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UPSC Notes-APEC: Asia-Pacific Economic Cooperation

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August 2, 2024

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APEC (Asia-Pacific Economic Cooperation): Comprehensive Notes for UPSC Preparation

Introduction

1. Overview:
   • APEC is a regional economic forum established to leverage the growing interdependence of the Asia-Pacific region.
   • It aims to create greater prosperity by promoting balanced, inclusive, sustainable, innovative, and secure growth.
2. Establishment:
   • APEC was established in November 1989.
   • The initiative was launched in response to the growing interdependence of Asia-Pacific economies and the advent of regional trade blocs.
3. Members:
   • APEC comprises 21 member economies: Australia, Brunei Darussalam, Canada, Chile, China, Hong Kong, Indonesia, Japan, South Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, the Philippines, Russia, Singapore, Chinese Taipei, Thailand, the United States, and Vietnam.

Objectives of APEC

1. Promote Free and Open Trade and Investment:
   • Reduce trade barriers in goods, services, and investment to create a free and open trade environment by 2020 for industrialized economies and 2025 for developing economies.
2. Enhance Economic and Technical Cooperation:
   • Provide capacity building and technical assistance to member economies to implement APEC initiatives effectively.
3. Facilitate a Favorable Business Environment:
   • Improve the business climate in the Asia-Pacific region by simplifying and harmonizing regulations and standards.
4. Support Sustainable and Inclusive Growth:
   • Promote policies that encourage sustainable and inclusive economic growth, benefiting all sectors of society.
5. Strengthen Regional Economic Integration:
   • Promote regional economic integration by advancing the trade and investment liberalization agenda.

Key Initiatives and Programs

1. Bogor Goals:
   • In 1994, APEC leaders set the “Bogor Goals” in Bogor, Indonesia, to achieve free and open trade and investment in the Asia-Pacific region by 2010 for developed economies and 2020 for developing economies.
2. APEC Business Advisory Council (ABAC):
   • ABAC provides business sector input for APEC’s policy direction and agenda.
3. Economic and Technical Cooperation (ECOTECH):
   • ECOTECH programs aim to assist member economies in achieving sustainable growth and equitable development through capacity building and cooperation.
4. Trade Facilitation Action Plan (TFAP):
   • TFAP aims to reduce trade transaction costs by streamlining customs procedures, standards, and conformance measures, and improving business mobility.
5. APEC Supply Chain Connectivity Framework:
   • This initiative aims to improve supply chain performance in the region by addressing eight identified chokepoints that hinder the smooth flow of goods and services.
6. APEC Digital Economy Action Plan:
   • This plan focuses on fostering the growth of the digital economy by promoting innovation, enhancing digital literacy, and improving access to digital infrastructure.

Achievements and Impact

1. Trade and Investment Liberalization:
   • APEC has played a crucial role in reducing tariffs and non-tariff barriers, thus promoting trade and investment among member economies.
2. Economic Growth:
   • Member economies have experienced significant economic growth due to increased trade and investment opportunities.
3. Capacity Building:
   • APEC’s initiatives have helped build capacity in developing economies, enabling them to integrate more effectively into the global economy.
4. Regional Integration:
   • APEC has facilitated greater regional integration and cooperation, fostering a sense of community among member economies.

Challenges and Criticisms

1. Diverse Economies:
   • The diversity in economic development levels among APEC members poses challenges in achieving consensus on various issues.
2. Non-Binding Nature:
   • APEC’s non-binding nature means that its decisions and commitments rely on voluntary implementation, which can limit effectiveness.
3. Geopolitical Tensions:
   • Geopolitical tensions among member economies can hinder cooperation and the implementation of APEC’s initiatives.
4. Overlapping Membership:
   • APEC’s membership overlaps with other regional organizations like ASEAN, leading to potential duplication of efforts and initiatives.

India’s Engagement with APEC

1. Observer Status:
   • India has expressed interest in joining APEC and has been an observer at APEC meetings since 2011.
2. Strategic Importance:
   • India’s membership in APEC would enhance its trade and investment opportunities in the Asia-Pacific region and strengthen its economic ties with member economies.
3. Economic Benefits:
   • Joining APEC would provide India access to a larger market, boost its exports, and attract more foreign investment.
4. Challenges:
   • India faces challenges such as aligning its economic policies with APEC’s principles and addressing concerns from some member economies about its inclusion.