APEC and Business: Partners In Regional Recovery and Development

Thank you Mr. Reed.

Good morning ladies and gentlemen of the International Polyurethane Industry. The chemical industry is obviously one of the World's Most International Industries. As such, i believe it has much to gain from the success of APEC's agenda and, indeed, much to contribute to that agenda.

In that sense i am honoured to be here with you and speak about APEC's relationship with the Business Community.

If I could begin with a brief background of APEC - the Asia-Pacific Economic Cooperation Forum.

The forum is today an organisation of twenty-one very diverse member economies. It has ambitious goals and an extensive action program of cooperation to achieve them. Its goal is prescribed in the Bogor Declaration, which the leaders' proclaimed in 1994. The following year in Osaka they announced the Blueprints on how they would reach those goals. Those blueprints are known as Osaka Action Agenda. In 1996, the Manila Action Plan or MAPA compiled APEC members' Individual Action Plans, which set out in detail how those blue prints are to be implemented. This includes accelerating the Individual Action Plans through Early Voluntary Sectoral Liberalisation in some 15 sectors.

One way to understand APEC's work is in terms of what we call - its Three Pillars.

• Trade and Investment Liberalization includes the voluntary efforts by member economies to reduce formal impediments such as tariffs, unnecessary regulations and investment barriers. APEC's very ambitious objective here is to achieve free and open regional trade and investment, by 2010 for developed economies and 2020 for developing economies.
• Trade and Investment Facilitation includes removing informal barriers and addressing "doing business" issues such as making it easier for business travelers to get visas, providing electronic business matching services, and aligning standards for conformity assessment.
• Economic and Technical Cooperation, or "ECOTECH," covers a wide variety of APEC programs that aim to reduce disparities between our members. These programs promote mutual benefit by building members' capacity to benefit from APEC's Trade and Investment Liberalization agenda. Examples include training programs for small and medium-sized companies in electronic commerce, training of banking supervisors and securities regulators, and programs to help developing members implement their international commitments to streamline customs procedures and strengthen protection of intellectual property rights.

It is important that APEC maintain a balance among these Three Pillars. Each area offers concrete benefits to APEC's business constituents.

That is as far as what the substantive agenda is all about. If i could now turn to some structural aspects of the forum.

The Annual Leaders' Meeting since 1993 has definitely raised the profile of the organization. Their meeting topping the year's events, the Economic Ministerial and some other Sectoral Meetings set APEC policy directions.

The real work you could say is done at Senior Official, experts committees and working groups under them. These include both functional groups, such as those on services, government procurement and intellectual property, and industrial sector groups, such as those on energy, telecomms and tourism.

As important as understanding what APEC is, it is also important to realize what it's not. It's not a rules-based binding trade agreement like the WTO. It doesn't have a lot of money to pass around like the World Bank or IMF. APEC operates according to the principles of voluntarism and consensus. This feature sometimes results in slower decisionmaking than business people like, but that given its very diverse membership; APEC could not have achieved what it has so far with any other mode of operation.

Another feature that sets APEC apart from other organizations - and another key to its past and future success - is the high degree of business involvement in its process. From early on, APEC members have recognized business as a key constituent and that business must be actively involved if APEC is to achieve its objectives. Business has input to the APEC process in a variety of ways.

At the top level, the APEC Business Advisory Council, or ABAC, was established by APEC leaders in 1995 to advise them and ministers on a range of issues affecting the regional business community. They have so far produced three reports with various recommendations for expanding trade and investment, addressing the financial crisis, promoting economic and technical cooperation, and making APEC's Action Plans more relevant to business people.

ABAC meets annually with the leaders, and council members are now busily developing additional proposals for their September meeting with leaders in Auckland. ABAC's advice has been extremely valuable to APEC's work, and many of its recommendations have been implemented by APEC.

Business is also helping to shape the APEC agenda at the working level. Their participation in many working groups such as energy, telecommunications and tourism, and other sub-groups working on customs procedures and electronic commerce is very essential if APEC is to remain relevant to business.

Some of you may be active in the asia-pacific chemical industry coalition, an association that has played a key role in APEC's consideration of early liberalization in the chemicals sector. In this and other working-level groups, business and APEC governments are working as partners to identify the cross-border problems faced by business and find solutions.

Business is also increasingly an important contributor to APEC's, ECOTECH activities, such as training programs and information gathering exercises. Among the latter, several of the sectors under consideration for early liberalisation will soon undertake to catalogue the non-tariff barriers to expanded trade, as a first step toward eliminating them. Business input is being solicited and will be critical to successful outcomes. Such a study will be conducted in the chemicals sector. Business support for APEC ECOTECH activities is perfectly appropriate, since many of these programs directly benefit business, and we hope such support will continue to grow.

What of APEC's achievements? Is the organization succeeding in reaching its ambitious goals?

Obviously, the jury won't render a final verdict until 2010 and 2020. But i believe that in numerous ways, some large and some small, APEC is succeeding. To cite just a few specifics:

Business Facilitation efforts are making an important difference. For example, simplification and harmonization of customs procedures has already resulted in significant cost savings for exporters and importers. APEC is making it easier for business people to travel around the region. Collective efforts have resulted in greater willingness by economies to issue multiple-entry visas and to raise service standards for business people who need longer-term work permits.

