Trade Ministers from the 21 nations of Asia-Pacific Economic Cooperation (APEC) concluded their July 21-22 meetings in Singapore by recommitting to a new WTO multilateral agreement while also encouraging trade within the Asia Pacific region. This recognizes the growing influence of the Asian members of APEC while maintaining the linkages to North America that have worked well for 20 years.

This year is the 20th anniversary of APEC’s founding in 1989 by 12 Pacific Rim countries (Australia, Brunei Darussalam, Canada, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand and the U.S.) to encourage investment and trade throughout the region.  Nine others (Chile, China, Hong Kong, Mexico, Papua New Guinea, Peru, Russia, Taiwan and Vietnam) joined later. The 21 member economies account for 41 percent of the world’s population, 54 percent of GDP, and 44 percent of trade.  The meeting focused on economic recovery, resisting protectionism, advancing the Doha negotiations and furthering regional economic integration. In 2008, 58 percent of U.S. exports valued at $747 billion went to APEC countries, and Canada, China, Japan, Korea and Mexico were the five largest markets for U.S. exports and the five largest suppliers of imports.

U.S. agricultural exports to APEC countries totaled $76.1 billion in 2008, 65.9 percent of total agricultural exports and imports were $47.5 billion, 59 percent of imports. Without Canada and Mexico, the remaining 18 APEC countries were a $43.4 billion market for agricultural exports, 37.6 percent of the total, and imports to the U.S. were $18.6 billion, 23.1 percent of total imports. The number one, two, three and four U.S. agricultural exports markets are APEC countries (Canada, Mexico, Japan and China). The 27 countries of the European Union are collectively the fifth largest market. APEC countries are the sixth, seventh and eighth largest markets (South Korea, Taiwan and Indonesia). Among other APEC countries, Russia is the tenth largest market, the Philippines the thirteenth and Hong Kong is fourteenth.

With rapid economic growth in Asia and increasing political influence, APEC suffers somewhat from an identity crisis. C. Fred Bergsten, Director of the Peterson Institute for International Economics in Washington, DC, sees it as a choice between Pacific Asia and Asia Pacific. After successes in its first ten years, APEC members in East Asia after the Asian financial crises of 1997-98 seemed more focused on Pacific Asia economic development. The European Union and NAFTA became two regional blocks and the lack of a round of WTO trade talks in the late 1990s created a vacuum in multilateral trade policy championed by APEC.

Bergsten sees four options for APEC. The first one is to terminate APEC if the Asian members decide that Pacific Asia should be the focus of economic policy. They already have a major role in the G20 group of countries that is becoming the new “steering committee” for world finances. The second option is business as usual as a way to maintain involvement in the region by the U.S. and as an alternative if integration within Pacific Asia fails to mature. The third option is to drive economic policy reforms like achieving an agreement in the Doha Round of trade talks and changes at the International Monetary Fund. Option four is to move forward with a Pacific Asia agenda and work with the U.S. and other members outside Asia on the global agenda. This would keep the U.S. involved in the region and act as a counterweight to the influence of China. This appears to be consistent with the Obama Administration’s plans to focus on Asia and the U.S. chairing APEC in 2011.

The statement issued by the Trade Ministers at the close of the meeting had no surprises and led off with a recommitment to concluding the Doha trade talks. They directed senior officials to meet in Geneva for talks before the G20 Summit in Pittsburgh in September. The commitment in November of 2008 to refrain until the end of 2009 from creating new barriers to investments or trade in goods and services was extended through 2010. A Free Trade Area of the Asia-Pacific is still being examined as a long-term goal. They agreed to accelerate regional economic integration through “at the border” customs procedures, “behind the border” regulatory reforms and “across the border” logistics policies.

The trade ministers’ support for completing the Doha talks was a given going into the talks with APEC having a history of supporting multilateral trade talks and the importance of trade to the region. As the largest gathering of trade ministers so far in 2009 and coming two weeks after the G8 supported completion of the round in 2010, to not support it would have indicated the talks have failed. The key question is how united the 21 countries will be when formal WTO talks begin again.

While the formal APEC meetings are important for broad discussions, much work was likely done in one-on-one meetings where specific problems could be addressed. U.S. Trade Representative Ron Kirk held a series of bilateral meetings, including discussions with South Korean Trade Minister Kim, Singapore Trade Minister Lim, Chinese Minister Chen and Canadian Minister Day. Ambassador Kirk also held a trilateral meeting with the Mexican Minister Ruiz and Canadian Minister Day and briefed U.S business people attending the meetings. In a briefing after the meetings he said, "APEC economies have the trading power and the collective potential to move global trade in the right directions – away from protectionism, toward more open markets, and toward a stronger rules-based system in which more countries are able to extend the benefits of trade for their workers, businesses – especially small businesses — and families."

None of the discussions and announcements lessens the real disagreements on trade policies within the 21 country group. APEC operates by consensus with sensitive issues handled behind closed doors at the heads of government level. As noted in their closing statement, the Trade Ministers are already looking toward the G20 meeting in September in Pittsburgh as the next major opportunity to promote trade policy reforms. Regardless of the public pronouncement from APEC or outcomes of one-on-one meetings at APEC gatherings, the U.S. has too much at stake in trade with Asia to do anything but work closely with other APEC member countries to support a freer trade agenda.