Most border barriers are already low. Since 1989, average tariffs have been reduced from 17 per cent in 1989 to less than 6 per cent while intra-APEC merchandise trade has grown five-fold. More efficient customs procedures and other practical arrangements to facilitate trade and investment are saving billions of dollars per year.

APEC-wide commitment to outward-looking economic growth has been important in limiting the damage of the global financial crisis, backing the coordinated macro-economic response orchestrated by the new G20. APEC leaders can take satisfaction that the new forum has adopted a mode of voluntary cooperation among rich and emerging economies pioneered by APEC. APEC is well placed to position itself alongside and help set the agenda for the G20.

These achievements mean that, as noted by Singapore Prime Minister Lee Hsien Loong last week, there is no need to be overly concerned that APEC’s Bogor goals will not be met in full. Some border barriers to trade in several sensitive products will remain in place long after 2010, or even 2020. As the scope of international commerce continues to evolve, there will always be opportunities to reduce the many costs and risks of trade and investment.

This is a time to look ahead and adopt a new post-Bogor vision informed by experience. APEC should play to its strengths; building consensus on policies, including trade and investment policies, which can help each Asia Pacific economy to achieve its potential for sustainable growth. This means accepting the limitations of a voluntary process of cooperation.

APEC’s successes have come in areas where governments have perceived the benefit of cooperating, voluntarily, to achieve agreed practical objectives. Problems, together with perceptions of failure, have arisen when participants in a voluntary process sought to engage in negotiations.

Some issues will continue to need the negotiation of binding commitments, for example in the WTO and to deal with global warming. But that does not require negotiations to be attempted by the consensus-building forums like APEC themselves. APEC governments should be able to exercise influence in institutions which have comparative advantage in conducting negotiations.

APEC leaders should adopt the suggestions from several sources to hold regular meetings of the leading APEC economies which are in the G20 together with India, engaging it in Asia Pacific deliberations.

Setting up such a compact group would not devalue APEC. The wider membership of APEC and East Asian forums will be challenged to identify practical recommendations which their G20 representatives can take forward globally. A division of effort could see the smaller group addressing the security environment needed for the closer economic integration to be promoted by APEC as a whole.

Setting priorities for promoting market-driven integration needs to reflect that the nature of international commerce has changed since 1989. International movements of people, investment and information have become inseparable complements to movement of goods and services, while intra-industry and intra-firm trade are growing much faster than trade in final products.

Most traditional border barriers to trade are low, or gone. Residual border protection is costly, but affects a rapidly shrinking share of international commerce. These days, much more relevant impediments are logistics, security concerns and economic regulations which are not efficient and needlessly different from those of others. These policy weaknesses are compounded by uncertainty about how policies and regulations will work in practice.

The new realities are highlighted in a recent speech by, Lim Hng Kiang, Singapore’s Minister for Trade and Industry, where he notes the need to complement a world of already low border barriers to trade in most products with an environment of transparent, consistent and efficient economic policies and regulations, along with best practice information networks and logistics.

As the APEC process turns away from a pre-occupation with border barriers, there is much to learn from the European Union (EU) experience. Western Europe had a free trade area of all its members by 1970. Subsequently, it became obvious that getting rid of border barriers was not enough, leading to its single market initiative which tackled a much wider range of costs and risks of intra-European trade. This experience shows that a region-wide preferential trade bloc is not an adequate new vision for APEC, even if such an arrangement was remotely feasible.

Tackling the most relevant impediments to international commerce requires attention to regulation of domestic as well as international markets and the ability to manage structural adjustment. Deep integration involves ambitions such as:

• full rights of establishment and the national treatment of all firms, in all significant sectors;

• region-wide minimum standards for competition policy, which are sufficiently rigorous to avoid the need for anti-dumping actions among APEC economies;

• a comprehensive program of mutual recognition of product standards and professional qualifications;

• transparency and harmonisation of a wide range of administrative procedures, including agreed minimum standards for auditing and disclosure.

Approaching these aims will need to deal with many of the issues the EU has addressed. But Asia Pacific governments will need to do so in a much more flexible way in a diverse region which is not about to consider a supra-national authority to enforce region-wide regulations. Nor is there any need for slogans or uniform deadlines.

Like free and open trade, these ambitions are ideals which can, and should, be striven for. Some economies will move much further and faster in these directions than others. Moving beyond the Bogor goals, long-term ambitions for a single market are a point of reference for concerted, but voluntary decision-making by APEC governments to promote ever-deeper economic integration.

Some economies, or groups of economies can act as pathfinders to pioneer arrangements which others can join when they able and keen to do so.

Singapore’s practical objectives for 2009 pave the way for such a vision of the challenge of ever-deeper economic integration. To quote Minister Lim Hng Kiang:

This year, Singapore is leading an APEC initiative to identify key regulatory areas for reform and five areas of interest to the business community have since been identified. They are: a) starting a business; b) getting credit; c) trading across borders; d) enforcing contracts; and e) getting permits.

The next step is to set APEC-wide targets for all the five areas so that we can measure progress. We are also working together to design reform programmes led by ‘champion economies’ with strengths in each of the areas. APEC economies are well-positioned to collectively push for more improvement in the business environment. Nine of the APEC economies are among the top 20 in the World Bank’s Ease of Doing Business rankings in 2010. The approach is to leverage on one another’s strengths to help all the APEC economies move up. We look forward to announcing more details on the targets and reform programmes at the upcoming APEC ministerial meeting in November.

This next wave of reforms will not be easy to implement and will take time. Compared to cutting tariffs, they are also administratively and technically more complex, and require an economy to have the capacity, determination and will to implement the necessary changes.

APEC’s traditional strengths of building capacity through the sharing of experiences and best practices will be a plus in this next wave of trade reforms. Because APEC is voluntary and non-binding, its unique pathfinder approach enables smaller groups of like-minded economies ready and willing to undertake reforms to go ahead first, allowing others to join in later when they are ready.

If APEC leaders adopt this approach APEC will continue to record tangible achievements, year after year.