Fran O’Sullivan: Apec Agenda stays off-course

The fight against global terrorism has emerged as a major business issue at Apec.

The issues are intricate – even at the geo-political level, where presidents and prime ministers from the 21 Asia-Pacific economies of Apec clearly hold sway. But the links between security and trade – added to this year’s formal leaders’ agenda – are now finely drawn.

Global tensions – from the forthcoming US weapons inspections within Iraq to North Korea’s attempts to build a nuclear bomb – dominated the agenda.

There is little doubt among chief executives present at this year’s Apec business summit that the US intends to press home its advantage against Saddam Hussein.

Even before US President George W Bush arrived in Los Cabos, Secretary of State Colin Powell and Assistant Secretary (Asia) Jim Kelly had telegraphed the Bush position in a range of bilateral meetings as they sought to build strong support among political leaders and senior business figures.

Powell was a late entry to the business summit agenda.

Bush had intended to speak at a lunch meeting but stayed back at his ranch to host Chinese President Jiang Zemin. China’s support is crucial to the Bush agenda.

Powell’s conversation with the business leaders masked a strategy to use the summit to reinforce the line that North Korea was now in clear violation of its previous agreements not to amass nuclear weapons fuels. The threat was real and its clear and present danger was also causing debate within Japan over whether its constitution should be amended to allow significant rearmament.

President Bush and the leaders of Japan and South Korea have urged Pyongyang to dismantle its weapons programme “in a prompt and verifiable manner”.

But there is still a strong sense among political leaders that Bush should follow UN protocols over Iraq.

The downstream effects of the ever-present terrorist threat crystallisd for the 300 chief executives and business representatives at the Apec CEO Summit as they pondered its cause and the resultant effects on business.

In a snap poll, executives were asked to rank seven major threats to business prosperity. Predictably, terrorism came first, but ironically US hegemony was not far behind.

Snowballing insurance premiums, the risk of global deflation, spiralling energy costs and the sheer prospect of ensuring the safety of their staff as they go about their business in a global context have increased the risk profile executives reported.

As with September 11, which occurred just weeks before last year’s Shanghai meeting – the Apec organisers could not have predicted that this year’s meeting would be overshadowed by recent terrorist onslaughts.

Three more Apec economies have been attacked in recent weeks: Indonesia which is still reeling from the Bali explosions; the Philippines through bombings and Russia with the hostage crisis that kept President Vladimir Putin at home. Australia’s citizens bore the brunt of the Bali tourist bombings and New Zealand also suffered losses.

The political gavotte for most Apec meetings is usually well choreographed.

But Apec’s goal of free and open trade among Asia-Pacific developed economies by 2010 was effectively parked as leaders and business summiteers concentrated on the immediate security issues.

Poverty was singled out as a breeding ground for terrorism, but the irony of debating weighty issues such as poverty and globalisation at Los Cabos, a top-line holiday resort stretching for 20km of pristine coastline at the tip of the Baja California peninsula, is not lost.

But September 11 changed the security ground rules, and few high-powered political summits are now held in the world’s major capitals.

Outside the resort hotels where the meetings take place, Mexican naval gunboats patrol the magnificent coastline. The US Navy stationed a Seventh Fleet aircraft carrier further out in case of terrorist onslaught.

But the closest the leaders came to mishap was when the huge tent that was to house the traditional leaders’ dinner collapsed through winds caused by a nearby hurricane, costing some CEOs their opportunity to schmooze with leaders.

The failure to press on with Apec’s formal agenda has been of huge concern to Abac – the Apec Business Advisory Council, which comprises three business representatives from each of the 21 economies.

The 21 economies between them generate 61 per cent of global income and service more than 2.4 billion consumers.

Abac had planned to use its formal meeting with the political leaders to press home the need to get some clear focus back on the trade liberalisation agenda.

At issue was the need to combat a potential slowing of the global economy as terrorism hit home.

Instead of running a broad agenda for Abac, the business representatives wanted to hone that down to a maximum of three policy fronts including agricultural liberalisation.

Strong sentiments were expressed that the US was not using its dominant position to lead Apec faster towards its liberalisation goals.

Yesterday, Jiang Zemin, president of the world’s largest developing country, stressed that all Apec economies were passengers in the same economic boat. The Chinese President made an oblique reference to the US imposition of steel tariffs as China itself takes up its membership of the World Trade Organisation.

North American CEOs went a step further, urging Apec to accelerate its own liberalisation initiatives and commit to ensuring the WTO negotiations are completed on or before 2005.

But by that stage the leaders’ roadshow had moved on up the coast for their own exclusive meeting.

The trade agenda seemed unlikely to get strong impetus this year.

There are more important things to do.

* Fran O’Sullivan was a member of the New Zealand delegation to the Apec business summit

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