APEC - Meeting the Challenges of Regional E-Commerce

Tokyo, Japan, 09 November 2007
  • Speech by Ambassador Colin Heseltine, Executive Director, APEC Secretariat
I am delighted to speak to you today about APEC - what it is, what it does, and how it is tackling the challenges of electronic commerce.
I also wish to highlight the value and importance of the GBDe Annual Summit. In particular it provides a valuable means for industry to communicate its views on critical e-commerce-related issues to governments and organizations such as APEC. The concerns of the private sector must be heard and considered by governments as the dynamic and evolving world of online and electronic transactions expands. As this trade grows APEC has been pleased to have GBDe's active participation in our fora. Over the past five years GBDe has been an active participant in meetings of the APEC Electronic Commerce Steering Group and the APEC Telecommunications and Information Working Group, and has made a valuable contribution to their work in areas such as cyber-security, data privacy and consumer protection. Ultimately, our work together will make a significant contribution to the development of practical policy solutions to help the region deal with cross-border issues associated with the growth of electronic commerce. 
The APEC region has experienced tremendous gains since its formation in 1989. APEC members account for half of world trade, 41 per cent of world population and 57 per cent of world GDP. Per capita GDP has increased by 26 per cent compared with eight per cent for non-APEC economies. Tariffs in APEC economies have decreased from 17 per cent in 1988 to six per cent in 2004. And more efficient customs procedures, progress towards paperless trading, and other trade facilitation measures are saving businesses millions of dollars each year. All this is to say that the APEC region is a dynamic and important market with enormous potential for e-commerce development.
How APEC Operates
In achieving its status as the pre-eminent organization promoting economic growth in the Asia-Pacific region, APEC has developed some unique ways of conducting its business. Unlike negotiating bodies such as the WTO, APEC works on the basis of voluntarism, consensus and concerted unilateralism, and provides a forum for discussing best practice advice and guidelines in a wide range of governance and technical issues.
The Leaders' Meeting is the most visible event, and the highlight of the APEC year. At this meeting it is the Leaders who set the priorities for APEC and make the key decisions that are then implemented by ministers and officials from each economy.
APEC is also unique amongst regional forum in its relationship with the private sector. The APEC Business Advisory Council, or ABAC, consists of three business representatives appointed by the Leaders of each member economy. Its members meet with Leaders each year to provide recommendations on issues that are of importance to business in the region. ABAC has now evolved into an organic part of the APEC structure.
APEC's Priorities
This year, under Australia's chairmanship, APEC deliberated on many issues of critical importance to the APEC region, some of which have only emerged very recently in response to the rapidly changing international environment. Let me touch briefly on a few of those issues to give you an idea of the work that APEC does. I will then move on to highlight some of APEC's specific e-commerce initiatives.
Primacy of the Multilateral Trading System
APEC's original commitment to trade and investment liberalization remains undiminished. Key elements in this objective are strengthening the multilateral trading system and working to achieve the Bogor goals of free and open trade in developed and developing economies by 2010 and 2020 respectively.
For APEC economies, the WTO remains the primary mechanism by which we aim to achieve free and open trade. Recognizing the urgent need for progress in the WTO Doha Development Agenda negotiations, Leaders in Sydney pledged their commitment to work with renewed energy to deliver an ambitious and balanced result.
Energy Security and Climate Change
For the first time in APEC history climate change was an important area of discussion. This year Leaders spelled out APEC's commitment to ensuring the energy needs of the economies of the region, while at the same time, addressing the issue of environmental quality and contributing to the reduction of greenhouse gas emissions.
New Ways to Promote Regional Economic Integration
Last November APEC Leaders asked officials to prepare a study on ways to promote regional economic integration, including a Free Trade Area of the Asia Pacific as a long-term prospect. While economic integration has, of course, always been a key objective of APEC this was the first time this issue had been on the formal Leaders agenda.
Structural Reform - Behind the Borders
Business people in the APEC region are looking for deeper structural reform within domestic APEC economies to make them more transparent and efficient, and less bureaucratic, costly and burdensome for business. A recent study by the Australian National University indicates that comprehensive structural reform in APEC economies would be worth over USD 100 billion per annum in additional income to these economies. The World Bank and others suggest that behind-the-border reforms could be worth in the range of $100-148 billion per annum in new trade and investment for APEC economies.
E-commerce in the APEC Region
APEC recognizes the enormous potential of electronic commerce to facilitate trade, expand business opportunities, reduce costs, increase efficiency and facilitate the greater participation of small business in global commerce. All of these issues contribute to APEC's Bogor Goals of free and open trade. And to that end APEC has implemented a number of e-commerce initiatives. Let me outline some of these to you now.
In undertaking e-commerce initiatives, which by there very nature can involve complex and highly advanced technologies, when it comes to designing effective strategies and action plans for e-commerce it is essential for APEC - given its highly diverse membership - to take into account the different stages of development of member economies, and the varied regulatory, social, economic and cultural frameworks in the region.
APEC Strategies and Action Plans
One of the first formal programs was the 1998 Blueprint for Action on E-commerce which was designed to consolidate and reinforce the various APEC initiatives related to e-commerce. Thus the Electronic Commerce Steering Group (ECSG) was established.
