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

APEC BUSINESS ADVISORY COUNCIL

SECOND MEETING, TOKYO, 16-19 APRIL 2018

REPORT TO NEW ZEALAND BUSINESS

SUMMARY

The second meeting of the APEC Business Advisory Council for this year took place in Auckland from 16-19 April. ABAC New Zealand members Katherine Rich and Tenby Powell attended, with staffer Stephanie Honey in support. During the meeting, ABAC members finalised their Letter to APEC Trade Ministers and engaged in substantive discussions on a range of issues including regional economic integration, finance and economics, sustainable development, connectivity and small business. Members talked about how to move towards an eventual Free Trade Area of the Asia-Pacific (FTAAP) including progress on pathway agreements CPTPP and RCEP, but equally stressed the need to ensure that small business, women, and broader communities could engage in and benefit from economic growth. Tenby Powell chaired a Special Session on the business community’s collective vision for the APEC region post-2020. Katherine Rich continued her leadership on the topic of non-tariff barriers with a deeper dive into elements of the ABAC Cross-Cutting Principles on NTMs/NTBs. Tenby Powell provided an update on the project he is leading on how to empower micro-, small and medium enterprises to participate more fully in global markets, with research being undertaken by the University of Southern California’s Marshall School of Business.   More broadly, ABAC’s interest in the digital economy remains strong, with discussions around how best to enhance e-commerce and the digital economy and avoid the creation of a digital divide.

REPORT

ABAC New Zealand’s Katherine Rich and Tenby Powell played an active role in ABAC’s second meeting for 2018 from 16-19 April in Tokyo. (Colleague Phil O’Reilly was not able to attend on this occasion.) Policy advisor Stephanie Honey attended in support.

Discussions took place in Plenary sessions and in five themed Working Groups: Regional Economic Integration (co-chaired by Katherine Rich); Sustainable Development (normally co-chaired by Phil O’Reilly); Micro-, Small and Medium Enterprises (MSMEs) (co-chaired by Tenby Powell); Digital and Innovation, and Finance and Economics.  ABAC New Zealand (Tenby Powell, in Phil O’Reilly’s absence) also chaired a “Special Session” on ABAC’s Vision for the region post-2020. The major focus of the meeting was on the finalisation of ABAC’s annual Letter to APEC Ministers Responsible for Trade. The statement issued at the end of the meeting, entitled “Asia-Pacific at the Crossroads: Choosing Prosperity”, can be found here.

The meeting was preceded by a site tour to the Shinkansen Railway Yard and Marunouchi District – the latter’s approach to sustainable development seeks to strike a balance among factors including the economy, environment, society and culture, with a focus on high quality landscapes and transportation infrastructure systematically constructed over a long period of cooperation between the public and private sector. Japan’s State Minister of Foreign Affairs, Kazuyuki Nakane, and Japan’s State Minister of Economy, Trade and Industry, Kosaburo Nishime, hosted and addressed ABAC members during the welcome dinner on 17 April.

Globalisation and trade liberalisation 

Globalisation & inclusive growth were once again a major theme for the week’s meetings, and featured prominently in the Letter to Trade Ministers. The Letter delivers a strong message of concern around the rise in protectionist rhetoric and action in the Asia-Pacific region and the need to press ahead with regional economic integration and trade liberalisation for inclusive and sustainable growth. It affirms ABAC’s commitment to the Free Trade Area of the Asia-Pacific and an ambitious Vision for the region post-2020, and welcomes the conclusion of CPTPP and urges early implementation. The Letter also acknowledges the need to do more for “inclusive growth”, including championing and broadening access to the opportunities that come from trade liberalisation. The Letter also highlights a range of specific actions, including the elimination of non-tariff barriers, the need for meaningful structural reform, the importance of the digital economy including the free flow of data across borders, the importance of striking the right balance between preserving public policy objectives and enabling cross-border investment flows, and the need for further services trade liberalisation.

In the meeting itself, ABAC talked about the prospects for the Free Trade Area of the Asia-Pacific (FTAAP), and agreed that it needed to step up efforts on developing practical steps towards FTAAP, including by commissioning an update to an earlier report, the FTAAP Opportunity, as proposed by ABAC Japan. Katherine for ABAC New Zealand foreshadowed that we intended to develop a detailed business-lead and business-oriented work programme to prepare for future substantive FTAAP discussions. ABAC Japan warmly supported this idea, noting that FTAAP remained a central priority for all APEC business communities.  There was also warm acknowledgement of the conclusion of one of the “pathways to FTAAP” in the form of the Comprehensive and Progressive Trans Pacific Partnership Agreement (CPTPP).

Under ABAC New Zealand’s leadership, ABAC members have begun to deepen their thinking on the vision for the Asia-Pacific region post-2020 (the latter date being the deadline for the achievement of APEC’s trade-liberalising ‘Bogor Goals’), and this work was a focus in Tokyo. Tenby Powell (in Phil O’Reilly’s absence) chaired a Special Session on the topic, where members were able to exchange preliminary thinking. It was agreed that the aim was for something aspirational but also grounded in practical, commercial business realities alongside broader objectives for inclusive growth; the transformation generated by the digital economy would also be central.

The (New Zealand) Chair of APEC’s Committee on Trade and Investment gave an update on APEC’s work on regional economic integration and trade issues. It was agreed that ABAC would write to the CTI Chair conveying the business community’s views on a range of issues including regional economic integration, how to counter the rise of protectionism and the digital economy.

Professor Christopher Findlay of the University of Adelaide (and PECC Australia) provided an update on a research project (which is being championed by Phil O’Reilly) on the impacts and benefits of trade liberalisation at the firm and household level. The project is now moving into a phase of business dialogues to explore the impacts – both positive and negative – of internationalisation and cross-border trade on individual firms.   Australia had held the first dialogue, focused on services firms, which had highlighted three major areas of concern for participants: restrictions on people movement, data movement rules and movement of money and payment systems. Members were requested to organize similar focus groups in their respective economies. (New Zealand held its own dialogue, with the generous support of Export New Zealand, on 4 May.)

Mr. Hajime Takata of Mizuho Research Institute briefed members on the global economic outlook. He noted that the global economy was likely to continue to expand in 2018, thanks to solid performance from the US, Eurozone and ASEAN economies. The downside risks to this outlook included a potential downturn in the US economy (and increased protectionism); China’s economic slowdown, and the spread of geopolitical uncertainties around the world.

Liberalising trade and investment: NTBs

Katherine Rich continued her leadership on non-tariff barriers, taking a deeper dive into the 2017 ABAC Cross-Cutting Principles and looking in particular at the implications of the terms “coherent, non-discriminatory and transparent” in relation to NTMs. It was agreed that members should continue to look at the details of the principles and how NTBs can be addressed effectively in trade agreements going forward. Katherine foreshadowed that she would explore the concept of “least-trade-restrictive” at ABAC III.

Food security

Among other topics, members had a brief discussion on the merits of appointing a food security champion who could assume the role of the ABAC Vice Chair of the APEC Policy Partnership on Food Security. It was agreed that the ABAC Chair would write to the PPFS Chair to convey ABAC’s concerns relating to the structural impediments to the effective functioning and participation by the private sector in PPFS.

Enhancing MSME and women’s integration in global markets

ABAC members explored ideas about how to enable micro-, small and medium enterprises (MSMEs) to participate more fully in the regional economy and in global value chains.   Tenby Powell, who is leading a major project in this area, gave an update on that research; the University of Southern California’s Marshall School of Business is looking at how best to enhance the ability of MSMEs (including women-led MSMEs) to engage more successfully across borders and in global value chains. There is strong interest in this work, which is due to be completed in time for ABAC IV in November.

ABAC Papua New Guinea noted that it would be holding an MSME Symposium in September 2018 which would focus on entrepreneurship, digital innovation, financing and capacity-building among other topics.

ABAC China noted that it was developing further thinking on enhancing opportunities for women entrepreneurs. The ABAC Women’s Lunch, hosted by ABAC Japan featured a keynote by Ms. Seiko Noda, Minister for Internal Affairs and Communications and Minister of State for Gender Equality and Social Security and Tax Number System. There was also a stellar panel of Japanese women from the business, academic and scientific fields which offered fascinating insights into how to achieve women’s economic empowerment and enabling success in STEM fields.

 The digital economy

Reflecting the growing prominence of the digital economy and innovation, members explored a range of issues including regulation of the digital economy, public e-services, the Internet of Things, a work plan on the APEC Internet and Digital Economy Roadmap, barriers affecting cross-border e-commerce and research on digital challenges for human resource development, skills and training needs.   Of particular interest was a report that looked at structural adjustment and the digital economy (this will be sent to the APEC Economic Committee for consideration); there was also a briefing on the APEC Cross-Border Privacy Rules (CBPR) System, a voluntary, accountability-based system that facilitates privacy-respecting data flows among APEC economies. It was agreed to encourage APEC officials and Leaders to promote CBPR within their economies. It was also agreed that ABAC should provide further business input into the APEC Cross-Border E-Commerce Facilitation Framework. Members also heard from a Panel on digital trade issues, focusing on the role of the regulatory environment in facilitating the digital economy.

Next meeting

The next meeting, ABAC III, will be held in Kuala Lumpur from 23 to 26 July.

Further information

Further information on the issues mentioned in this report is available at www.nzibf.co.nz and www.abaconline.org. Copies of reports and studies mentioned in this update are available on request from Stephanie Honey, stephanie@honeyconsulting.co.nz.