Asian Pacific Economic Cooperation (APEC)

Asian Pacific Economic Cooperation (APEC)

APEC is an organization that aims to promote free trade and economic cooperation throughout the Asia Pacific region. It was created in 1989 because of the growing interdependence of Asia-Pacific economies and the establishment of regional economic blocs such as the European Union and the North American Free Trade Agreement.

APEC intends to improve living standards and education levels through sustainable economic growth and to promote a sense of community and an appreciation of common values among Asia-Pacific countries. APEC’s membership includes 21 states, called “member economies.”

Of these, 12 are founding members—Australia, Brunei, Canada, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and the United States— while Chile, China, Hong Kong, Mexico, Papua New Guinea, Peru, Russia, Taiwan, and Vietnam joined at a later phase. APEC has no treaty obligations of its participants.


Decisions made within APEC are reached by consensus, and commitments are undertaken on a voluntary basis. APEC’s membership accounts for approximately 40 percent of the world’s population, approximately 56 percent of world GDP, and about 48 percent of world trade.

The first APEC Leaders’ Meeting occurred in 1993 and was organized by Bill Clinton in Blake Island, Washington. At its 1994 summit meeting in Bogor, Indonesia, APEC set an ambitious schedule to achieve free trade and raise the level of investments throughout the Asia-Pacific region by 2010 for members with developed economies and by 2020 for members with developing ones.

The Osaka Action Agenda was adopted a year later and was designed to implement APEC’s goals of liberalizing trade and investment, facilitating business activities, and promoting economic and technical cooperation. The procedure that all APEC’s decisions had to be taken by consensus and preferably passed unanimously limited the effectiveness of APEC.

In addition, although decisions can be taken in the absence of unanimity, they are not legally binding on member governments. In 1997 at the annual summit in Vancouver, Canada, police forces violently clashed with demonstrators objecting to the presence of Indonesian president Suharto.

APEC is organized into numerous committees, special task commissions, working groups, and a business advisory council. The committees meet twice per year. The working groups are led by experts and consider specific issues, including energy, tourism, fishing, transportation, and telecommunications.

Every year one of the member economies hosts an economic leaders’ meeting, selected ministerial meetings, senior officials meetings, the APEC Business Advisory Council and the APEC Study Centres Consortium, and also fills the executive director position at the APEC secretariat.

The deputy executive director changes every year, as the position is given to a senior diplomat of the country who will be the APEC chair the following year. The APEC secretariat, established in 1993 and based in Singapore, provides coordination as well as technical and advisory support for all the organization’s initiatives.

Democratic Progressive Party and Chen Shui-bian (Chen Shui-pièn)

Democratic Progressive Party

After its defeat in the civil war the Republic of China (ROC), led by the Nationalist Party (or Kuomintang, KMT), fled to Taiwan, an island province, while the Chinese Communist Party ruled the mainland, called the People’s Republic of China (PRC).

Fearing invasion by the PRC and to ensure stability on Taiwan, the Nationalist government under Chiang Kai-shek prohibited the formation of opposition parties and imposed martial law in 1949; non-KMT candidates could nevertheless compete as independents or nonpartisans in local elections.

Although most citizens accepted the restrictions as a necessary price for living a relatively free and increasingly prosperous life, some criticized the mainlander-dominated KMT for monopolizing national power.


Chiang Kai-shek died in 1975. His eldest son, Chiang Ching-kuo, was elected president in 1978 and reelected in 1984. Ching-kuo left important legacies. One was political reforms that included ending martial law in 1987, granting full freedoms, and allowing the formation of competing political parties.

He also declared that no member of the Chiang family would succeed him and promoted highly educated younger people, including native-born Taiwanese, to power. One was his vice president, Taiwan-born Lee Teng-hui. Unlike the chaotic political changes during the same period in the Philippines and South Korea, Taiwan’s transition to democracy was peaceful.