Its first action was the promotion of the E-Commerce Readiness Initiative. Primarily a private sector driven project, this initiative was designed to assess the status of the e-commerce environment in each individual member economy so that concrete steps could be taken to address national-level issues, thereby facilitating the acceleration of e-commerce at a regional level.
Another project initiated as a result of the Blueprint is the Paperless Trading Initiative. APEC member economies have agreed to "reduce or eliminate the requirement for paper documents needed for customs and other cross-border trade administration" by 2005 or 2010, depending on the level of economic development of member economies. Progress made is tracked via each economy's Paperless Trading Individual Action Plan.
Work to enable the electronic transmission of trade-related information across the region by 2020 is underway. And progress has been made in implementing APEC's Strategies and Actions Toward a Cross-Border Paperless Trading Environment.
A large majority of economies have started to develop and implement ICT or e-commerce strategies, but these are at very different stages of development. While developed economies may focus on issues such as broadband access, or the building of regional networks, developing countries focus on key elements such as human capacity building, basic access to ICT, and low-cost hardware and software to list a few.
Internet Access
In spite of the differences among member economies, access to new technologies and the Internet is considered a key element of e-commerce strategies and a prerequisite for enhancing the participation of businesses and consumers in e-commerce and the digital economy.
In this regard, APEC Economies are successfully working towards reducing telecommunications trade barriers. This work results in increased accessibility and the long-term affordability of telecommunications access in the region, particularly for people in developing countries. Internet access in the APEC region has more than doubled since the year 2000 and some economies have more than tripled their internet access.
The digital divide in the Asia-Pacific region, as is the case in other parts of the world, is not only between developed and developing economies, but also between urban and rural populations, between more and less educated people and even between women and men.
Thus the Digital Divide Blueprint for Action and the e-APEC Strategy aims to transform the digital divide into a digital dividend in order for APEC economies to benefit from the opportunities presented by a networked environment; and to prepare APEC economies and all of our people to use the information revolution as a passport to the New Economy.
Key to the success of any strategy however is capacity building. Unless businesses and consumers are educated about the opportunities and benefits offered by ICT, and unless they are trained to use the Internet, e-commerce will not take off. Building capacities for e-commerce is therefore one of APEC's top priorities.
Consumer Protection
We cannot overlook consumer protection. Without confident e-consumers, there would be no e-commerce. It is imperative to ensure that online traders observe specific rules and guidelines to allay the fears of consumers and promote ethical online transactions.
In order to build trust in e-commerce, work has been undertaken to help economies implement APEC's Voluntary Consumer Protection Guidelines for the Online Environment. These cover international cooperation, education and awareness, private sector leadership, on-line advertising and marketing, and the resolution of consumer disputes. However, for the full potential of e-commerce to be realized, a number of issues remain to be overcome. The primary challenges include security and privacy.
With regard to security APEC member economies have combined their efforts to combat threats under the APEC Cyber security Strategy, which includes a package of measures to protect business and consumers from cyber crime, and to strengthen consumer trust in the use of e-commerce.
Practical tools to protect small businesses - as well as home users - from attacks and spreading viruses, have also been developed. This includes advice on how to use the internet securely, safety issues relating to wireless technologies and safe e-mail exchanges.
To be successful however a global approach is needed to combat cyber crime. To that end APEC is cooperating with ITU, and ASEAN on cyber security, and network security. And we are also collaborating with the OECD to prepare an APEC-OECD Analytical Report on Malicious Software and Recommendations with Actions Plans against Malware and Related Threat; and, to develop an APEC-OECD Model Survey on Indicators for Trust.
Recent initiatives adopted to promote consumer trust and business confidence in cross border data flows includes the APEC Privacy Framework; and the APEC Data Privacy Pathfinder and its work plan which was launched by APEC Ministers in Sydney.
APEC recognizes that the business sector plays a leading role in developing electronic commerce technology, applications, practices and services. We value the importance of public-private collaboration in developing and implementing joint initiatives for the fast development and use of electronic commerce in the region. And so to strengthen the public private partnership on e-commerce, the APEC Electronic Commerce Business Alliance (APEC ECBA) and the Public-Private Partnership Dialogue on Paperless Trading (PPP Dialogue) were established.
Guest status has been granted to business organizations, including the Global Business Dialogue on Electronic Commerce (GBDe), the International Chamber of Commerce (ICC), and the Pan Asian Alliance on E- Commerce (PAA). These organization's voluntary reports, and active participation in APEC meetings and projects are a welcome contribution to the ECSG work plan.
Work with other international partners is also integral to the success of APEC's e-commerce initiatives. And APEC is working with the Organization for Economic Cooperation and Development (OECD) on data privacy issues and with the United Nations Centre for Trade Facilitation and Electronic Business (UNCEFACT) on electronic standards for paperless trade to undertake work to enhance global and regional trade facilitation. Both organizations have been granted guest status at the ECSG and regularly participate in its meetings.
In closing I would like to say that in order to develop and maintain a successful global e-commerce environment all relevant stakeholders must work together. This means that the private sector must work in concert with governments to develop meaningful and rational policies. So I invite you to communicate with your respective governments to ensure the development of an efficient and productive e-commerce milieu.
I would like to thank the GBDe for its valuable contribution to advancing APEC's work on e-commerce and I look forward to the continuation of this fruitful relationship during the following years.
Thank You.