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U.S. Department of State

Diplomacy in Action

Why APEC Matters

Atul Keshap, Special Representative for APEC
New York City
January 10, 2013


APEC economies are among the world’s most economically dynamic and together account for:

o Nearly 3 billion consumers (2.7 billion people in 2011)
o 44 percent of global trade ($16.8 trillion)
o 56 percent of global economic output ($39 trillion in 2011)

Six of America’s top 10 largest goods export markets are in APEC (Canada, China, Japan, Korea, Mexico, Hong Kong)

Economic engagement is central to our foreign policy, especially in the Asia-Pacific. When President Obama and the Secretary talk about rebalancing our foreign policy toward the Asia-Pacific, they cite the region’s economic dynamism. APEC is at the center of that dynamism.

Open markets in Asia provide the United States with unprecedented opportunities for investment, and trade. Our economic recovery at home depends on exports and the ability of American firms to tap into the vast and growing consumer base of Asia.

Between 2009 and 2011, U.S. goods exports to other APEC member economies increased nearly 45 percent, and they are up 7.5 percent for the first half of 2012 alone.

APEC economies purchased 60 percent of total U.S. goods exports in 2011 ($895 billion), and nearly 39 percent of U.S. private services exports in 2010 ($205 billion), supporting an estimated six million American jobs in 2011.

According to recent analysis by PwC, fast-growing APEC economies are steadily integrating so that by 2021, intra-APEC trade is set to triple levels from 2011. In 2011, our intra-APEC exports amounted to double the amount of exports from APEC economies to the rest of the world. And even in the wake of the global economic crisis, fifteen of our APEC economies are projected to outpace average global GDP over the next decade.[1]

APEC’s strengths

Some may dismiss APEC as nonbinding, but this allows economies to be forward-leaning through experimentation and cooperation that wouldn’t happen otherwise in the region.

APEC provides intellectual leadership as an incubator for new ideas and solutions to prevent barriers to trade from emerging. These new ideas can then be taken on by other groups and organizations.

One reason APEC has been so effective in tackling practical issues is the robust role of the private sector in all levels of its work, a subject I will expand upon in a moment.

APEC commitments are made at the highest levels of government. APEC includes a strong, tested working-level process for functional cooperation, that translates high-level commitments into tangible results.

Through capacity building, helps economies develop capabilities to enact reforms and meet commitments.

APEC facilitates business

Since APEC was created, average tariffs in the region have fallen from 16 percent to 5 percent – on a value of $2.3 trillion of goods and services trade between the United States and the Asia-Pacific economies in 2010.

As part of its Ease of Doing Business Initiative, APEC economies are working to make doing business in the region cheaper, easier and faster by addressing issues such as: starting a business, dealing with construction permits, getting credit, trading across borders, and enforcing contracts.

A recent report shows an improvement of 8.2 percent between 2009 and 2011, exceeding the five percent target for the period and setting a strong foundation to achieve the a 25 percent more favorable business environment by 2015 and fostering greater economic activity in the region.

For example, between 2009 and 2011, the median time to start a business in the APEC region fell 56.5 percent, from 23 to 10 days. By contrast, it fell only 12.5 percent for the rest of the world, from 20 to 18 days.

In 2011, the average cost to export a container in the APEC region was 44 percent cheaper the rest of the world ($835 vs $1,486). And to import a container in the region it was 49 percent cheaper ($896 vs US$1,768).

Outcomes from 2012

In 2012 the objective for the United States in APEC was to maintain momentum on our key areas of interest from our 2011 host year and continue to produce concrete outcomes. We also worked to support Russia’s priorities as 2012 host including (1) trade and investment liberalization; (2) strengthening supply chains; (3) promoting food security; and (4) promoting innovative growth.

Trade and investment liberalization

My colleague Wendy Cutler can expand on the trade and investment issues but I’ll just note that we were particularly pleased with the consensus we achieved on a list of 54 environmental goods for which all APEC economies committed to reduce tariffs to 5 percent or less by 2015. This was a major achievement for APEC and will significantly contribute to our goals to increase exports and jobs and will help businesses and citizens access important environmental technologies at a lower cost. We also achieved great results on supply chain performance and crafting guidelines on how economies can implement principles on innovation and trade, which Wendy will describe for you.