Significant tariff reductions have been achieved in the APEC context. These represent purely voluntary efforts by individual economies. According to one research estimate, the tariff cuts and business facilitation measures promised in the Manila Action Plan for APEC alone will expand trade enough to raise APEC-wide income by US$68 billion. While tariff cuts beyond these are needed to reach the eventual target, APEC economies are fully on track to reach those final goals.

Non-tariff trade barriers are also tackled by, for example, working to harmonize product standards and encourage mutual recognition of testing authorities. Standards of transparency in the region have not been forgotten. APEC economies are now sharing information with each other and the global public on a range of policy areas such as investment regimes and government procurement systems.

APEC has also served as a useful prod to global trade liberalization efforts in the World Trade Organization. APEC played a role, for example, in bringing the Uruguay Round to a successful conclusion and to the launching in 1996 of the Information Technology Agreement. Again with the leaders' and Economic Ministerial Meetings just before the WTO meeting in the USA, this should be another significant year for APEC.

Some things APEC has not done must also count as significant achievements. It has not established itself as an inward-looking trade bloc but rather has remained true to the principle of open regionalism. APEC's successes have also been achieved without creating another big international bureacracy.

In short, while much work remains to be done to reach its end goals, APEC has already achieved much of practical value to business and has established mechanisms for completing the job on schedule.

Moving forward in 1999 under New Zealand's Chairmanship to build on these successes, the broad objectives this year are to:

• Make continued progress on Trade and Investment Liberalization;
• Develop a credible APEC response to the financial crisis, including extending economic and technical cooperation to strengthen regional financial markets;
• Build public support for APEC's agenda; and
• Develop an APEC contribution to an expected new round of multilateral trade negotiations in the WTO.

Some specific priorities in pursuit of these objectives include the following:

• Member Economies will update their Individual Action Plans, which compile their detailed commitments for reaching APEC's Free Trade and Investment goals. APEC, with help from outside experts, will also review the quality of these plans to see how they can be made more useful roadmaps to the final objectives.
• A steering group will begin implementation of the APEC blueprint for action on electronic commerce approved by leaders in Kuala Lumpur. A key focus will be technical cooperation to enhance members' uptake of electronic commerce, especially by smaller companies
• A major conference is planned for April here in Singapore on the Y2K problem. Experts will assess members' preparedness and possible Y2K cross-border impacts in the transport, energy, telecommunications and financial sectors. The conference, part of a wider APEC Y2K week of activities to raise awareness, aims to prioritize outstanding problem areas and discuss contingency planning, again with emphasis on implications for small and medium-sized companies.
• A new task force will examine ABAC's recommendation for an APEC food system, a comprehensive proposal that includes ideas for liberalizing food trade, developing rural infrastructure and facilitating transfer of agricultural technologies.

On the human resources side, APEC begins implementation this year of its action program for skills development, an effort to build public-private partnerships in vocational training.

Another major area of activity for APEC in 1999 is the organization's response to the financial crisis and ensuing regional recession. I should say that APEC was not designed as a crisis-response manager and it does not have the resources of the major initernational financial institutions. But APEC has played an important role in addressing some of the longer-term issues that contributed to the crisis. In particular, APEC has a number of programs underway to strengthen financial markets. These include, among others, training for financial supervisors; a new initiative to assess the adequacy of banking supervisory regimes; a workshop on developing domestic bond markets; a workshop on the credit rating industry and the quality of agencies' ratings and efforts to harmonize regional accounting and disclosure requirements.

Various efforts are also underway to address the human resource and social impacts of the crisis. In sum, without spending millions of dollars, APEC is making a credible contribution to addressing the impacts of the financial crisis and to preventing any future recurrence. The business community is also involved in this side of APEC's work, providing valuable advice through the APEC Business Advisory Council and another industry group known as the APEC Financiers Group.

To wrap up, New Zealand, as Chair this year, certainly plans to continue efforts to increase business involvement in APEC activities. Key events include an SME Business Forum in conjunction with the SME Ministers Meeting next month in Christchurch, a Business Symposium on prosperity for our region in June in Auckland, and a CEO Summit parallel with the leaders September meeting in Auckland.

In the chemicals sector, there are several upcoming opportunities for business involvement. I mentioned earlier an important study of non-tariff barriers affecting the industry, on which officials will be soliciting business input. APEC members will also compile a list of customs regulatory barriers faced by chemicals exporters, as part of ongoing efforts to simplify and harmonize customs procedures. A number of ecotech programs are also being considered, such as extending the industry's responsible care program to more APEC members, strengthening the capacity of members to remove non-tariff barriers, and technical assistance and training programs to help regulators. As a first step, a workshop on Asia-Pacific chemical regulations and standards is being planned.

APEC encourages more business people to "get involved, get informed, get specific" in our activities. I have just come back from the Industrial, Science and Technology Working Group Meeting in Hong Kong - another workshop that may be of interest to you. Your inputs and participation are invaluable to us all. The Secretariat here in Singapore is always ready to help you make contact with the appropriate APEC working group.

Thank you very much.