ABAC Helps Launch APEC's Mid-term Review With a Business Assessment
In the decade since establishing APEC's Bogor Goals of free and open trade and investment in the region, APEC economies' liberalisation efforts and economic growth have helped raise an estimated 165 million people out of poverty, reducing poverty in the region by one third. Over the past decade, APEC economies have created 195 million jobs and generated 70% of world economic growth. These are among the observations made in "The First Decade Since Bogor: A Business Assessment on APEC's Progress", an independent report commissioned by APEC's private sector partner, the APEC Business Advisory Council (ABAC).
This Business Assessment offers private-sector views on APEC's progress, and aims to help APEC prepare for an introspective, mid-term review, scheduled for 2005, to assess its progress toward the Bogor Goals. In general, to date, APEC receives pretty good marks. From 1995 to 2001, APEC economies have lowered average tariff rates by over one third, from 12% to 7%. Economies have made good progress liberalizing their investment regimes and trade in key services sectors, such as telecommunications. Foreign direct investment (FDI) has grown by 210% and trade has increased 113% to over $2.5 trillion.
APEC's business facilitation accomplishments include: a Blueprint for APEC Customs Modernization, the APEC Business Travel Card scheme, rapid information exchange on regional certification requirements, and APEC mutual recognition arrangements for conformity assessment of telecommunications equipment. A recent study estimated that successfully reaching the Shanghai Accord target of reducing business transaction costs by 5% could result in a net increase of APEC's collective GDP by nearly 1% or about US$154 billion.
Business also recognizes the unanticipated challenges that have faced the region over the past decade. Dr. Victor Fung from Hong Kong noted, "Since the establishment of the Bogor Goals, significant events, such as the Asian Financial Crisis, September 11th, the rise of China, the SARS health threat and technological progress have changed the world." These exogenous shocks have affected economic growth and political climates in APEC economies. For example, the Asian financial crisis damaged business confidence and highlighted corporate governance problems and the need to strengthen financial markets. The threat of terrorism has raised fears and undercut confidence well beyond the immediately affected economies and sectors, and subsequent security measures have created new costs for both economies and businesses.
APEC also faces new challenges, such as ensuring that new FTAs/RTAs concluded by members are compatible with WTO principles and the Bogor Goals, and reversing a trend of creeping protectionism that threatens to undermine APEC's trade liberalisation progress.
ABAC's study also makes clear that APEC still has much to do if it is to reach its Bogor Goals. There are still significant tariff peaks, particularly in sensitive sectors, and protection especially for agricultural products remains a major impediment to trade liberalisation in both APEC and the WTO. Economies' liberalisation in investment, services and other areas are often not committed to in the WTO and therefore could be reversed.
Business facilitation is a natural focus for APEC, which has taken a number of meaningful steps, but there is still much more that can be done in areas such as standards, customs, legal infrastructure, intellectual property protection, and movement of people.
Another critical outstanding challenge for APEC is more effective capacity building. From 1998 to 2002, APEC undertook 984 projects, and they have gradually eIssue ved from information gathering toward practical training programs, but overall there has been little progress. APEC must better coordinate capacity building efforts, make them more effective, and explore more public/private partnerships. Better capacity building could more widely and equitably share the benefits of APEC's liberalisation, build confidence and engagement among developing economies, and increase popular support for not only APEC but also the WTO.
So what is the Report's conclusion? That the Bogor Goals are still relevant and important. APEC's partnership between the public and private sectors is a defining characteristic and one of its strengths. ABAC's annual "Recommendations to Leaders" helps give direction to the entire process, and business is the engine that converts policy reforms into economic growth, job creation and even poverty alleviation. ABAC's "The First Decade Since Bogor: A Business Assessment on APEC's Progress" is an invitation to APEC economies to carry through on the goals they have set, and a statement from business that it plans to stay engaged and play its part to reach Bogor.