Promoting food security

A number of countries faced droughts or other threats to their harvests this past year. Poor harvests increase the risk that producers will introduce export restrictions on grain and other products.

For this reason it was vitally important that APEC Leaders committed to refrain from export limits and other measures that could distort international market prices. The United States will continue to work with other APEC economies to safeguard global food security and avoid measures that would be politically and economically destabilizing to import-dependent economies around the world.

Women in the economy

APEC has also been at the forefront of work focused on unlocking a vital source of growth that can power our economies in the decades to come. And that vital source of growth is women. The economic gains are significant as the APEC region is currently losing between $42 billion-$46 billion in GDP per year due to limitations that prevent women from fully participating in the economy.

Increasing women’s participation in the economy and enhancing their efficiency and productivity can bring about a dramatic impact on the competitiveness and growth of our economies.

Women are now 40 percent of the global workforce, half of the world’s university graduates. East Asia alone is home to six million formal, women-owned small businesses. Limiting women’s economic potential does not make economic sense.

In 2011, we developed the San Francisco Declaration at the APEC Women and Economy Summit. We focused on four main areas of growth: capacity building, leadership, access to markets and access to capital. This past year Russia hosted the Women and the Economy Forum (WEF) in St. Petersburg that focused on integrating women more fully into APEC economic planning and policy development to further sustainable economic growth. We look forward to working with Indonesia in 2013 when they host the Women in the Economy Forum this September in Bali.

Priorities for 2013

Indonesia is the current APEC host economy for the first time since 1994 when Leaders adopted the Bogor Goals of free and open trade and investment in the Asia-Pacific by 2010 for developed economies and 2020 for developing economies.

At the Informal Senior Officials Meeting in Jakarta last month Indonesia outlined their three priority themes of (1) attaining the Bogor Goals; (2) achieving sustainable growth with equity; and (3) promoting connectivity.

The U.S. will look to continue to advance many of the important trade and investment initiatives that have been put into place in APEC in recent years including work on innovation and trade, local content requirements, environmental goods and good regulatory practices among other issues. Again, Wendy can likely expand on our thinking for these issues.

The U.S. shares Indonesia’s views on the importance of promoting women as economic drivers, supporting SMEs, promoting food security, and addressing health issues under the sustainable growth with equity theme.

We also believe Indonesia has an excellent opportunity to show leadership on the responsible stewardship of natural resources.

We welcome Indonesia’s focus on connectivity to include investment and infrastructure, travel facilitation and supply chain performance.

Indonesia’s stance on trade issues will have a significant impact on its hosting of APEC and we will look to remind Indonesia of the importance of implementing a robust vision for trade liberalization during their chairmanship.

Private Sector Engagement

I’ll conclude my opening remarks with another major strength of APEC which is engagement with the private sector.

The APEC agenda benefits greatly from receiving direct input from companies on the frontlines of trading and investing in the region.

The United States is focused on revitalizing and elevating public private partnership in the policy-making process.

During the U.S. host year of APEC, we tried to take private sector engagement one step further by elevating their role from providing input to policy makers at the senior officials' level, to actually holding a seat at the policymaking table by creating two new policy partnerships, on women and the economy and the other on food security.

Both of these groups held their inaugural meetings during Russia’s host year and we were pleased that Russia used this model as the basis for a new policy partnership which will focus on promoting innovation, science, and research.

We see these policy partnerships as an important step to bring all of the stakeholders, including the practitioners affected by the policies that officials agree upon and industry's technical experts, into the conversation.

Working with partners within APEC, the premier regional forum for work on economic and commercial issues, we have significantly advanced the trade and investment liberalization agenda, providing tangible improvements that have helped to facilitate business within the region.

I hope we can continue working together to foster a regional economic system that is open, free, transparent and fair.

[1] PwC APEC 2012 Point of View on Economic Integration.

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