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APEC STRUCTURAL REFORM INITIATIVE

- Japan's proposal for promoting related work in APEC -

November 2003

Pursuant to the proposal put forward by Japan's Prime Minister Junichiro Koizumi regarding promoting structural reform in the APEC region at 2002 APEC Leaders' meeting in Los Cabos, Japan has played an active role to encourage structural reform related activities both in each economy and APEC as a whole. Japan's initiative has come up with "APEC Structural Reform Initiative", which was endorsed by Leaders and Ministers at Bangkok in October 2003. "APEC Structural Reform Initiative" consists of the following two components: "APEC Leaders' Commitment on Structural Reform" and "APEC Structural Reform Action Plan".

1. APEC LEADERS' COMMITMENT ON STRUCTURAL REFORM
   
   Cognizant of vital importance of structural reform in the APEC region, APEC Leaders has delivered a strong political message to further promote structural reform on the occasion of APEC Leaders' meeting in Bangkok. On structural reform, the APEC Leaders' Declaration, "Bangkok Declaration on Partnership for the future", reads as follows.

   "Accelerate structural reform in the APEC region. We reiterated APEC's strong political commitment to continued structural reform to ensure sustainable economic growth and development in the Asia- Pacific region. We welcomed the adoption of the APEC Structural Reform Action Plan that includes strengthening economic legal infrastructure as a guiding working program and instructed Ministers to review implementation of this Action Plan and identify future initiatives."

2. APEC STRUCTURAL REFORM ACTION PLAN
   
   *APEC Structural Reform Action Plan was adopted at the APEC Ministerial Meeting (October 2003) as a guiding working program on the APEC Structural Reform Initiative.
   
   

   1. IMPORTANCE OF STRUCTURAL REFORM

      The promotion and strengthening of structural reform in APEC economies is an essential prerequisite for achieving sustainable economic growth and development in the Asia Pacific region and beyond. The 1997 Asian Financial Crisis demonstrated the importance of ongoing institutional, regulatory and structural reforms to enable APEC economies to successfully address the challenges presented by economic shocks and market instability.

      To maximise the opportunities from open markets "at the border", mutually supportive structural reform is necessary "behind the border". The objective of structural reform is to help achieve durable, non-inflationary growth and employment. By improving the functioning of markets, reform can remove impediments to the full and efficient use of resources, helping governments achieve widely-held economic and social goals such as higher productivity and living standards.

      Structural reform will assist APEC economies in realising the benefits of trade and investment liberalisation and facilitation, contributing towards the achievement of the Bogor Goals. Reforms establishing transparent and impartial regulatory frameworks will also boost business and investor confidence in an environment of global economic uncertainty.

      Building on the lessons of the financial crisis, APEC economies can be the driving force for continued growth in the world economy by implementing appropriate reforms to address new and emerging challenges resulting from rapid economic changes. By implementing appropriate structural adjustments in a timely manner, APEC economies can seize new opportunities for prosperity. Therefore, APEC should reenergize its promotion of the benefits of structural reform and utilize high-level policy dialogues including peer review, complemented by capacity building activities to share experiences and best practice models.

   2. APEC WORK TO DATE ON STRUCTURAL REFORM

      APEC member economies have a shared responsibility to enhance prospects for sustained economic growth and maximise the benefits of open markets by addressing structural reform issues through commitment to reform "behind the border", advocacy and awareness-raising activities, capacity building projects and enhanced cooperation. Examples of recent specific APEC initiatives include:

      • A Structural Reform Seminar held in Khon Kaen, Thailand in May 2003.
      • Finance Ministers' initiatives to strengthen corporate governance and improve insolvency systems.
      • Initiation of a Corporate Debt Restructuring project in the Economic Committee.
      • Various initiatives in the Competition Policy and Deregulation Group (CPDG).
      • Corporate law, competition policy and institution and capacity building initiatives implemented by the Strengthening Economic Legal Infrastructure (SELI) Coordinating Group.
      • Promotion of capacity building projects to strengthen Social Safety Nets.
      • Good regulatory practice seminars in the Standards and Conformance Committee and the Group on Services.

   3. PROPOSED FUTURE STRUCTURAL REFORM WORK WITHIN APEC

      Structural reform is a broad ranging and continual process. The recognition of transition costs during the adjustment phase of the reform process underlines the importance of careful and expert management. APEC will continue to play a leading role in the promotion of continuous economic reform in the region through advocacy and awareness-raising activities; capacity building projects and coordination and cooperation. A key objective will be to assist economies in their efforts to develop a constituency for reform and promote openness through their own policies.

      • Advocacy and Awareness Raising Activities: APEC member economies and ABAC are encouraged to work together to enhance awareness and build support among key stakeholders in their economies on the importance of structural reform for economic growth and sustainable development in the APEC region. APEC fora are encouraged to improve advocacy of their structural reform work with the APEC Secretariat to promote structural reform outcomes through their communications and outreach work.
      • Capacity Building Projects: APEC fora and individual member economies are encouraged to develop and implement capacity building projects and provide technical assistance, with the outcomes of all projects to be widely disseminated and acted upon.
      • Cooperation and Coordination: APEC fora are encouraged to work together to advance APEC's structural reform agenda by sharing information, publicising the outcomes of projects and keeping each other apprised of progress with initiatives. Senior economic policy makers and regulators are encouraged to contribute to high level policy dialogues and peer review. Cooperation and coordination between APEC and regional/international organisations on their structural reform agendas should be improved, with regular dialogue to facilitate interaction.

Specific Initiatives

Relevant APEC fora have detailed their future structural reform initiatives. Examples of proposed APEC activities related to structural reform are:

APEC member economies are also considering individual initiatives to promote structural reform in the APEC region. Examples of proposed activities include: