REPORT TO NEW ZEALAND BUSINESS – APEC Business Advisory Council, November

APEC BUSINESS ADVISORY COUNCIL

FOURTH MEETING, DANANG, 4-6 NOVEMBER 2017

REPORT TO NEW ZEALAND BUSINESS

SUMMARY 

1. ABAC’s final meeting for 2017 was held in DaNang, Viet Nam, and culminated in ABAC’s annual Dialogue with APEC Economic Leaders where ABAC’s key recommendations for improving the business environment in the region were presented. These meetings took place against the background of a strengthening regional economy but continuing uncertainty about the future of trade liberalisation in the region including in relation to TPP, the core elements of which – after significant drama – were finally agreed. The meeting wrapped up its 2017 work programme and adopted the priorities for 2018 under ABAC Papua New Guinea’s leadership. New Zealand Members secured Co-Chair roles for the coming year – Katherine Rich (Regional Economic Integration), Phil O’Reilly (Sustainable Development) and Tenby Powell (SMEs). Among the key deliverables from the ABAC meeting was the presentation of a major research report on what policies need to accompany globalisation to make it work better for people, undertaken by the USC Marshall School of Business with significant input from New Zealand. ABAC New Zealand also presented more generally on barriers for services and digital trade and agreed to sponsor a research project in 2018 looking at the impact of trade on households and firms. An invitation was extended to all ABAC Members to join the first meeting for 2018 to be held in Auckland 1-4 February. ABAC Members were also pleased to meet with Prime Minister Rt Hon Jacinda Ardern, Deputy Prime Minister, Rt Hon Winston Peters, and Trade Minister, Hon David Parker.

REPORT

2. ABAC New Zealand members Katherine Rich, Phil O’Reilly and Tenby Powell, along with Stephen Jacobi (Alternate Member), attended ABAC’s final meeting for 2017 hosted by ABAC Viet Nam in DaNang. As is customary, a number of APEC meetings were held at this time including APEC Senior Officials, Ministers, Trans Pacific Partnership (TPP) negotiators, Ministers and Leaders, a Viet Nam Business Summit and the APEC CEO Summit, the latter attended by a small New Zealand delegation. This note focuses on the key outcomes of interest to New Zealand business.
3. ABAC’s annual report to APEC Economic Leaders adopted the theme “Creating New Dynamism, Fostering Shared Future”. The report notes the continuing improvement of the regional economy and the increasing technological drivers but also acknowledges the public disquiet about globalisation. The report urges governments to press on with structural reform and trade liberalisation to improve competitiveness and productivity, ensure greater inclusiveness and avoid a growing digital divide both between and within economies. ABAC’s report can be found on the ABAC website[1].

Achieving regional economic integration

4. In DaNang there was considerable attention focused on negotiations to achieve TPP-11 following the withdrawal of the United States from the agreement. New Zealand’s change of government was also a focus, particularly in terms of signaled changes to New Zealand views on TPP.   ABAC Members met with the Prime Minister and Trade Minister Parker and were reassured that New Zealand was intent on securing a favourable outcome on TPP in DaNang, provided its concerns could be met. After some last-minute drama and a no-show at the TPP Leaders’ meeting by Canadian Prime Minister Trudeau, agreement was finally reached on the “core elements” of what is now to be known as the Comprehensive and Progressive Agreement on a Trans Pacific Partnership” (CPTPP). Importantly this new agreement preserves the market access outcome from the earlier agreement and softens the edges of some of the more controversial elements, including in relation to intellectual property and investor state dispute settlement. Four relatively minor elements remain to be resolved before CPTPP can be signed (which could yet provide scope for unravelling), but this was a significant achievement and will hopefully play favourably into future discussions on regional economic integration.
5. This year’s major report by the USC Marshall School of Business was entitled “APEC’s New Challenge: Inclusive Growth through Smarter Globalisation and Technological Progress”[2]. This report was based on comprehensive consultation with over 400 business leaders and other influencers in 18 economies throughout the region including New Zealand. 91 percent of those interviewed believed globalisation was not working properly while 70 percent believed that government policies were insufficient. The report profiles the growing public disquiet about aspects of globalisation and proposes a number of solutions by way of accompanying policies and programmes, including social safety nets and labour mobility along with greater business advocacy. This is a major piece of work, one which ABAC New Zealand through the efforts of Stephanie Honey had a major hand in finalising, and one which will be a useful reference point as ABAC continues its focus on inclusiveness.
6. At the ABAC meeting Katherine Rich delivered a further presentation on the need to address non-tariff barriers related to services and digital trade (a copy of the presentation is available on request). Katherine drew attention to ABAC’s recommended guiding principles to ensure that legitimate non-tariff measures do not become trade-distorting non-tariff barriers and it was agreed to continue this work programme in 2018. Katherine has once again been appointed Co-Chair of ABAC’s Regional Economic Integration Working Group (REIWG) while Phil O’Reilly has agreed to lead a PECC/ABAC research programme focused on understanding the contribution trade makes at the firm and household level. The latter research should be a useful complement to work undertaken this year the USC Marshall School.
7. The meeting also received a number of reports about progress in the WTO, TPP, RCEP and Pacific Alliance and agreed to update research carried out last year on how to bring into effect the Free Trade Area of the Asia Pacific (FTAAP). ABAC New Zealand will have some further ideas to share on FTAAP at the next meeting.   Phil O’Reilly has been invited to chair a group (consisting of representatives of the APEC Chairs in 2017, 2018, 2019, 2020 and 2021 i.e. Viet Nam, PNG, Chile, Malaysia and New Zealand) tasked with developing ABAC’s contribution to the post-2020 APEC agenda (i.e. following the expiry of the Bogor Goals in 2020).

Towards sustainable development

8. ABAC New Zealand has taken a lesser role in relation to food security this year, but was pleased to welcome an ABAC Japan initiative related to further development of the agricultural value chain connecting urban and rural areas. Several other ABAC delegations spoke in support of a continuing focus on food in 2018.
9. Phil O’Reilly has been appointed Co-Chair of the Sustainable Development Working Group (SDWG) which will enable us to champion issues of relevance to New Zealand in 2018.

Enhancing MSMEs and women’s entrepreneurship

10. Finding ways to ensure micro-, small and medium-sized enterprises can have access to international markets global value chains has been a long-standing focus for ABAC. Several practical ideas were presented at the meeting including providing online means to resolve commercial disputes. Tenby Powell will be assuming a Co-Chair role in the ABAC MSME Working Group in 2018.
11. Women’s entrepreneurship was again the focus of the ABAC Women’s Lunch and several side events during the week attended by Katherine Rich and the other members.

Promoting connectivity

12. ABAC continued its focus on structural reform and heard reports from the incoming Chair of APEC’s Economic Policy Committee about APEC’s work programme in 2018. ABAC has committed to developing further thinking on how structural reform might promote further investment in infrastructure. ABAC New Zealand provided a written update on the ongoing project to implement global data standards (GDS) for supply chain connectivity, security and integrity. Several pilot projects have now been completed. ABAC New Zealand and GS1 New Zealand are currently undertaking a review of this project to determine its ongoing viability. ABAC also received an update on the operation of the APEC Business Travel Card which continues to grow in usage.
13. Under PNG’s leadership in 2018, ABAC’s Connectivity Working Group has been replaced by a Digital Innovation Working Group. This will result in some re-allocation of existing portfolios among ABAC Working Groups.

ABAC Dialogue with Leaders

14. At the ABAC Dialogue with Leaders the annual report was presented by the ABAC Chair Hoang van Dung and subsequent discussion in small groups focused on building the case for globalisation, building new vision for APEC post 2020, furthering the digital economy and assisting MSMEs. Phil O’Reilly moderated one of the dialogue groups with the Leaders of Chile, PNG, Russia and Thailand. Katherine Rich was in a group with the Leaders of China, Indonesia, New Zealand and Peru. Tenby Powell was with Malaysia, Singapore, Korea and the US (represented by Ambassador Lighthizer). Tenby reported that, of the 45 minutes spent in session, 25 minutes were dedicated to MSMEs – with Malaysia advancing innovative support initiatives.

APEC CEO Summit 2017 

15. The annual CEO Summit gathered around 2000 business leaders, thought leaders and delegates from around the region. New Zealand’s delegation was comprised of business leaders based both in New Zealand (John Monaghan and Phil Turner from Fonterra, Kim Cambell from EMA Northern, Grant McPherson and John Laxon from EducationNZ, Jenny Morel from No8 Ventures) and Viet Nam. Several Leaders from APEC economies addressed the CEO Summit, together with business leaders including Facebook’s Sheryl Sanderberg. Prime Minister Ardern’s remarks were well received and focused on the importance of addressing climate change and meeting the challenges of sustainable development. The delegation met over breakfast with the Prime Minister, Deputy Prime Minister Peters and Trade Minister Parker.

Next meeting and further information

16. PNG will chair APEC and ABAC in 2018. ABAC’s theme for 2018 will be “Digitisation and Innovation – fostering social harmony”. The first ABAC meeting will be held in Auckland 1-4 February 2018. The APEC CEO Summit 2018 will be held in Port Moresby 12-16 November 2018.
17. Further information is available at tradeworks.org.nz and www.abaconline.org. Copies of reports and studies mentioned in this report are available on request from Stephanie Honey stephanie@honeyconsulting.co.nz. 

ABAC New Zealand

November 2017

[1] https://www2.abaconline.org/assets/2017/ABAC%20Report_2017_FINAL.pdf

[2] Available here shortly: https://www2.abaconline.org//content-type/browse-docs/1017