Leaders and Ministers from the 21 APEC member economies are convening in Manila for the 2015 APEC Economic Leaders’ Week to boost trade and inclusive, sustainable growth in the Pacific Rim. Ten things to know about the proceedings are described below:
Economies in Transition
A slowdown in trade growth is weighing on Asia-Pacific economies, coming after a quarter century of high trade growth that fueled the region’s development and transformed it into an engine for the global economy. Market uncertainty, protectionist pressures and the need for difficult structural reforms as well as inequality brought increasingly to the fore by the rapid accumulation of wealth in the region and the escalating risk of shocks due to threats such as climate change, pandemics and terrorism are further challenges that are creating impetus for more robust regional cooperation.
Opening New Era of Growth for All
APEC economies are in a period of transition but they still account for much of the world’s growth. What is more, greater market integration and development in the Asia-Pacific has lifted hundreds of millions of people out of poverty and into the ranks of the middle class. This is creating enormous opportunity for businesses to sell their goods and services to a new generation of consumers in the region and driving APEC members to push for new, increasingly large and ambitious trade agreements and parallel measures to promote trade, investment and growth among them.
Emphasis is on ensuring that the region’s diverse economies are each in a position to move forward and that the benefits of increased trade and growth are widely felt, particularly among groups that have not benefited fully from the forces of globalization in the past. APEC members are moreover intent on building a stable, secure environment to safeguard people, communities and businesses while strengthening environmental protection to ensure the future of growth and prosperity across the region and beyond.
Next Steps for Regional Economic Integration
Leaders’ Week will convene all 12 Trans Pacific Partnership participants, 12 of 16 from the Regional Comprehensive Economic Partnership and three of four founders of the Pacific Alliance—all of which are APEC members. Together, APEC’s membership will seek to expand information sharing and technical capacity building between them in support of emerging regional undertakings such as these and to contribute to the eventual realization of an APEC-wide Free Trade Area of the Asia-Pacific or FTAAP that builds off of them.
They will furthermore review the progress of a two-year collective strategic study on issues related to the realization of the FTAAP initiated by APEC Leaders in Beijing last November and co-chaired by China and the United States, and provide guidance on work underway by all 21 APEC members to complete the study—due when the region’s Leaders and Ministers reconvene at the end of 2016 in Lima. Leaders will also hold an informal dialogue on the sidelines in Manila on the Pacific Alliance and APEC, including participation from Columbia.
Towards New Trade and Investment Frontiers
In Manila, APEC members will look to deepen cooperation among them to ensure that they are each equipped to tackle next generation trade and investment issues, facilitating their integration and optimizing its potential benefits across the region. Areas of focus range from complex policy dimensions such as intellectual property protection, government procurement and rules of origin, to enhancing internet and digital network development, data privacy protection and cyber security.
Services Growth Awaits?
APEC members will seek to round out a number of complementary and potentially game changing trade and growth-boosting measures. High among them is a new Services Cooperation Framework to provide an entry point for market liberalization and development within the sector which has trailed that of manufacturing and could significantly increase productivity and job creation in the region. Emphasis will also be on related work to open the sale of retail funds between economies through implementation of the Asia Region Funds Passport, facilitate travel and tourism, cross border education, and compatible architect and engineering standards and develop environmental services.
Push to Deliver Environment Goods Tariff Reductions
Meeting the landmark commitment among APEC members in Vladivostok in 2012 to cut tariffs on 54 environmental goods such as solar panels and wind turbines to five per cent or less by the end of 2015 is another key aim. It would mark the first successful multilateral tariff lowering arrangement in 18 years, opening up trade in goods with a market value of USD500 billion globally while promoting environmental protection and green growth. It could also boost the comparable global negotiations underway on environmental goods under the World Trade Organization as well as offer a model for possible tariff reductions in other product categories and sectors.
Yes, Small Firms Can Benefit from Greater Trade Too
Small and medium enterprises account for over 97 per cent of all businesses, about 60 per cent of GDP and half of employment in APEC economies but a low proportion of their exports—less than 35 per cent in Thailand and Viet Nam, less than 25 per cent in Indonesia, Japan, Malaysia, Singapore, Chinese Taipei and the United States, and less than 15 per cent in Australia, Chile and Peru.
