History and Overview:
APEC was founded in 1990 at the suggestion of former Prime Minister of Australia, Bob Hawke, which would aim to increase multilateral cooperation in view of the economic rise of the Pacific rim. Australia tried to urge American participation in the Asia Pacific region, with fears that it’s development would be hindered if America focused too much attention in Europe. For developing nations within the pacific, it allowed them to boost their economies by trading with large markets in developed nations. The forum also allowed them to engage directly in discussions with political leaders from developed economies such as the U.S., Japan, Canada, and Australia. For the U.S., its primary interest at the time was to position itself within the Asian sphere, as to protect itself from potential exclusions in the growing region.
While its goals have substantially shifted over time, APEC initially arose with the view of reducing trade barriers, and potentially becoming the largest free trade region in the world. In 1994, at the Bogor summit in Indonesia, the member economies committed themselves to achieve free and open trade for industrialised economies by 2010, and for developing economies by 2020, by reducing trade and investment barriers as well as promoting the free flow of capital, goods and services. As of today however, APEC’s primary goal is to raise living standards through support sustainable economic growth and prosperity in the Asia-Pacific region. It has also expanded its discussion base to include issues such as international security, human development, climate change, intellectual property, supply chain integration, energy and other factors which ultimately influence overall economic development.
In order to meet these goals, APEC operates on 3 main pillars. Trade and Investment Liberalisation - aims to eventually eliminate both tariff and non-tariff barriers to trade and investment. Business Facilitation aims to reduce costs between international negotiations by reforming policies and business strategies which adversely affect markets and thus allowing businesses to operate more efficiently. Economical and Technical Cooperation aims to provide training and cooperation to enable citizens of member economies to maximise a country’s economic potential.
As of 2012 APEC’s 21 members account for about 47 percent of the world’s trade and 56 percent of global GDP, according to the United Nations Conference on Trade and Development.
Since its inception, the region has seen a tremendous growth in both trade and GDP. The region’s real GDP has doubled from $17.7T in 1989 to $35.8T in 2010. Trade has also grown from $1.7T to $9.9T in the same time period. When it was first established, average trade barriers in the region stood at approximately 16.9% and as of today are on average 5.8%. Although it has failed to establish the world’s largest free trade area, APEC has spawned 42 multilateral FTAs between various member economies. Charles E. Morrison, director of the East-WEst Center in Hawaii (a U.S. - funded organization that studies the U.S. and Asia-Pacific region quotes "If you think about what APEC was like 20 years ago, before that you never had a meeting where the leaders of China, Japan and the U.S.