Setting the Scene for the APEC Economic Leaders Meeting in 2007
Balancing Energy Security and Environmental Sustainability
APEC Leaders have a pivotal role to play in tackling climate change. APEC member economies account for 60 percent of the world's energy demand and across this regional grouping demand is expected to double by 2030. APEC is already a net importer of oil and for some forms of energy such as natural gas and coal, the APEC region will move from net exporter to net importer by 2030.
To meet energy demand, the APEC region will have to invest around US$7 trillion in energy infrastructure over the next three decades. If that doesn't happen, high and volatile energy prices will remain a key risk to economic growth in the region.
APEC economies will have to balance their demand for energy supplies, economic growth and development with increasing efforts to reduce carbon emissions. New policies will have to be assessed to make sure energy emissions are reduced with minimal costs and support growth and development over the long term.
By playing a role in expanding the use and transfer of new, more efficient energy technology, APEC member economies can share experience and analysis on the various approaches to clean development.
APEC economies are already working on developing improved low-emission technologies, increasing the use of renewable energy sources and seeking reductions in land clearing.
APEC Transportation Ministers in May discussed ways to reduce emissions from the transportation sector and in May, APEC Energy Ministers agreed to set up a voluntary peer review to help member economies raise energy efficiency and cut their dependence on oil. They also looked at emergency preparedness to ensure economies manage the consequences of short-term supply disruptions, improve oil data sharing and cooperate with international energy organizations.
Securing an Ambitious and Balanced Outcome from the WTO Doha Trade Negotiations
APEC economies are determined to see results from the WTO Doha Round. APEC accounts for half of all world trade and the Asia-Pacific region has been the biggest beneficiary of the open trade system.
In July, APEC Trade Ministers meeting in Cairns, Australia, issued a statement focusing specifically on the WTO negotiations and highlighting the urgency of reinvigorating WTO talks. Their statement on the DDA emphasized that real and substantial cuts must be made in agricultural and industrial tariffs.
Regional Economic Integration
Last year APEC Leaders meeting in Ha Noi commissioned a report to be presented to them in Sydney in 2007 on ways to strengthen regional economic integration, including a Free Trade Area of the Asia Pacific (FTAAP) as a long term prospect. Building on work already done in APEC, there are many practical steps that can be taken to promote greater regional economic cooperation both in the short and longer term. These can include trade and business facilitation, cooperation on 'behind-the-border' issues and structural reform, strengthening APEC's work to promote high-quality free trade agreements and greater integration of regional financial markets. The final report will be submitted to Leaders in Sydney for their consideration.
Eliminating Behind-the-Border Impediments to Trade and Investment
APEC has made tremendous progress in reducing average tariff levels and is determined to meet the Bogor Goals in 2010 and 2020. However, there are many other barriers to trade and investment in the region, including structural and regulatory obstacles that inhibit cross-border trade and investment by creating "behind-the-border barriers" to improving business performance.
Structural reform consists of improvements made to institutional frameworks, regulations and government policies. These improvements foster an economic environment that supports the efficient functioning of markets; contributes to macroeconomic stability, productivity and economic growth; and ultimately enhances living standards in a sustainable way.
Business is seeking deeper structural reform within domestic APEC economies to make them more transparent and efficient, and less bureaucratic, costly and burdensome.
In light of the importance of the structural reform agenda, APEC members will seek endorsement in Sydney of an ambitious and forward-looking work program on the Leaders' Agenda to Implement Structural Reform (LAISR) which will make progress on all five priority areas: public sector governance; regulatory reform; economic and legal infrastructure; competition policy and corporate governance.
Fostering Greater Investment Liberalisation and Facilitation
Measures that can be taken to help ensure that sufficient investment takes place to underpin economic growth are also likely to be discussed. While investment has been rising in a number of APEC economies, particularly commodity exporting countries, investment in many emerging Asian economies is still well below the levels before the 1997-1998 Asian Financial Crisis.
APEC Finance Ministers at their meeting in Coolum, Queensland in early August emphasized the importance of managing fiscal risks and the need to deepen private capital markets to provide diverse sources of funding and create new economic opportunities. Publicly providing analysis of the fiscal risks faced by government can foster confidence and credibility, which can generate real economic benefits in the form of greater investment and lower borrowing costs.
Human Security
As a result of 9/11 and the SARS and avian influenza outbreaks, human security issues have risen on the APEC agenda. Apart from the devastating human consequences of serious and destabilizing incidents affecting human security, there are serious economic losses, as confidence and efforts to achieve more open trade and investment are undermined. The activities of terrorists, natural disasters and outbreaks of disease all pose a serious threat to regional economic growth and stability.
In Sydney, Leaders and Ministers will consider setting up a framework for future work on total supply chain security; the development of the APEC Voluntary Food Defense Principles; and how to strengthen capacity to disrupt terrorism financing in the APEC region.
APEC Reform
The outcome of APEC's reform efforts will also be discussed in September. APEC has developed a package of reform measures designed to further strengthen APEC's institutional base. These include streamlining APEC processes; developing a more strategic approach to setting and implementing policy and capacity building priorities; bringing organizational changes to the APEC Secretariat in Singapore and ensuring closer interaction between APEC and the business community.