Eduardo Pedrosa
Secretary General, Pacific Economic Cooperation Council
The APEC leaders’ meeting in Bali is over. The week-long series of events were but the tip of the iceberg when it comes to the APEC process. APEC is an institutionalized process with thousands of experts attending more than 100 meetings, all competing for a mention in the leaders’ statement.
Each year, the Pacific Economic Cooperation Council (PECC) conducts a survey on what opinion leaders think the priorities should be from a list of 30.
Many of the issues can be combined. Taking this approach, the top five priorities were:
First, attaining the Bogor Goals, regional economic integration and reducing income inequality.
Second, a connectivity framework for APEC members, investment in physical infrastructure to facilitate trade and establishing reliable regional supply chains.
Third, the APEC growth strategy and a green growth strategy for the region.
Fourth, regulatory impediments to business and corruption.
Fifth, the World Trade Organization (WTO) Doha Round.
While the absence of US President Barack Obama was surely a huge disappointment, a failure to come up with a budget deal in the US threatens the global economy and other leaders need Obama to deal with this issue more than they needed him in Bali.
It is a shame that such a choice was forced on him. Other than the host, Chinese President Xi Jianping would also likely be one of the most disappointed leaders. The APEC leaders’ meeting would have given the two a chance to build on the rapport they had developed at Sunnylands.
China recently signaled its intent to join the highly ambitious Trade in Services Agreement. This would create a new dynamic in the world economy, significantly boosting economic growth.
So what did APEC deliver? While everyone remembers the catchphrase from Bogor on free and open trade and investment, it is but a means to an end. That end, as defined in 1994, is accelerated and equitable growth in the region.
We only need to look at economies that have not made that commitment to free trade to see the results: North Korea, which is part of the region but not of APEC, is one of the poorest countries in the world. One part of the economy that remains relatively closed is services.
Indonesia has raised the profile of services in APEC work. Addressing this gap is critical for development – it includes electricity, water and education. Inclusive growth requires providing opportunities for participation, but parties cannot join in without the skills and wherewithal to do so.
Free and open markets are a necessary but not a sufficient condition for accelerated and equitable growth. The benefits of integration are not yet evident to millions of people.
After the 1997-98 economic crisis, many economies underinvested in infrastructure. APEC’s Framework for Connectivity and its Plan on Infrastructure and Development can help resolve this problem. Coming as it did with President Xi’s proposal for a regional infrastructure fund, it is clear that there is momentum and political will to address this.
Connectivity is a broad concept that addresses the ability of people, especially those outside of major cities, to benefit from integration. APEC talks about a seamless regional economy. This should mean the law of one price, yet domestic price variations are high – the connectivity work needs to address this. APEC will establish a Public-Private Partnerships (PPP) Expert Advisory Panel and a pilot PPP center in Indonesia that should help more projects make it from proposal to implementation.
Indonesia had made a resilient Asia-Pacific engine of global growth one of its central themes at APEC. This could have been a bad case of schadenfreude, or, worse, hubris as traders dumped emerging market assets. But the larger narrative is one of change. What can be done to benefit from the tectonic shifts taking place in the global economy?
China’s leaders have set out reforms to rebalance growth, become less reliant on exports and increase consumption.
Japan’s leadership is trying all it can to address an issue many will soon face – ageing.
The US, despite the irresponsible government shutdown, looks to be recovering.But it will be a different America, consuming less and exporting more as a result of its shale gas boom.
In 2010, APEC adopted a new growth strategy to adjust to these changes. Green growth is very much a part of this. APEC will create a PPP on environmental goods to further this, as the region reduces tariffs on environmental goods, and as with the Information Technology Agreement (ITA), prices will drop and more and more economies will get in on the game.
Corruption remains a scourge for many regional economies. Regulations matter and an opaque regime encourages corruption. APEC has established a network of anti corruption and transparency experts. It will not solve problems overnight, but it will provide an opportunity for nations to learn from one another, which is increasingly important as a lot of corruption is cross-border.
The hotline between Washington and Moscow helped avoid missteps during the Cold War. We now need more hotlines among multiple agencies.
Leaders have once again made a statement on concluding a WTO round of negotiations. The problem is not enough time has been spent on this. It was realistic but pro forma, nice words that did not move anything forward. Much more needs to be done here to ensure that the Asia-Pacific region, while benefiting from the multilateral system, actually takes ownership of it.
In addition to the formal APEC meetings, the APEC Business Advisory Council (ABAC) has been meeting throughout the year and bringing ideas like the PPP Panel to the table. There were numerous side events, including a Conference on Sustainable Development and the annual CEO Summit.
The point of this is that APEC is a large ecosystem that brings together stakeholders of all sorts. All of these events highlight the growing importance of cooperation in this region. The initiatives are there, but all members now need to use them to implement domestic change — otherwise it really is just a talking shop, useful but not to the point.
The author is the secretary-general of the Pacific Economic Cooperation Council (PECC), one of APEC’s three official observers. The views expressed are his own.