IAP Peer Reviews: APEC Member Economies Make Progress
The APEC Secretariat's Finance Director, Mr. Geoffrey Woodhead, highlights the cooperative nature of the IAP process that has recently begun another round of reviews. "Peer learning, peer support, and peer pressure from all Member Economies are a big part of efforts to achieve free and open trade in our region," says Mr. Woodhead. "In APEC, peer reviews are seen as encouraging economies to make progress on economic cooperation."
There are two parts to the APEC peer review process. In the first stage, Member Economies develop and implement Individual Action Plans (IAPs) that include a comprehensive package of reforms and ongoing trade facilitation measures. Then every few years, these IAPs are reviewed through a process that involves an assessment by independent experts. The report that is prepared by experts is then presented to the other 20 APEC Member Economies, which then have the opportunity to question the economy under review and measure their progress.
"The review process is open and can be very frank if one economy feels another economy needs to improve their progress," Mr. Woodhead explains.
This process lies at the heart of APEC's voluntary and consensus-based process. "While commitments are non-binding in a court of law," notes Mr. Woodhead, "the peer review process ensures that if one economy does not appear to be honoring commitments there will be pressure for compliance."
APEC's peer reviews are a win-win for the economies under review as well as for all members because they learn how the reviewed economies go about policy change; what they are doing well or poorly, and what difficulties they face. The questions asked of the reviewed economies help each re-examine their own motivation and ask themselves why certain policies have been put in place. Peer reviews provide evidence of best practice for others to follow, and their transparency helps to meet APEC goals.
Often the achievements of some economies can nudge other economies to improve their performance to keep up with their peers, according to Gloria Pasadilla, research fellow at the Philippines Institute for Development Studies. "In one report, a member economy immediately gets a good picture of the economic and policy scenarios faced by the reviewed economy," says Ms. Pasadilla, who worked as an independent expert on the recently concluded peer review of Chinese Taipei.
"The reviewed economies benefit from the exchange with the experts because they learn what other economies do in specific policy areas such as customs facilitation and standards setting, based on the knowledge of the reviewers. They also benefit in taking a comprehensive look at their economy's trade policies which, in many cases, tend to be decentralized."
Mr. Sung-Hoon Park, who conducted this year's IAP of Hong Kong, China, adds that economies facing domestic reluctance to reform can use the recommendations brought forth in APEC's peer reviews to help exert pressure to make real reforms. And he notes that business sectors have an opportunity within the peer-review system to express their concerns and address their interests. The experts take the views of business fully into account when writing their study reports.
Peer reviews were first developed in the scientific field, when scientific studies were reviewed by other scientists prior to publication in well-respected scientific journals. Today the practice is used in a number of different fields and by a number of international organizations to monitor and assess national policies in various sectors.
Like peer reviews conducted by the OECD or the Trade Policy Reviews of the World Trade Organization, APEC's IAP peer reviews often confront problems directly but they are constructive and not adversarial. They are intended to be interactive and to provide a mutual learning experience for all APEC members and individuals. The economy under review has the opportunity to learn how others view its policies, programs, and administrative practices in the context of progress towards achieving the Bogor Goals.
The peer review process may be used to indicate where capacity building is desirable. And the voluntary nature of APEC means that the peer reviews are carried out in an atmosphere of trust; this enhances learning opportunities.
In 2005, following a mid-term stock taking of progress towards the Bogor Goals, APEC put measures in place to strengthen its peer review process. The first change was to put in place at the outset a time-table for the review of all 21 member economies. At that time member economies decided collectively that they would each submit to a peer review of their IAP.
In the very first round of peer reviews, which began at the second Senior Officials Meeting in 1997, the time-table was voluntary and ad hoc. There was no fixed schedule and economies simply offered themselves for peer reviews, explains Anita Douglas, the APEC Secretariat's Singapore-based Director of Communications and Public Affairs. What's more, the timing of the peer reviews at the Senior Officials Meeting (SOM) was improved to make it easier for the Senior Officials to attend.
The IAP Peer Reviews were designed to be more robust and forward looking, and to provide policy relevant interaction, including a greater focus on what APEC members are doing individually and collectively to implement specific APEC commitments and priorities. The new framework, which includes a three-year cycle for full IAPs and accompanying Peer Reviews, aims to reduce the current resource burden imposed by annual IAPs, while maintaining the integrity of the IAP Peer Review process.
In addition, changes to the IAP Peer Reviews agreed to in 2005 allowed for the review process, by mutual agreement of the economy under review and the Review Team, to extend beyond issues listed explicitly in the IAPs and to include other issues useful for demonstrating progress towards meeting the Bogor Goals. The new process aimed to provide a forward-looking aspect to the Peer Review by allowing the economy to set out its future policy priorities, explains Mr. Woodhead.
Another major change that was brought about is that there are now two experts conducting the independent assessments, rather than one. "The areas to be covered in the peer review are rather large and it was felt that two experts would provide better coverage," Mr. Woodhead adds.
Each economy prepares an Individual Action Plan or IAP, a kind of self-reporting, to mark the steps it has taken and intends to take to achieve the Bogor Goals. The IAPs are quite detailed. And they are updated each year to take into accounts new developments. The summary of improvements can be accessed by the public on APEC's e-IAP website .
APEC's IAP peer reviews provide a significant opportunity for economies to question the economies being reviewed on ambiguities and issues. And as APEC members become more comfortable with the IAP process and the action plans themselves become more robust, says Yuen Pau Woo of Canada's Asia Pacific Foundation, who conducted a peer review of Japan in 2003, "the opportunity for some frank discussion and exchange among APEC members will be healthy for regional trade and investment liberalization."
The individual action plans of Australia, Hong Kong/China, Japan and Chinese Taipei offer a number of insights into the trade policy instruments of each economy. Chinese Taipei, for instance, was described as "one of the most successful developing economies in the 20th century," with market liberalization playing a crucial part. In that economy, exports of textiles, electronics and IT products have been the primary engine of growth. Offshore investment has also played a significant part in Chinese Taipei's development, the independent experts noted in their report. One of the key areas in which the economy made the most significant improvement was in the area of customs procedures - with the clearance of cargo being among the shortest of all APEC member economies.
Australia too has made steady progress in trade liberalization and facilitation, going "beyond many other APEC members in arranging and implementing competition policy and deregulation." Australia has invested heavily in domestic infrastructure and is successfully closing the productivity gap with other advanced economies thanks to its broad structural reforms in recent decades. Structural reforms were most notable in export infrastructure, land transportation and electricity and water. Meanwhile, Australia has implemented autonomous liberalization in areas such as tariffs, non-tariff measures, services and investment.
Hong Kong, China, meanwhile, was identified by the report's authors as "one of the most liberal and open economies in the world" and strongly committed to the multilateral trading system. It has long maintained a free-market economy and a liberal trade and investment regime. Indeed Hong Kong, China was lauded as a model against which many other economies can be benchmarked. It currently applies no tariffs at all on imported products, and levies duties only on selected items. No quantitative restrictions are imposed, and there is very sparing use of licensing schemes. What's more, the investment regime is highly transparent, the authors found, and Hong Kong "can be considered the APEC member economy that is closest to achieving the Bogor Goals at the moment."
In Japan, economic reform is a central preoccupation of the Japanese government as it strives to create the conditions for sustainable economic growth. In recent years Japan has emphasized supporting APEC's work in the areas of intellectual property, competition policy, structural reform, standards and conformance, and WTO capacity building.