A Free Trade Area of the Asia-Pacific that includes all APEC economies is a beacon on the horizon but it could be time to better define this policy said Dr Alan Bollard on Monday as he addressed a plenary of APEC business advisors in Santiago.
With less than two weeks before APEC Trade Ministers meet in Qingdao, China, the APEC Business Advisory Council gathered in Santiago, Chile to agree on a set of recommendations to help keep the economy on track.
During the plenary, ABAC members heard an analysis of the regional economic outlook, how APEC can help the World Trade Organization reduce trade barriers and identified pathways to a Free Trade Area of the Asia-Pacific to improve market access and export growth. The need for greater economic reform was a further point of emphasis.
ABAC members agreed with the APEC Policy Support Unit’s regional economic trends analysis and recognized that even though APEC economies are forecast to grow in 2014, there is a cause for some concern.
“Medium-term GDP forecasts for APEC economies have actually been revised down from 5 percent to between 4 and 4.5 percent over the next five years,” explained John Denton who chairs ABAC’s Finance and Economics Working Group. “The consequence of that downward revision in growth would actually translate into a USD4 trillion deficit in economic outlook for APEC economies over the medium-term.
“It’s an alarming figure in its own right and one that reinforces the need for policy reforms to promote greater regional integration and connectivity to improve economic growth and development which are the priorities for the APEC Business Advisory Council,” Mr Denton confirmed.
In particular, Chile has experienced a slowdown in the growth of its economy since last year. To address this issue, the government has deepened the liberalization of free trade and commerce, pursued economic reforms and investments in education.
“The new cycle is driven by a slowdown in the prices of some raw materials, heavy investment in human capital and supporting the development of new industries,” said Rafael Guilisasti, Vice President of Viña Concha y Toro who is an ABAC member in Chile. “Investments in education bring a lot of opportunity for our economies, particularly exchanges between universities to narrow the gap for our future to prepare human resources.”
Members met with the APEC Mining Task Force Chair, Rodrigo Urquiza, to advocate for policies that would improve the environment for investment in the mining industry, a key sector for Chile and other APEC member economies.
APEC Secretariat Executive Director Dr Alan Bollard provided an update to ABAC members on the APEC agenda, including joint work to move towards negotiations for a Free Trade Area of the Asia-Pacific. He also sought to gather input from the business community to deliver to APEC Senior Officials who will also meet in Qingdao later this month.
“Innovative, inclusive and sustainable growth is guiding our strategy this year, particularly as it relates to progress being made on economic and regulatory reform that is required to achieve our goals by 2015,” said Dr Bollard. “We are very open to ideas coming from ABAC on how to invigorate, develop and take next steps in the area of regulatory reform.”
President Michelle Bachelet will address ABAC members on Tuesday, 6 May.
The meeting of APEC Ministers Responsible Trade, also known as MRT, will take place in Qingdao on 17-18 May. APEC Senior Officials will gather there on 14-15 May.
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