APEC members will set in motion a new action agenda for micro, small and medium enterprise participation in regional and global markets to position the sector to take advantage of new trade opportunities as economies become more open and integrated. In view is promoting small business access to finance, ethnics standards and management, wider use of e-commerce and tie-ups with larger businesses in global value chains—or the different stages of international production and supply chains. This includes the conception, design, production, marketing, distribution and sale of value added products ranging from blue jeans to commercial jets.
They will also seek to improve free trade agreement utilization as well as push to finalize the APEC-wide adoption of the World Trade Organization Trade Facilitation Agreement to usher in measures such as single customs windows and paperless transactions that cut administrative red tape and make it easier, cheaper and faster for firms big and small to move goods across borders. Spurring adoption of the agreement by economies globally is an additional focus.
The advancement of measures for empowering the people of the region to keep pace with the changing economic environment and igniting productivity, job creation and wage growth will be a top priority. Emphasis is on promoting start up growth and entrepreneurship as well as strengthening human capital development so that labor forces are compatible with the needs of 21st century economies.
APEC members will endeavor to take forward new structural reforms to make it simpler for people around the region to start a business and navigate complex backend requirements like dealing with permits and enforcing contracts. Particular attention will moreover be directed towards building support for women’s entrepreneurship. Emphasis is on areas such as the development of mentoring and social support networks, facilitating women-friendly health policies, technology access and training, and individual action plans for enhancing women’s leadership within APEC economies.
At the same time, APEC members will look to make it easier to pursue education and skills training abroad including through the creation of new scholarships and internships and the targeting of one million university student exchanges in the region annually by 2020—25 per cent higher than current levels. Enhanced cross-border mobility for more people – building on the APEC Business Travel Card program – is an additional agenda focus.
Mitigating Climate Change and New Disaster Risks
The China-United States climate change deal came alongside the APEC Leaders’ Meeting last November in Beijing and the global climate change conference is scheduled to take place in Paris just a few weeks after the APEC Economic Leaders’ Meeting in Manila.
APEC members in Manila have an opportunity to set the stage for greater progress in mitigating climate change as they work to meet their deadline to reduce tariffs on environmental goods and step up efforts to develop and harmonize standards and regulation to facilitate their deployment.
Green building and electric vehicle development, and improvements in urban planning are additional focus areas that could help to move APEC economies towards the goals of doubling their renewable energy to about 20 per cent of their energy mix by 2030, a 45 per cent reduction in energy intensity – facilitated by improved energy efficiency – by 2035 and lowering carbon emissions.
At the same time, APEC members are looking at new measures to deal with the increasing frequency and severity of disasters such as typhoons, flooding and drought due to climate change and their impact on communities, ecosystems and economies. This includes potential disruptions to businesses, particularly vulnerable small firms, and the knock-on effects this can have on regional and global production and supply chains which drive trade, growth and livelihoods. Already, APEC members, which are hit by 70 per cent of the world’s natural disasters, incurred over USD100 billion annually in related losses over the last decade.
Connectivity and Security Amid Rising Threats
As the volume of people and goods moving between Asia-Pacific economies climbs to new heights, it is bringing the need to bolster physical linkages in the region increasingly to the surface. This need is especially pronounced in emerging markets where rapid change, including rising urbanization, are set to continue over the coming decades. Further steps to bridge infrastructure gaps will be a focus of APEC members in Manila. Emphasis is on the facilitation of public-private partnerships to help meet the nearly USD10 trillion in required project investment just in the next decade.
Strengthening the resilience of infrastructure including roads, rail, ports and airports against the rising threat of natural disasters due to climate change as well as building capacity at and behind borders to mitigate the escalating threat of pandemics, cross border terrorism, corruption linked to illegal wildlife, logging and people trafficking, and food supply disruptions are related points of focus. The aim is to limit disruptions to people and trade flows, improve human security and ensure the next phase of growth and development in the region.
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Details on meetings and events during the 2015 APEC Economic Leaders’ Week can be found at this link.
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