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ASIA PACIFIC ECONOMIC COOPERATION (APEC)
1. What is APEC?
APEC is an association of economies that share the boundaries of the Pacific Ocean. Under APEC, member economies work together to reduce barriers to trade, ease the exchange of goods, services, resources and technical know-how, and strengthen economic and technical cooperation between and among themselves. These concerted efforts, ultimately, would result in a greatly improved global economy and the forging of stronger ties between the developing and the major economies of the world.
3. Who are its members?
4. How significant is APEC to world trade economy?
· Collectively, the APEC members are considered the growth engine of the whole world economy.
· APEC member-economies represent around two billion people or 42% of the world’s total population,.
· APEC occupies 43% of the world's land area.
· In 1997, total Gross Domestic Product of APEC member-economies was US$23,680 billion.
· APEC accounted for almost half of the world's total merchandise exports in 1997.
· APEC is characterized by cultural diversity and varied levels of scientific and technological development.
5. What are the goals of APEC?
· to enhance the gains of both regional and world economy by encouraging the flow of goods, services, capital and technology;
· to develop and strengthen the open multilateral trading system in the interest of Asia-Pacific member economies and all other economies; and
· to reduce barriers to trade in goods and services, and minimize hindrance to investment among its participants in a manner consistent with GATT/WTO principles, where applicable, and without detriment to other economies.
APEC envisions full trade and investment liberalization and facilitation by 2010 for industrialized economies and 2020 for developing members. With respect to tariffs, the goal is zero tariffs in 2010 and 2020 for developed and developing countries, respectively.
6. How can these objectives be attained?
The objectives of APEC can be achieved by a balanced program of:
· facilitation of trade and investment to reduce needless divergences in approaches to domestic policies influencing international commerce;
· technical cooperation to share the information and expertise needed to implement proposals for facilitation and to enhance the availability and efficiency of regional infrastructure; and
· economic policy coordination to reduce uncertainties that add to the costs of international economic transactions.
7. What benefits can accrue to the Philippines as a member of APEC ?
The benefits from Philippine participation in APEC are as follows:
§ As APEC seeks to create a more open trade environment, business transactions and exchange of goods, services and technology will be greatly relaxed.
· Investments will flow freely to and from developing economies. The transfer of professional skills and consultancy will be simpler and more manageable.
· There will be easier access to resources made available to industrialized member-economies giving a better chance for local industries to improve and compete in the global market.
· Improvements in the energy, transportation, and telecommunication infrastructures are expected to be the immediate results of a strengthened cooperation among the APEC member-economies.
· Agriculture is vital to APEC's continued growth. Technical cooperation in this crucial sector will raise productivity and hasten the rural area growth of developing APEC members like the Philippines.
· APEC includes Japan, Chinese Taipei, Hong Kong, People’s Republic of China, and the Republic of Korea which are major sources of foreign investments.
· Small and Medium Enterprises (SME’s) are critical factors in a country's development and 90% of all firms in APEC are SME’s.
· Industrial science and technology could be developed through the flow of APEC regional information on technology, the research exchanges in science and technology, and joint research projects.
8. What are the major results of the APEC leaders’ annual summit meetings?
1993 marked a positive year for APEC with the holding of the first APEC Economic Leaders Meeting on November 20 in Blake Island, Seattle. Hosted by then U.S. President then Bill Clinton, all APEC members reaffirmed their support for APEC and the ideals it stood for.
B. The Bogor Declaration of Common Resolve
The Bogor Declaration of Common Resolve identified the timeframe for the attainment of more open trade. Industrialized economies were envisioned to achieve this goal not later than 2010 and developing economies not later than 2020. This laid down the foundation for “APEC 2020” - economic growth through open trade, equal partnership, shared responsibility, and mutual respect.
