The average tariff rate of APEC member economies has been lowered by almost half from 15.4 percent to 7.6 percent during the period between 1988 and 1998. Many countries such as Australia, China, Indonesia, Korea, New Zealand, the Philippines, and Thailand experienced a dramatic decline in their average tariff levels. Currently, four countries (Hong Kong, Singapore, Brunei and New Zealand) have average rates below 5 percent, while eight countries (USA, Canada, Australia, Japan, Korea, Taipei, Malaysia and the Philippines) have mean rates between 5 and 10 percent. Three countries (Chile, Indonesia and Mexico) are in the range of 10 to 15 percent levels. The remaining three countries (China, Papua New Guinea and Thailand) have their average rates above 15 percent.

Some points can be made with regard to tariff reductions. First, the IAPs of 1998 regarding tariffs have made a limited improvement, which in turn has not been uniform across APEC economies. Second, for some member economies, implementing UR commitments has eclipsed the APEC process of unilateral tariff liberalization and reduction of non-trade barriers. Third, regional integration arrangements such as NAFTA, ANZCERTA, MERCOSUR, CER and AFTA have contributed to tariff reductions in some member economies. Fourth, the Early Voluntary Sectoral Liberalization (EVSL) initiative, announced in Vancouver in 1997, still constitutes a going concern in the region. Fifth, the member economies have been giving support to the Information Technology Agreement (ITA) and the subsequent ITA II. This support will generate significant benefits in terms of production, exports, and lower prices. At the same time, ITA in the Asia Pacifi region will enforce its conclusion in the WTO. Sixth, the provision of data needs to be improved.

Tariff reductions are endogenously determined. Thus it is worthwhile to ascertain whether the extent of tariff reductions provided in IAPs is 'sufficiently bearable or reasonably sincere' in light of member economies' past experience and present 'capability.' For that purpose, we identified the elements that determine the endogenous tariff rates (current rates) as reference rates. Then we compared the IAP commitments and/or the Bogor goals with the reference rates.
The point of our empirical exercise is to devise an indicator that can be used to assess the APEC's progress toward the Bogor goals on an individual country basis. Our approach is unique in that it puts emphasis on individual country's 'ability' to implement the IAPs, and that it focuses on the political process, both internal and external, of each member economy, which eventually leads to the proposed action plan.

However, limited data availability keeps us from fully evaluating the achievements made by APEC members in the area of tariff reductions. Yet we were able to evaluate the relative performance of 18 members. When we compared the fitted values (which are supposed to reflect the ability and sincerity to implement the commitments made in their IAPs) with what these member economies actually implemented, we found that, among these members, Papua New Guinea, Singapore, and Thailand have been carrying out the most drastic cut in tariff rates. They are followed by the Philippines, China, Korea, Australia, New Zealand, Malaysia, Indonesia, Chile, Japan, Canada, the United States, and Mexico in the order of the size of their relative tariff reductions. This result contrasts with the comparable order in the Yamazawa scheme, in which Hong Kong (gets 95 points out of 100) and Singapore (95 points) lead the pack.
They are followed by New Zealand (90), Australia (85), Brunei (85), the United States (85), Canada (80), Japan (80), Korea (75), Malaysia (70), Taipei (70), Indonesia (55), the Philippines (55), Chile (50), Thailand (45), Mexico (35), China (30), and Papua New Guinea (10).

What we can infer from the present analysis is the following. First, some advanced economies in the region such as the United States, Canada, and Japan are slow or reluctant to implementing their liberalization commitments. Second, other advanced economies such as New Zealand and Australia are doing relatively well in carrying out their IAPs. Third, it is those developing economies again such as Papua New Guinea, Thailand, the Philippines that have reduced their tariff rates more drastically than what they would normally do, should they live up to the endogenous tariff determination hypothesis.

Executive Summary

Ⅰ. Introduction

Ⅱ. Tariff Reductions

Ⅲ. Political Economy of the IAPs
1. Theoretical Underpinnings
2. Empirical Analysis

Ⅳ. Discussion and Implications

V. Summary and Conclusion

References

Korean Abstract