The Asia-Pacific Economic Cooperation (APEC) is a regional economic forum of 21 member states of the Pacific Rim that promotes free trade in the Asia-Pacific region.
The forum was established in 1989 in the backdrop of growing interdependence among Southeast Asian nations and the emergence of regional trading blocs such as the European Union (EU) and the North American Free Trade Agreement (NAFTA).
What Does APEC Do?
Headquartered in Singapore, the APEC represents more than 50% of the global GDP and 40% of the world’s population. It is primarily an economic forum that ensures that goods, services, investment, and people move easily across the respective borders.
Member states facilitate this process by offering favorable business opportunities, faster customs procedures at borders, standardizing trade regulations, and lowering tariffs. APEC provides a platform for member states to develop a mutually beneficial framework of cooperation in trade and investment.
How Does It All Work?
Unlike the EU, which is a supranational organization of states sharing similar ideology, the APEC does not have any institutional structure or ideological undertone. Rather, it relies on consensus, voluntarism, and non-binding agreements as opposed to a large bureaucracy with strict enforcement mechanisms.
This loose arrangement facilitates states with vastly different political and ideological cores to cooperate in matters of trade and investment without interfering in each other’s internal affairs. Respect for sovereignty, therefore, plays an important part in the trade negotiations that happen in an annual summit hosted by one of the member states.
Each year, the summit revolves around cooperation, consensus, and capacity building vis-à-vis trade and investment. Each year, APEC leaders are given policy recommendations to set the vision and agenda for the APEC summit by four core committees of APEC and their respective working groups.
These include the Committee of Trade and Investment (CTI), the Senior Officials’ Meeting (SMO), the Economic Committee (EC), and the Budget and Management Committee (BMC). Working groups are then tasked with implementing the agenda set by the APEC leaders.
Read More: APEC: A forum for collaboration and consensus
APEC at Gyeongju and the Future of Global Economy
The 2025 APEC summit is being held in Gyeongju, South Korea. However, the 2025 edition of the summit was dominated by the headlines of the US-China economic war and the possibility of reconciliation or at least a detente, and for good reasons.
Since the return of Donald Trump to the White House, the United States has increased tariff rates on most states around the globe. Be they allies or enemies, no one escaped Donald Trump’s tariffs, but at the center of Trump’s economic war was China.
In early October, Trump announced an additional 100% tariff on Chinese goods on top of the 30% imposed beforehand as a response to export control of the rare earth minerals by the Chinese that are vital for the tech-industry in the US.
Therefore, the trade negotiators from both sides were involved in backdoor diplomacy and talks to agree on a deal before the actual meeting of President Donald Trump and Xi Jinping in South Korea on the 30th of October.
The high-stakes meeting was covered frequently by the international media due to the severity of the consequences if both leaders failed to reach at least some kind of understanding. However, both leaders were eventually successful in securing a mutual de-escalation of their economic war efforts.
Both leaders signed a one-year trade truce and agreed on a rare earth deal that Trump said would be negotiated every year. The Chinese also agreed to buy American soybeans, and in return China got the reduction of tariffs on fentanyl to just 10%.
Though experts have warned that the truce does not mean peace but only a temporary ceasefire, it seems, for the time being, that the global economy will not free fall.
Read More: Trump, Xi Strike Deal on Soybeans, Rare Earths and Fentanyl
Beyond the United States and China
Though the US-China meeting took center-stage at the APEC summit, it was not the totality of the summit. The headlines of US-China rivalry overshadowed the many other deals that were made at the summit. These include;
- Singapore-Vietnam Rice Trade Deal: To ensure a stable supply of rice from Vietnam to Singapore.
- US-Korea Deal: To reduce US tariffs on the Korean automotive industry to 15%, with Seoul agreeing to invest $350 billion in the US economy.
- Canada-Indonesia Trade Deal: To reduce the tariffs on Canadian goods entering the Indonesian market.
- China-ASEAN Trade Deal: An upgrade to the existing free trade agreement between China and ASEAN.
APEC is, therefore, an alive and active forum that promotes free trade among the nations that touch the Pacific Sea. It provides a platform for discussions to find a way out of the economic deadlocks that are so prevalent in today’s economic milieu.
Moreover, forums like APEC prove that, despite the predictions of doomsday, a respectful discussion around core interests and a willingness to concede ground can do wonders and bring even the most contentious states on the same page.
Muhammad Omer Rafiq
Muhammad Omer Rafiq is a student of politics with a passion for making sense of our tumultuous political world that always seems to be on the edge. He recently graduated in International Relations from Lahore Garrison University. He can be reached at muhammadomerrafiq@gmail.com
