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Wednesday, February 17, 2010

The 2009 Asia Pacific Economic Cooperation (APEC) Meetings and U.S. Trade Policy in Asia

Michael F. Martin
Specialist in Asian Affairs

Congress and the Executive Branch have historically identified the Asia Pacific Economic Cooperation forum (APEC) as potentially important in the promotion of liberalized international trade and investment in Asia, and possibly the rest of the world. APEC's commitment to the goal of trade and investment liberalization is embodied in its Bogor Goals, in which APEC members pledged to free and open trade and investment in the Asia-Pacific by 2010 for industrialized economies and 2020 for developing economies. 

The 2009 APEC Leaders' and Ministerial Meetings focused on balanced growth, resisting protectionism, fostering trade and investment liberalization, accelerating regional economic integration, and enhancing human security. In the Leaders' Declaration, APEC presented a new "growth paradigm" based on balanced, sustainable, and inclusive growth. In the Ministerial Meeting, one of the main topics was efforts to be taken at, behind, and across borders to promote regional economic integration. 

The next two years may be a critical period for APEC and its achievement of the Bogor Goals. The 2010 meetings are to be held in Yokohama, Japan—the target year for APEC's industrialized members to achieve the Bogor Goals. The United States will host the 2011 meetings. The Obama Administration has chosen Honolulu as the host city for the 2011 Leaders' Meeting, but has not given a clear indication of APEC's role in U.S. trade policy. 

Several alternative avenues for the promotion of trade integration in Asia have emerged, challenging the past U.S. focus on APEC. The Association of Southeast Asian Nations (ASEAN) is promoting the creation of various forms of an all-Asian free trade association that could exclude the United States. In November 2009, the Obama Administration announced it would to enter into negotiations with the Trans-Pacific Strategic Economic Partnership Agreement (TPP), a free trade agreement between Brunei Darussalam, Chile, New Zealand, and Singapore. 

Critics of APEC have referred to the association as a "talk shop," that has produced few results. However, studies conducted by APEC reveal a substantial drop in members' average tariff rates, the elimination of a number of non-tariff trade barriers, and a major reduction in the transaction costs associated with international trade—all of which is likely attributable at least in part to APEC initiatives. 

Historical trade data is consistent with the premise that APEC has been successful in promoting greater trade within its member economies and with the rest of the world. Both the exports and imports of APEC members have grown faster than global trade since the creation of APEC. However, APEC's greater trade growth may be attributable to other factors than the liberalization of trade and investment policies among its members. 

The 111th Congress may reexamine U.S. policy towards APEC. It has already increased APECrelated funding in FY2009, in part to provide for the preparations for the 2011 APEC meetings to be held in the United States. In addition, there are other actions Congress may choose to take with respect to APEC, depending on its determination of APEC's role in relation to trade promotion initiatives in Asia. Congressional attitudes and actions may also be influenced by the Obama Administration's trade policies in Asia—and the role APEC plays in those policies. 

This report will be updated as circumstances warrant.

Date of Report: February 4, 2010
Number of Pages: 27
Order Number: R41071
Price: $29.95

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