▶ The 2024 APEC Leaders' Machu Picchu Declaration focuses on empowering, including, and growing through digitalization, sustainability, and inclusivity, with initiatives such as the Lima Roadmap (2025–2040) for transitioning informal sectors to formal economies and advancing clean energy policies.

▶Geopolitical tensions, rising protectionism, aging populations, and the impact of Trump's policies pose significant challenges to APEC's goals, threatening regional stability, trade, and investment.

▶APEC's non-binding, dialogue-focused structure remains critical for fostering collaboration and mitigating tensions, with middle powers like South Korea, as the 2025 APEC host, poised to lead multilateral initiatives toward its vision of an open, dynamic, and resilient Asia-Pacific by 2040.

The Asia-Pacific Economic Cooperation (APEC) Economic Leaders’ Week took place in Lima, Peru on 9th-16th November 2024. It was graced by more than 1,000 government officers, C-suite executives, and thought leaders from the Asia-Pacific to discuss pressing issues pertaining to the region as well as global economy. The outcomes of the APEC meetings are closely watched by the policymakers and business communities. This is partly because the grouping’s economic weight is hard to ignore. The member economies account for 40% of the world population[1], 62% of the world GDP and 48% of the global trade[2]. Also, APEC plays an instrumental role fostering regional trade liberalisation and facilitation, promoting investment and digital innovation, aligning different rules and regulations, and addressing transnational challenges. For example, the Single Window allowing e-submission of the required customs clearance documents and Trade Facilitation Action Plan streamlining customs procedures have reduced the at-the-border costs. The APEC Connectivity Blueprint for 2015-2025 aimed at galvanizing physical and institutional infrastructure and people-to-people connectivity has boosted business travels and international tourism in the region.

APEC’s programs galvanizing small and medium enterprises (SME)’s capacities, resilience, and competitiveness have led to more inclusive growth and development.[3] Moreover, its mechanisms purposed to increase regulatory transparency such as the Anti-Corruption Task Force and the Anti-Corruption and Transparency Experts’ Working Group, have helped attract investments into the region.[4] Since 2020, the cooperation has be guided by the APEC Putrajaya Vision 2040 envisaging “an open, dynamic, resilient, and peaceful Asia-Pacific by 2040.”[5] Under the US host, the 2023 APEC Leaders’ Golden Gate Declaration was adopted. It not only builds on the previous years’ accomplishments but also propels the region “towards new ways of bringing resiliency, sustainability, interconnection, innovation and inclusion.”[6]

APEC 2024’s Outcomes

This year’s theme is “Empower. Include. Grow.” Some key outcomes and achievements are the followings. As seen in the 2024 APEC Leaders Machu Picchu Declaration, the parties pledged to work towards realising the APEC Putrajaya Vision 2024 “including through the implementation of the Aotearoa Plan of Action.”[7] They also reaffirmed their commitments to supporting the rules-based multilateral trading system, enhancing supply chain connectivity, digital economy and structural reform, as well as advancing bio-circular-green economy, inclusivity and sustainability, food security, and quality infrastructure and investment.

On “Empower”, the APEC governments adopted the Lima Roadmap to Promote the Transition to the Formal and Global Economies (2025-2040) which harnesses innovation and digitalisation to move people in the informal sectors to the formal and global economies, enhancing the region’s inclusive growth and development. As for “Include”, the Leaders welcomed the Ministerial-level deliberations of the 2024 sectorial meetings and their consensus Statements regarding, among others, Women and the Economy, Tourism, and SMEs. Recognizing the roles of women in driving the regional economies, they pledged to accelerate the full implementation of the La Serena Roadmap for Women and Inclusive Growth (2019-2030). Regarding “Grow”, the member economies embraced the Policy Guidance to Develop and Implement Clean and Low-carbon Hydrogen Policy Frameworks in the Asia-Pacific adopted at the Energy Ministers’ Meeting. This Guidance intends to boost the region’s use of renewable energy and environmentally sound technologies for sustainable energy transition. In addition, they adopted the Ichma Statement on A New Look at the Free Trade Area of the Asia-Pacific (FTAAP). The text outlines the Guiding Elements to modify the FTAAP to be more “adaptable and responsive to sustainable and inclusive economic growth, the evolving needs of”[8] the members in the current international trade and investment dynamics.