C. The Osaka Action Agenda
D. The Manila Action Plan
The Action Plan represented a giant step forward in six areas: (a) greater market access through progressive reductions in tariffs and non-tariff barriers to trade; (b) enhancement of market access in services; (c) provision of an open investment regime; (d) reduction of the cost of engaging business; (e) enhancement of an open and efficient infrastructure sector; and (f) intensification of economic and technical cooperation. All these have energized the community spirit in the Asia-Pacific region and stimulated APEC’s commitment to sustainable growth and equitable development.
E. The Vancouver Summit
F. The Kuala Lumpur Summit
· growth-oriented, prudent macroeconomic policies appropriate to the specific requirements of each member-economy;
· an expanded financial assistance from the international community to generate employment and to build and strengthen social safety nets to protect the poor and vulnerable;
· a comprehensive program of support for efforts to strengthen financial systems, restore trade finance, and accelerate corporate sector restructuring;
· new approaches to catalyze the return of stable and sustainable private capital flows into the region;
· a renewed commitment to the Bogor goals of achieving free and open trade and investment within APEC; and
· urgent work within APEC and with other economies and institutions to develop and implement measures to strengthen the international financial system.
G. The Auckland Summit
With respect to the first theme, Ministers reaffirmed the central role of Individual Action Plans in delivering liberalization, facilitation and reform under the APEC process; endorsed key trade facilitation achievements; and declared a continuing commitment to open regionalism and to the multilateral trading system, particularly the importance of the WTO negotiations in liberalizing trade and investment within the region and encouraging growth in the global economy. The Ministers also welcomed the submission by the Philippines and four (4) other economies – Australia, Brunei, Japan and the United States – of their Individual Actions Plans to voluntary peer review.
H. The Brunei Summit
I. The Shanghai Accord
To strengthen commitments in achieving the Bogor Goals, APEC adopts the Shanghai Accord in 2001. The Accord focuses on:
· Adopting a pathfinder approach in advancing selected APEC initiatives towards achieving the Bogor Goals. Use of so-called pathfinder approach enables a group of countries to pilot initiatives that encourage other members to participate later.
· Commitment to develop and implement transparency principles for investment rules, regulations, and standards, and for government procurement procedures to ensure good governance. A five percent reduction in transaction costs over the next five years through the elimination of red tape is targeted.
· The e-APEC strategy is adopted. It sets out an agenda to strengthen market structures and institutions, facilitate infrastructure investment and technology for on-line transactions and promote entrepreneurship and human capacity building.
APEC member-countries reaffirm support to the Multilateral Trading System and issue the first Counter-Terrorism Statement.
J. The Los Cabos Summit
To promote stability in the region’s financial system, APEC Leaders discussed measures that promote prudent and transparent fiscal management, competitiveness and efficient savings allocation. APEC adopts a Trade Facilitation Plan, Policies on Trade and the Digital Economy and Transparency Standards.
APEC adopts the Secure Trade in APEC Region (STAR) Initiative, which highlights the importance of private-public partnership in advancing trade and human security.
K. The Bangkok Summit
In 2003 Bangkok Summit, APEC pushed for renewed negotiations on WTO Doha Development Agenda. Actions are agreed to curb terrorist threats posed by Man Portable Air Defense Systems, to better coordinate counter-terrorism activities and to implement the APEC Action Plan on SARS and Health Security Initiative. Stepping up efforts to build Knowledge-Based economies, strengthening efforts to promote sound and efficient financial systems and accelerating regional structural are also agreed.
L. The Santiago Summit
APEC issues a strong statement of support for progress in the WTO Doha Development Agenda and sets a target for achieving a breakthrough in negotiations: December 2005, convening of the Sixth WTO Ministerial conference. APEC adopts Best Practices for RTAs and FTAs, the Santiago Initiative for Expanded Trade and Data Privacy Framework. Member economies express determination to confront the threat of terrorism, make a political commitment to fight corruption and ensure transparency, and endorse a specific Course of Action towards this end.
