Structural Reform, Going Digital and COVID-19

Hong Kong, China, 07 May 2020
  • Dr James Ding

In these trying times, while the world is under the threat of the COVID-19 pandemic, the need for a stronger concerted effort among APEC economies and a more focused strategy for structural reform to address economic challenges has become more critical than ever.

The APEC Economic Committee (EC) provides support for advancing APEC’s agenda to help economies implement structural reform to stimulate economic growth and bolster trade and investment volume. Thus it could play an important part of the APEC region’s recovery.

The committee has long embraced the idea of harnessing modern digital technology to solve problems. It is central to our work in structural reform—that is, strengthening policy and legal infrastructure to make it easier to do business and improve economic conditions. Last year, the committee released the APEC Economic Policy Report: Structural Reform and Digital Economy, written to help build the capability of economies to adapt to a digital world. If a shift to digital was a looming need a few months ago, it is now a stark reality. For some sectors of society, such as smaller businesses, it is a matter of survival.

There are many ways governments can employ simple digital solutions to help entrepreneurs affected by lockdown measures and disruptions in supply chains.

Take returns and dispute resolution, for instance, which, according to a study by the APEC Business Advisory Council, is one of the greatest challenges faced by micro, small and medium enterprises (MSMEs) when trading across borders, with 94 percent of them reporting that as a problem. Another study reported that as many as 35 percent of cross-border disputes involving MSMEs remain unresolved, with the average value of the dispute being some USD50,000.

The EC’s Friends of the Chair group on Strengthening Economic and Legal Infrastructure (SELI) has been developing a work plan to promote online dispute resolution (ODR)—an innovative solution designed to aid small businesses who do business abroad, and who face significant hurdles when it comes to accessing justice in cross-border transaction disputes.

In August 2019 the EC endorsed the newly developed APEC Collaborative Framework on ODR of Cross-Border B2B Disputes (the ODR Framework), which is a useful guide for businesses (particularly MSMEs) for tapping online dispute resolution for negotiation, mediation and arbitration for business-to-business disputes.

In September 2019, after years of development, APEC SME Ministers expressed support for the ODR Framework noting that it “will provide a cost-effective and efficient platform to resolve low-value cross-border disputes.”

As of today, China; Hong Kong, China; Japan; Singapore and the United States have opted into it, while a number of economies are actively considering the possibility of joining.

ODR was designed to help small businesses navigate the global stage, but it is also particularly apt for resolving disputes when face-to-face meetings or physical hearings are neither encouraged nor allowed.

The government of Hong Kong, China, is well aware of this, and anticipated an upsurge of disputes arising from or relating to the onset of the pandemic. In line with the ODR Framework, it introduced the “COVID-19 Online Dispute Resolution Scheme,” to provide the general public and businesses, particularly MSMEs, speedy and cost-effective means to resolve low value disputes (below HKD500,000) through negotiation, mediation and arbitration.

The ODR Framework is just one example of how modern technology and structural reform can help businesses of all sizes. The EC will continue to find ways structural reform can contribute in the implementation of the APEC Internet and Digital Economy Roadmap. We’re also in the process of preparing for the upcoming Structural Reform Ministerial Meeting, which will lay the foundation for the next phase of structural reform programs for APEC economies from 2021 to 2025.

It will be an opportunity for APEC economies to explore how structural reform may help to revitalize the region’s economy after the pandemic and even reinforce it against future economic crises.

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Dr James Ding is the Chair of the APEC Economic Committee.