-Pacific economies. NCAPEC is the only U.S. business association focused exclusively on facilitating U.S. private sector input into the APEC process. As an organization, NCAPEC has been a model which other APEC economies have replicated.
NCAPEC works closely with the Departments of State, Commerce, and Treasury; Office of the United States Trade Representative; and other government agencies to advance the business community's interests with regard to trade, economics, regulatory issues, and other matters in the Asia-Pacific region.
Some of the world's most influential U.S. companies make up NCAPEC's membership. These companies are leaders in a broad range of industries including aerospace, automotive, biotech, chemicals, computer software, consumer goods, express delivery, financial services, food, health care, heavy equipment, insurance, logistics, medical equipment, mining, energy, pharmaceutical, retail, and telecommunications. While they have diverse interests and concerns, members share a strong commitment to APEC's goals of free and open trade and investment. Members work closely with NCAPEC, ABAC, and government officials from all economies to raise their concerns and recommended actions to improve business conditions in the region.