8th APEC Energy Ministers Meeting (EMM8)

I am delighted to attend this meeting of APEC Energy Ministers. I had the pleasure of meeting some of you at the third Mining Ministers Meeting in Perth earlier in the year, and I look forward to working with you during this meeting as we seek to achieve successful outcomes that will benefit the APEC region.

The 8th APEC Energy Ministers Meeting is taking place at an extremely important time for APEC and the regional economy as APEC seeks to reinvigorate itself as the pre-eminent forum for promoting economic growth and cooperation in the region. Indeed APEC leaders in Hanoi last November, in instructing member economies to continue to work on APEC reform and to become more efficient and results-oriented, emphasized the need for the organization to continue to meet new challenges and opportunities in a rapidly changing environment.

One set of such challenges that has emerged at the top APEC's agenda this year is energy security, the environment and climate change. But before talking more about these issues let me first put the work of this meeting into a broader APEC context by setting out APEC's overall priorities this year.

APEC will continue to do all it can to strengthen the multilateral trading system and to bring the Doha negotiations to a successful conclusion. For APEC economies, which account for more than half of world trade, the WTO remains the primary mechanism by which we aim to attain free and open trade, and all of us have a very real interest in its success.

APEC is also developing a more coherent and transparent framework for bilateral FTAs and regional trade agreements. Some may think this is inconsistent with APEC's strong support for the multilateral trade system, but in fact these arrangements are an important component for strengthening the multilateral trading system as well as useful mechanisms for promoting regional integration. Ten years ago there were only three intra-APEC FTAs - now there are 20 and at least a dozen under development. We often hear that the so-called spaghetti bowl effect of so many and varied FTAs is creating confusion for business people. To ensure more comprehensive, transparent and high-quality agreements, APEC has developed a series of model measures that serve as a reference for APEC member economies in the negotiation of FTAs and RTAs. Six of these model measures were developed in 2006 and more are planned for 2007.

APEC is also exploring new ways of promoting regional economic integration. Last November Leaders, while reaffirming their commitment to the Bogor goals and the successful conclusion of the DDA negotiations, requested officials to prepare a study for their consideration this year on ways to promote regional economic integration, including a Free Trade Area in the Asia Pacific as a long term prospect. While economic integration has always been a key objective for APEC, this is the first time this issue has been specifically placed on the formal Leaders agenda. Work is progressing and a report will be submitted to Leaders to consider in September.

We are hearing from business people in the region that while reducing tariffs and other border barriers remain very important this is not enough to secure the fuller regional economic integration that business is seeking. What business is looking for is deeper structural reform within domestic APEC economies to make them more transparent and efficient, less bureaucratic and less costly and burdensome for business. Consequently APEC is giving high priority this year to addressing these behind-the-border barriers to trade and investment. In particular APEC is looking at ways to improve domestic investment environments, competition policy, public sector and corporate governance, financial flows and strengthening economic legal infrastructure. These are areas of critical importance for the energy sector.

APEC's human security agenda continues to be a high priority for Leaders, Ministers and Senior Officials, with terrorist activities, threats of disasters, and health pandemics posing a serious threat to regional economic health and stability. Counter-terrorism and secure trade have become a major focus of APEC in recent years. Preventing terrorist financing, improving aviation security, and defending the integrity of the food supply chain from contamination will also be tackled with the active participation of the private sector.

The Secure Trade in the APEC Region - or STAR - conference in Sydney in late June will bring together key government and business representatives to identify practical ways to achieve greater supply chain security.

Let me now turn to the APEC 2007 priority of greatest interest and importance for this meeting, which is to develop a coherent regional policy response to one of the major challenges now facing APEC member economies, namely the inter-related issues of energy security, the environment and climate change. Even as little as 12 months ago we were not thinking that these issues would be so prominent on the APEC Leaders' agenda, but debate and discussion of them have progressed rapidly as regional and global interest has intensified.

Indeed this year's host, the Australian Prime Minister, has written to his APEC counterparts foreshadowing his intention to put this issue right at the top of the agenda for the Leaders' meeting in September.

There is of course now unprecedented global focus on these issues, with numerous efforts underway in international fora to address them. At times the multiplicity of effort can appear daunting. But APEC member economies, accounting for 60 per cent of global energy demand, and including the world's four largest energy consumers, as well as a number of major producers, are well placed to make a significant contribution to the global response to the challenges of energy security and climate change.

It is fair to say that solutions to the challenges of energy security, the environment and climate change will in very large measure result from actions of APEC member economies, and this carries special responsibilities.

The issues and outcomes from today's meeting will be the subject of discussion and action at various upcoming meetings which will be conducted over the course of the year culminating in the Leaders Meeting to be held in Sydney in September.

Last November when APEC Economic Leaders met in Ha Noi, they instructed Ministers to report back on ways in which APEC might further respond to energy related challenges. Specifically Leaders requested that Ministers look at "policies and technologies that promote the development of cleaner energy and the improvement of energy efficiency." In essence Leaders are expecting to hear back from Ministers on ways to enable economies to meet increasing regional energy needs while lowering environmental impacts and also to address issues relating to climate change.

It is important for this meeting to bear in mind that energy has now become in effect a cross-cutting issue in APEC, with energy-related work either underway or planned in several APEC fora. We have seen this happening already in APEC ministerial meetings this year.

At the APEC Small and Medium Enterprise Ministerial Meeting in Hobart, Ministers encouraged SME innovation in developing a more energy efficient industry to assist in reducing greenhouse gas emissions. Ministers also agreed that capacity building in this regard is essential to encourage member economies, especially developing economies, to upgrade their technology and work practices to become more environmentally friendly.

The 5th APEC Transportation Ministerial Meeting in Adelaide also considered major challenges in the transport sector relating to emissions and increases in the cost of fuel. As a consequence the Transportation Working Group is now discussing measures to promote environmentally sustainable transport and to look for opportunities to collaborate in areas such as fuel efficiency and alternative energies, including bio-fuels.

APEC's SOM Committee on Trade and Investment is now considering the possibility of recommending an APEC list of environmental goods to the WTO for potential tariff elimination during the Doha Round of negotiations. If this is achieved, barriers to trade in energy saving and energy efficient products would be effectively removed.

As for upcoming meetings APEC Finance Ministers will be discussing the importance of well-functioning energy markets to macroeconomic stability and sustainable growth. Finance Ministers have already noted the importance of adequate investment in oil production and refining capacity, as well as technology transfer for energy conservation and developing renewable energy sources. They have previously encouraged APEC Member Economies to take actions to reduce demand-distorting subsidies on energy market. Finance Ministers have also highlighted that with the development of appropriate fiscal and monetary policies, more private and public funds would find investment in energy infrastructure and new and renewable energy technologies to be more attractive.

It is clear therefore that energy security and the environment are very big issues that cut across a wide spectrum of APEC's work. The challenge between now and the Leaders Meeting in September is to draw the work of this meeting today and all the other work in APEC fora into a coherent set of initiatives that are both visionary and practical, for Leaders to consider.

So, let me close by noting that the many new energy initiatives contained in the draft EMM8 Declaration will make a critical contribution to meeting this challenge and will have a significant impact in shaping the way APEC in 2007 addresses the key issues of energy security and climate change. At the end of the day when APEC Energy Ministers endorse the Darwin Declaration, your directives will guide APEC towards a new level of energy security.

I wish you success and hope this meeting will produce tangible deliverables to the APEC Economic Leaders Meeting in September 2007.