M. The Busan Roadmap
8. What were the operational targets set by the APEC leaders in Osaka to achieve the goal of free and open trade and investment in the Asia-Pacific region by 2020?
Trade in goods
Trade in services
· National treatment of all firms and unrestricted rights of establishment in all sectors of production, including national treatment of international investors in terms of fiscal policy (taxation and/or subsidies).
· Accession of all APEC governments to existing international conventions for the settlement of disputes relating to international investment.
· Full harmonization of air traffic control procedures and safety standards.
· Uninhibited (other than for safety reasons) landing rights for carriers with majority of shares owned by an APEC national, or by nationals of economies which impose no restrictions on landing rights to APEC-based carriers (i.e., "open skies" in the Asia Pacific).
· Accession of all APEC governments to international legal conventions for the carriage of goods by air, sea and land.
· Introduction of "smart card" passports and electronic processing of international passengers.
· Visa-free travel by residents of APEC economies within the region for visits of up to six (6) months.
· Unhampered trans-border transmissions.
· National treatment for connections to local telecommunications networks.
· Rejection of anti-dumping measures by APEC governments against imports from any other APEC participant, following the adoption of an agreed code of minimum standards for competition policy.
· Full compatibility and Electronic Data Interchange (EDI) of customs documentation and clearance procedures.
· Full documentation and on-line access to texts of all significant commercial legislations, regulations, tariffs or quantitative restrictions influencing international economic transactions of all participants, including patents, standards and testing procedures.
During the Senior Officials Meeting (SOM 1) held in February 1996 in Manila, the member economies were enjoined to prepare their indicative Individual Action Plans (IAP’s) for the TILF areas.
On tariffs, the Philippine Action Plan consisted of the following:
As part of its overall liberalization program, the Philippines will gradually phase down its MFN tariffs and move towards a more uniform level of protection across sectors. By January 1, 2003, a 2-tiered tariff structure consisting of 3% for raw materials/intermediate products and 10% for finished products will apply. By January 1, 2004, the above will converge to a rate of 0-5%.
One-hundred-forty-four (144) tariff lines classified as “sensitive agricultural products” are excluded from the above.
b. ensure transparency of tariff regime
The Philippines will participate actively in the APEC Tariff Database. Accordingly, it will update its tariff data notifications as may be necessary.
On non-tariff measures, the country's IAP include the following:
b. ensure transparency of non-tariff measures
The Philippines will exchange information with APEC on residual NTM’s.
The following Executive Orders have been issued:
· Executive Order No. 264 (July 22, 1995) implemented the tariff reduction program on industrial products under Chapters 25 to 97 of the Tariff Code.
§ Executive Order No. 288 (December 12, 1995) put in place the tariff reduction on non-sensitive agricultural products (those not covered by QR’s) falling under Chapters 1 to 24 of the Tariff Code.
§ Republic Act No. 8178 (March 28, 1996), or the Agricultural Tariffication Act, provided for the replacement of quantitative import restrictions on agricultural products, except rice, with tariffs.
§ Executive Order No. 313 (May 7, 1996) provided interim tariff protection and set the maximum bound tariff rates for sensitive agricultural products (i.e., those whose QR’s were lifted).
§ Executive Order No. 465 (January 22, 1998) implemented the re-calibration of tariff rates for deserving industries and corrected remaining distortions in the tariff structure.
§ Executive Order No. 486 (July 10, 1998) implemented the re-calibrated tariff schedules for residual items not covered under Executive Order 465 to achieve a coordinated phased tariff reduction program.
§ Executive Order No. 163 (January 1, 2000) eliminated tariffs on certain Information Technology (IT) products as part of the Philippine commitment to the WTO-IT Agreement.
§ Executive Order No. 334 (January 1, 2001) set the reduction of tariff levels across all sectors towards 0-5% by 2004, excluding sensitive agricultural products.