Beyond advancing regional economic cooperation, the sideline meetings provide opportunities for the Asia-Pacific governments to push forward their bilateral engagements. For example, the Peruvian President Boluarte and the Chinese President Xi Jinping met to discuss infrastructure and investment projects.[9] These sideline gatherings also give the governments opportunities to meet directly with the private sector and boost investors’ confidence of their economies. For instance, the Thai Prime Minister Paetongtarn Shinawatra, at her meeting with the US business leaders, urged them to increase their investment in Thailand’s key sectors such as sectors as “finance and banking, SME development, healthcare, and the digital economy.”[10]

APEC’s Continued Challenges and Future Prospects

The progress and accomplishments notwithstanding, APEC is facing remaining challenges. For one thing, the cooperation is taking place against the backdrop of the intensifying geopolitical competition and rising protectionism. These factors could exacerbate the situations in flashpoints such as the Korean Peninsula, South China Sea, and Taiwan Strait. This can ultimately heighten the Asia-Pacific instability, dampening investors’ confidence and trade and investment prospects. Another challenge is modest growth. Except the US, the region is predicted to expand by 4.6%[11], as compared to the 2008 level of 7.5% growth.[12] Moreover, the populations are ageing the fastest in the world. One study found that 630 million people aged 60 years or over in 2023. By 2025, the number is estimated to reach 1.3 billion, meaning that one in four persons will be 60 years old or above.[13] These elements pose a pressing question: How will APEC coin and enact initiatives to ensure resilience, inclusive, and sustainable growth and development for the region in years to come?

Another issue regarding the APEC’s future concerns with international dynamics in the aftermath of the 2024 US Presidential Election. Donald Trump has won his second Presidency. The Republican Party also assumed the majority in both houses of the Congress, making it easier for Trump to implement his policy promises. With the “Make America Great Again” agenda, Washington will tend to double down on its attempts to bolster domestic manufacturing and safeguard the American jobs via industrial policies. It will also continue to outcompete China on several fronts including technological advancements. Moreover, Trump may use his Presidential power to immediately impose 60% duties on Chinese imports and 10-20% blanket tariffs on all imports. Such policies can invite retaliations not only from Beijing but also other regional states. Due to these actions, the Asia-Pacific economies will likely witness worsening protectionism, more supply chain interruptions, and increased market uncertainties.

But one should not lose hopes. This environment actually elevates the importance of APEC more than ever. Beyond advancing regional economic collaboration and integration, the grouping’s value lies its ability to convene players that have locked horns in conflicts and rivalries (e.g. the US and China), rendering it a critical forum for discussions and dialogues. APEC’s approach of open and non-binding cooperation allows different powers to maintain their communications and voice frank opinions and concerns. This in turn helps them avoid miscalculations and misinterpretations of one another’s moves which could result in escalations or armed clashes. Such modality also provides room for policymakers to jointly explore ideas to tackle pressing international problems without fearing that they are bounded by formal contracts, hence raising the likelihood of finding innovative solutions.

It is worth noting that focusing solely on the impacts of Trump’s policies on regional economies can risk ignoring the roles of the other APEC members which are middle powers and smaller states in upholding multilateralism. History teaches us that these countries have agency to drive international cooperation and governance. For example, Canada is leading the Ottawa Group to reform the World Trade Organization (WTO). Australia and Singapore are among the co-conveners the WTO’s Joint Statement Initiative on e-commerce which negotiation reached a stabilized text on the Agreement on Electronic Commerce in July 2024. Moreover, the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), which is one of the world’s largest trading blocs, was originally concocted by the “P4” – Brunei, Chile, New Zealand, and Singapore. During the potential Washington’s retreat from economic multilateralism, these players can step in to champion the international rules-based trading system.

One hopeful development is that South Korea, a middle power, will host APEC in 2025. Seoul is Asia’s fourth largest economy. Its trade accounts for about 85% of its GDP.[14] The state plays a key role in global supply chains of several products such as semiconductors, automotives and parts, and electronics goods. Moreover, its government is open for investment and trade, as exemplified by 52 active FTAs with various partners.[15] As the nation with such profiles will assume the next year’s APEC chairmanship, it will further steer the entity towards deeper cooperation and integration.

Yet, the road ahead for Seoul will not be rosy. For one thing, the Sino-America rivalry and tech decoupling are set to worsen. Rising protectionism and inter-state conflicts risk exacerbation. Trump’s mercurial decision-making style will entail policy unpredictability and increase market volatilities. Trump’s preference for bilateral interactions over multilateral ones may tempt him to skip attending the APEC meetings altogether, missing a chance to communicate with his Chinese counterpart to sort out their bilateral issues. How well the South Korean chair will utilize APEC as a forum to lessen these challenges and direct the regional economies towards “an open, dynamic, resilient, and peaceful Asia-Pacific” as envisioned in the Putrajaya Vision 2040 awaits to be seen.