Individual Action Plans Keeping APEC Economies on Track
How can a Issue untary forum like APEC keep the pressure on its 21 Member Economies to pursue trade and investment liberalization and facilitation measures and to meet the Bogor Goals of free and open trade and investment by 2010 for industrialized economies and 2020 for developing economies?
Part of the answer lies in the forum's Individual Action Plans or IAPs, and its unique Peer Review process. IAPs are like an annual report of each APEC Member Economy's actions to liberalize and facilitate trade and investment. They give economies a chance to describe policies and report on progress with the various liberalization and facilitation initiatives which are collectively represented by the Bogor Goals. APEC's IAP Peer Reviews create a forum in which economies explain their policies to their peers, with the aim that this peer pressure will help promote economic growth and prosperity they seek for their communities.
How does it work? Each IAP contains 15 chapters on different trade-related issues such as tariffs and non-tariff barriers that can restrict trade or make it more expensive (such as quotas, subsidies, minimum import prices, quarantine measures and technical barriers). There are also chapters on services and investment or arrangements that impact on investment. The chapter on investment includes investment by foreign entities such as the transparency of decision-making processes, capital transfer procedures and non-discrimination policies. The IAPs are submitted annually by each economy and are available to the public at www.apec-iap.org.
A few economies each year then Issue unteer to participate in an extensive IAP Peer Review. The review process starts by soliciting questions from other APEC economies on the policies of the economy under review. These questions and the resulting answers, and discussions with officials in the economy under review, are then used to prepare an in-depth study report by an independent expert. The study report ensures that the process is rigorous and comprehensive, and it becomes the background for the interactive IAP Peer Review session, in which the economy under review sits in the hot-seat answering questions from the other 20 APEC members.
"IAPs are not meant to be aggressive...or adversarial," explains Dr. Hank Lim, Director of Research, Singapore Institute of International Affairs (SIIA), an economist who recently served as an independent expert on the IAP Review of the People's Republic of China. "It's a progress report."
APEC's IAP Review differs from the WTO's Trade Policy Review in that the APEC approach is meant to be "a mutual learning experience among APEC members with a gentler peer-pressure approach," notes Dr. Mignonne Chan, Director of the Taiwan Institute of Economic Research's Division of International Affairs, who also served as an independent expert on Peru's recent IAP Review. "It is important for APEC since it is the consensual mechanism" to achieve the Bogor Goals. Chan notes that IAP Reviews could also serve as a catalyst for implementing and going beyond WTO commitments as well as contributing to the WTO's Doha Development Round in capacity building based on needs.
As important stakeholders in the process, the business community is also invited to comment throughout the process through the APEC Business Advisory Council (ABAC). In addition, representatives of the business community are invited to attend and join in IAP Peer Review sessions as a peers.
Each economy's IAP includes the economy's report on standards and conformance and how they are progressing with aligning domestic standards with international standards. It covers customs procedures including measures being taken to reduce the time and cost to move goods across borders, such as electronic or paperless mechanisms, harmonizing trade data and risk management. The IAP describes policies and measures to protect intellectual property, competition policy or rules to ensure and promote open and fair competition and prevent practices to restrict competitive activity. Government procurement practices or how government agencies purchase goods and services in a fair and open way and to assure value for money when spending public funds, are also included. Additionally, each IAP looks at how the economy is progressing towards implementing its obligations under WTO Agreements, including commitments on goods, services and intellectual property; rules of origin; dispute mediation; and the mobility of business people.
APEC has continued to refine the IAP system over the years since IAPs were first launched in 1996 as part of the Osaka Action Agenda. In 1997 APEC introduced Issue untary peer reviews, and in 2000 APEC launched the e-IAP system in which economies upload their annual IAP submissions onto the World Wide Web. This allows easier public access to IAPs.
Base Year and Cumulative Improvements Tables provide informational snapshots of arrangements in the base year (when IAPs were established - 1996 for most members, and 1998 for the newest members Peru, Russia and Viet Nam), together with lists of improvements that have been implemented from the base year until now. This comparison puts the annual IAP in context, recognizing economies' different starting points with regard to their trade and investment regimes. In 2001, APEC took another stride forward and established IAP Peer Review Teams. As part of each team, an independent expert is commissioned to prepare a Study Report to assure a sufficient analytical basis for discussion.
Twelve of APEC's 21 economies have completed the current round of IAP Peer Reviews: Australia, Canada, China, Hong Kong China, Korea, Japan, Mexico, New Zealand, Thailand, Peru, Chile, and the United States. Peer Reviews will be completed for Chinese Taipei and Singapore in September and the remainder (Brunei Darussalam, Indonesia, Malaysia, Papua New Guinea, the Philippines, Russia and Viet Nam) will be completed before the first Senior Officials' Meeting in 2005.
"The peer-review process keeps economies informed of what others are doing, and it keeps people moving in the right direction," explains Scott Smith, a program director at the APEC Secretariat in Singapore, who was recently inIssue ved with China's IAP. Adds Dr Lim who prepared a comprehensive report on China's economy: "Participating gives an esprit de corps and puts pressure on those who haven't been reviewed to participate in one."
Dr Lim studied China's economy for six months from October 2003 to April 2004, including a five-day stint in Beijing interviewing government experts and regulators, to research his report for China's IAP peer review. He noted that China has made astounding progress since China IAP Review in 1996, bolstered by efforts related to China's WTO accession, and can be justifiably proud of its progress. China has done "a remarkable job on tariffs, as well as with formulating comprehensive new rules" he summarizes in a recent interview with the APEC Secretariat's Newsletter, "but how China enforces those rules and the resources and political capital it devotes to enforcement will be telling." There is also much work still to be done in areas such as intellectual property protection, government procurement and non-tariff barriers. In its IAP Peer Review, China acknowledged the importance of enforcement and that success is vital to China's own interests. Still, China's economic liberalization has been remarkable and, Dr Lim emphasizes "the acid test is that they're moving in the right direction and steadily making progress."
Adds Armando Caceres, the independent expert contributing to the US IAP Peer Review: "APEC's seeking open regionalism creates a favorable environment for discussing and experimenting with best practices, especially in trade facilitation in the region."
IAPs continue to eIssue ve and are unquestionably a key mechanism to help APEC members achieve their Bogor Goals. The annual tabling of IAPs by Ministers at the APEC Ministerial Meeting, and the process of being periodically evaluated by peers, gives economies a chance to highlight the good things they are doing. Opening IAPs up to the public also improves transparency and gives stakeholders such as business a chance to engage and constructively question economies' policies and practices.