OBG talks to Ambassador Muhamad Noor, Executive Director, Asia-Pacific Economic Cooperation (APEC) Secretariat

Interview: Ambassador Muhamad Noor

How can APEC distinguish itself from other regional groupings as a venue for economic cooperation?

MUHAMAD NOOR: APEC has some key features that set it apart from other regional groupings. First, note that APEC is a non-rules based forum founded to foster cooperation. APEC operates on the basis of non-binding commitments, consensus and open dialogue. Thus, APEC does not impose any treaty obligations on its members. Commitments by members are voluntary.

The absence of binding rules and the presence of an open environment provide the necessary space for greater innovation, closer collaboration and more effective cooperation between members, as well as with other stakeholders, including business and academia.

In particular, for issues such as addressing trade barriers and facilitating trade and investment in Asia-Pacific’s vast geographical span, one solution does not fit all – and APEC recognises that. APEC members, therefore, implement actions that take their own circumstances into account. For some areas, APEC adopts a “pathfinder approach,” which allows members to undertake new and innovative programmes and lets economies join an initiative only when they are ready.

What barriers currently hinder trade among APEC members? How can their effects be mitigated?

NOOR: Since APEC was formed, members have taken concerted action to address tariff barriers and non-tariff barriers to trade and investment throughout the region. Tariffs in the APEC region have been reduced from 17% in 1989 to 5.8% in 2010.

Non-tariff barriers such as sanitary and phytosanitary measures, as well as technical barriers, have also been addressed to make them consistent with the World Trade Organisation (WTO). Under the APEC Trade Facilitation Action Plans, a set of projects and initiatives have been implemented to help members in trade-related areas. Measures include improving business mobility, simplifying Customs procedures and harmonising standards and conformance. The first plan saw a 5% reduction in trade transaction costs between 2002 and 2005. The second plan saw another 5% reduction between 2007 and 2010. This translates to a total saving for business of $58.7bn.

How can you help APEC members keep economies open, thereby avoiding trade-restrictive measures?

NOOR: In November 2011, APEC leaders met in Honolulu, Hawaii and renewed their commitment to extend a standstill on new trade and investment barriers, new export restrictions, or implementing WTO-inconsistent measures in all areas through to 2015.

APEC’s achievements show free trade and investment are critical components for advancing long-term economic growth and development. Social indicators show that between 1999 and 2009, the GDP of APEC economies grew by 29.2%, employment increased by 10.8% and poverty fell by 35%. These achievements encourage APEC members to continually pursue greater openness and a more economically-integrated region.

How can APEC promote energy cooperation?

NOOR: APEC member economies together account for 60% of global energy demand and include the world’s four largest energy consumers. APEC launched the Energy Working Group in 1990 to promote cooperation and to maximise this sector’s contribution to the region’s economic and social well-being, while also mitigating the environmental effects of energy supply and use. Several schemes, like the APEC Energy Security Initiative and the Joint Oil Data Initiative, work to encourage cooperation on energy issues.

The Honolulu Leaders’ meeting raised and renewed commitments, increasing the target for reducing APEC’s aggregate energy intensity by 45% by 2035, almost doubling the previous commitment. To do this, APEC is incorporating low-emissions development strategies into its economic growth plans. APEC is fostering greater cooperation and knowledge-sharing among members to support energy-smart low-carbon communities.