In 1986 a previously “illegal” political party became legal. It was called the Democratic Progressive Party (DPP) and gained about 20 percent of the popular votes in legislative elections that year. After Chiang’s death in 1989, Lee Teng-hui accelerated the pace of political reforms and won two terms as president.

Chen Shui-bian

Fractures within the KMT caused by Lee’s policies resulted in the victory of DPP candidate Chen Shui-bian (born 1950) a lawyer, in the 2000 presidential elections with 39 percent of the popular vote (compared with 60 percent combined votes for the KMT and its splinter People First Party candidates). Chen won a second term in 2004 with a very slim majority, but the KMT and its allies won a comfortable majority in the legislature.

Taiwan’s stable democratic transition with a competitive party system was remarkable. However, it was accompanied by a new kind of corruption, locally called “black and gold politics,” that is, crime and money influencing the political process, a situation unknown under authoritarian rule.

Chen Shui-bian was popular among some Taiwanese for promoting a local identity and a thinly veiled goal of separating from China. Since the PRC regarded Taiwan as a renegade province and has not disavowed force to compel it to rejoin the motherland, Chen and the DPP’s policies have heightened tensions across the Taiwan Strait.

And after China became Taiwan’s second-largest trading partner in 2000, Chen’s political stance and corrupt rule resulted in a downturn in Taiwan’s economy. Despite the end of the United States-ROC Mutual Defense Treaty in 1979, the United States continued to sell arms to Taiwan and remained interested in maintaining the people of Taiwan’s right to self-determination. Thus the unsettled relations between the two Chinas constituted the most important source of friction between the PRC and the United States.

U.S.-Taiwan Mutual Defense Treaty

The United States and the Republic of China (Taiwan) signed a mutual defense treaty in 1954 in which the United States would provide protection for the ROC in case of invasion by the People’s Republic of China (PRC). The treaty was approved by U.S. president Dwight Eisenhower and Taiwan’s president Chiang Kai-shek and was fully ratified by their respective legislatures.

The treaty was a product of U.S. cold war policy. The United States had washed its hands of China’s civil war in 1948, but had become concerned about communist expansion when Communist North Korea attacked proWestern South Korea in 1950. The United States then sent the Seventh Fleet to patrol the waters in Taiwan Strait.

In September 1954 the PRC attacked the ROC. The terms of the treaty committed the U.S. government to deploy land, sea, and air forces in and around Taiwan as required for its defense. The treaty also stipulated that the ROC and the United States would aid each other to increase their capacity to resist an armed attack or communist subversive activities directed against either country’s territorial integrity. Furthermore, both sides agreed to maintain peace and security in the region and refrain from the use of force in any manner inconsistent with their obligations to the United Nations.

Following the 1954 crisis with the PRC, the United States became concerned that the nationalist government of Taiwan might deploy force against the mainland. This could possibly involve American troops despite the treaty’s defensive nature. United States Secretary of State John Foster Dulles met with ROC president Chiang Kaishek to urge against attacking the PRC.


An incident occurred in 1958 when the PRC shot down two Nationalist F-84s on patrol. The PRC also renewed attacks on the offshore islands in midsummer 1958, testing the commitment of the United States to the treaty. In response, the United States deployed an aircraft carrier battle group to the region that included combat aircraft and transports. Nationalist forces were escorted safely by their ships to supply their offshore islands.

Both the United States and the Soviet Union urged a peaceful solution. Throughout the 1950s–60s the United States remained sympathetic to the cause of the ROC but also acted to restrain the ROC from acts that might provoke the PRC.

Beginning in 1971 the United States began to negotiate with the PRC. In 1972 President Richard Nixon visited China. The visit culminated in the Shanghai Communiqué in which China declared that Taiwan was a part of China and that differences should be resolved peacefully.

In 1978 President Jimmy Carter established formal diplomatic relations with the PRC, effective in 1979, thereby severing relations with the ROC and ending the U.S.-ROC Mutual Defense Treaty. A Taiwan Relations Act enacted by the U.S. Senate in 1979 authorized non-official relations with the ROC that also provided for the U.S. sale of weapons to the ROC.