INDIVIDUAL ACTION PLANS ON TARIFFS
The Philippines intends to establish free and open trade through progressive reduction of tariffs and make its tariff regime transparent in year 2020. At present, there is no definite commitment to reduce tariffs to zero across-the-board by 2020. The minimum tariff policy is still 3% with certain exceptions.
A computerized tariff database called the APEC Tariff Database is now available on the Internet and is accessible to all interested parties. Each economy is required to keep this database current by providing both regular updates of tariff information as changes occur and annual updates of trade and other agreed upon data. To support WTO, member economies are required to provide tariff and trade data annually in accordance with WTO obligations. Non-WTO members may provide the information required as a voluntary measure.
INDIVIDUAL ACTION PLAN ON COMPETITION POLICY
The basic statute which prohibits unfair trade practices, monopolies and combinations in restraint of trade is the Law on Monopolies and Combinations under RA 3247, as amended and the Revised Penal Code, as amended by RA 1956. The law deters any person, firm or entity from monopolizing or attempting to monopolize, or from taking part in any conspiracy or combination in the form of trust in restraint of trade or commerce or from restraining free market competition. The objective is to promote efficiency by effectively promoting desirable competition resulting in increased output, faster economic growth and lower prices of goods and services.
3. What is the role played by the Tariff Commission in the promotion of Competition Policy?
The Philippines committed itself to enact an anti-trust law and establish a Fair Trade Commission to enforce a comprehensive national competition law and policy.
THE EARLY VOLUNTARY SECTORAL LIBERALIZATION (EVSL)
1. What is the Early Voluntary Sectoral Liberalization (EVSL) Scheme?
Early voluntary sectoral liberalization means liberalization before 2010 for industrialized economies and 2020 for developing economies.
The Osaka Action Agenda (OAA) calls for collective actions to identify industries where progressive reduction of tariffs and non-tariff measures would have a positive impact on trade and economic growth in the Asia-Pacific region or for which there is regional industry support for early liberalization. Work on the identification of sectors was mandated at the APEC Economic Leaders’ Meeting in Subic in 1996.
The EVSL initiative envisions a three-track approach to liberalization consisting of market opening measures, trade facilitation activities, and economic and technical cooperation initiatives.
2. What is the product coverage of the Scheme?
At the Vancouver Summit in 1997, Ministers agreed to early voluntary sectoral liberalization in fifteen (15) areas. These are: environmental goods and services; fish and fish products; toys; forest products; gems and jewelry; chemicals; telecommunications mutual recognition agreement (MRA); energy; medical equipment and instruments; oilseeds and oilseed products; food; natural and synthetic rubber; fertilizers; automotive goods; and civil aircraft.
Nine (9) sectors were identified for fast-tracking, namely, environmental goods and services; fish and fish products; forest products; medical equipment and instruments; energy; toys; gems and jewelry; chemicals; and telecommunications MRA.
3. Is there a flexibility option available to APEC members?
While recognizing the need for a balanced and mutually beneficial package, the APEC Ministers acknowledge that the early liberalization process is to be conducted on the basis of the APEC principle of voluntarism whereby each economy is free to determine the sectoral initiatives in which it will participate. In order to facilitate maximum participation of all economies in all sectors, some forms of flexibility, e.g., longer time frames for implementation of tariff liberalization targets, are allowed to accommodate specific concerns of economies. Ministers also acknowledge that flexibilities should take into account the broader goal of maximizing mutual benefits and maintaining the balance of interests; thus, member economies are allowed to submit their reservations.
4. What is the Accelerated Tariff Liberalization (ATL) Initiative?
(i) broadening the participation in the tariff element beyond APEC to maximize the benefit of liberalization; and
(ii) working constructively to achieve critical mass in the WTO necessary for concluding agreements in all sectors.
5. What are the current developments in the Scheme?
With the decision to transfer the tariff component of the EVSL to the WTO, work has focused on non-tariff measures, trade facilitation, and the economic and technical components of the sectoral initiatives.