newzealandinc.com Informed. Influential. Indispensable.
By Stephen Jacobi
So what was actually decided at the 24th Asia-Pacific Economic Cooperation (APEC) forum in Vladivostok?
Not much if you take a glass-half-empty approach. It’s hard to get past the fact that APEC’s role is to be largely a forum for socialising ideas about economic policy that need to be put into practice elsewhere. That’s because unlike the World Trade Organisation (WTO), APEC is not a negotiating body – membership is voluntary and its decisions non-binding.
What has not been widely reported is the one big decision APEC did actually make this year that was both practical and symbolic. The 21-Pacific Rim countries agreed to reduce tariffs on a list of “environmental goods” to 5 percent by 2015 – things like renewable and clean energy technologies, waste water treatment equipment, air pollution control technologies, and environmental monitoring and assessment equipment.
The practical side is the advantage to New Zealand companies making and exporting these types of goods. The symbolic part is that this is one of the few times APEC has come together to free up trade in this direct way rather than encouraging progress through the World Trade Organisation or via initiatives like the Trans Pacific Partnership (TPP). It also helps underscore the idea that trade and the environment can be mutually supportive.
This symbolism is important because APEC’s prevailing idea is that the region’s economies should create a single economic space through the Free Trade Area of the Asia Pacific (FTAAP). While the pathway to FTAAP is not entirely clear, APEC has adopted the so-called Bogor goals, which set a target for free trade and investment by 2020.
On the face if it, little progress appears to have been made on moving to FTAAP in Vladivostok apart from the now ritual reaffirmation of the importance of opening markets. Such reinforcement is not a bad thing given that protectionism continues to lurk in the shadows (even this year’s host, President Vladimir Putin, justified it in certain circumstances during an off-script moment).
Trade was however discussed extensively in Vladivostok but mostly off-stage. TPP is one of the recognised pathways leading to FTAAP and Ministers from the 11 TPP economies met and welcomed Canada and Mexico to the negotiation, reviewed progress in the 29 negotiating groups, and gave instructions to negotiators to narrow down the areas of difference so political decisions can be made. Their report to TPP leaders show that more is being done in the negotiation than may be apparent to the casual observer. Ministers gave no indication of when negotiations might be complete but few now expect that the negotiation cannot be concluded until next year. That was the thrust of a statement released by seven business organisations in TPP economies, including the NZ US Council.
Attention in Vladivostok also focused on alternative pathways to FTAAP. These include a new negotiation between ASEAN plus six others including the North Asian economies, Australia, New Zealand and also India, which currently sits outside APEC; and a negotiation underway between China, Korea and Japan – which is a pre-requisite for the ASEAN + 6 initiative to work. These initiatives can be seen as complimentary but a sense of competitive liberalisation is no bad thing if it encourages movement towards the Bogor goals and FTAAP.
Ambition is the key and this was underlined by research presented to the APEC Business Advisory Council (ABAC) in Vladivostok, which points to US$2 trillion gains to income by 2025 from FTAAP.
Beyond trade and investment APEC made valuable decisions on a range of other issues on its work programme – upholding fiscal responsibility, encouraging efforts to promote supply chain connectivity, reviewing measures to promote food security, and initiating a new policy partnership in research, science and technology.
Importantly outgoing Reserve Bank Governor Alan Bollard was confirmed as APEC’s new Executive Director, giving New Zealand another opportunity to help shape the agenda and increase the relevance of the organistion. Vladivostok was also the occasion for world leaders, including Prime Minister John Key, to address the annual CEO Summit and to undertake a variety of bilateral meetings and sign a number of co-operation accords, some with sizeable budgets attached.
ABAC met for the fourth and final time for this year and presented its annual report and recommendations direct to leaders. This involves the ABAC members including New Zealanders Tony Nowell, Maxine Simmons and Wayne Boyd sitting down in small group conversation with leaders – a remarkably powerful way of ensuring APEC’s agenda meets business needs.
So is APEC just a talk-fest?
There is no shortage of talk at APEC, but this is primarily an opportunity for New Zealand politicians, leaders and business people to exchange views and ideas with their counterparts from across APEC’s 21 economies. At a time when there remain significant risks to global economic recovery, the fact is APEC would need to be invented if it didn’t already exist.
Finding ways to work together to build the region’s economy is at the heart of APEC’s agenda – talking is important, walking it even more so!
- Stephen Jacobi is the executive director of the NZ International Business Forum and an alternate member of ABAC.