TWENTY-ONE leaders of the Asia-Pacific Economic Coopera-tion (Apec) economies meet in Beijing next week.
It will mark the organisation’s 25th anniversary.
So what has Apec got to show the world besides growing from 12-member economies in 1989 to 21 today?
How effective has it been in driving trade and investment?
What can these high-level meetings actually do to improve the global economy?
If one asks whether Apec’s main goal – easing the barriers to doing business in the region – has been achieved, the answer has to be yes. Here’s why.
To be sure, it’s had a head start. First, it accounts for 40% of the world’s population (2.8 billion people), 47% of global trade and 54% of the world’s real Gross Domestic Product in purchasing power parity (PPP) terms.
Has it succeeded in easing tariff barriers? Again, yes.
When Apec was established in 1989, the average tariffs in the region stood at 16.9%; today, those barriers have been reduced to 5.7%.
It has enabled greater intra-Apec trade, which has increased over seven-fold since 1989 and now constitutes 62.2% of total merchandise trade.
It’s been the same for total trade (goods and services) which has increased seven-fold within the region.
That’s significant when one considers that Apec’s positions are non-binding on its member states.
Progress has inevitably come about through reason, cajolery or moral suasion, and perhaps the focus on the greater good.
That way too lies Beijing. Strengthening the multilateral trading system will remain Apec’s priority.
Overriding these talks is the Bogor Goal of free and open trade and investment flows in the region by 2020.
There are loftier goals. In 2010, Apec’s leaders agreed to work towards a Free Trade Agreement for the region (the Free Trade Agreement of the Asia Pacific, FTAAP) by pledging to certain pathways.
These included trade and investment barriers, building on existing regional undertakings and regional trade agreements and continuing sectoral initiatives on issues such as services or e-business.
China has chosen the theme “Shaping the Future through Asia-Pacific Partnership” to frame next week’s discussions on regional economic integration, economic reform and growth, and connectivity.
Three key documents are likely to be endorsed.
One is the “Apec Strategic Blueprint for Promoting Global Value Chains (GVC) Development and Cooperation”.
The second is the “Apec Accord on Promoting Innovative Development, Economic Reform and Growth”. And finally there is the “Apec Blueprint on Connectivity”.
To the sceptics, these document titles alone reflect more talk and little substance.
We beg to differ.
Take the GVC Blueprint. Among others, it will address enhancing SME integration into the global value chain.
The sectors covered include the automotive, textile and electric and electronics industries.
Malaysia has offered to become the lead for the automotive sector and will work with other economies to detail out the work programme for the next two years.
The Ministry of International Trade and Industry (Miti) and its agencies (the Malaysia Automotive Institute, Mida, SME Corp and Matrade) will drive this initiative.
The focus of Apec’s “Accord on Promoting Innovative Development, Economic Reform and Growth” is to enhance the innovative capacity and sustainability of regional small and medium enterprises (SMEs).
This is to facilitate their participation in global value and supply chains.
And its key is the elimination of barriers to their participation in cross-border trade.
The Connectivity Blueprint seeks to promote integration through physical (i.e. logistics, transport and infrastructure), institutional (addressing behind-the-border issues) and people-to-people (education, tourism and business mobility) connectivity.
Specific initiatives include the creation of public-private partnership (PPP) centres.
These, in turn, will help enhance the development and financing of infrastructure PPPs by member economies.
The Connectivity Blueprint also includes the establishment of an Apec Higher Education Research Centre to facilitate joint research and exchange of students and researchers, to achieve the goal of one million intra-Apec university-level students a year by 2020.
The bottom line is that Apec is important to Malaysia.
Its member economies account for more than 76% of Malaysia’s global trade and around 54% of foreign direct investments.
There will be challenges, there always are, but the fact is that Apec can create opportunity; it can support networks for Malaysian SMEs.
Malaysia goes to Apec this year with a clear message: Apec member economies must remain committed towards strengthening the rules-based, transparent, open and non-discriminatory multilateral trading system.
We must resist protectionist measures that would stymie the recovery of the global economic condition.
Datuk Rebecca Fatima Sta Maria is secretary-general of the Ministry of International Trade and Industry. The views expressed here are entirely her own.