Bridging the Pacific: Coping with the Challenges of Globalization - Business Executives Present Recommendations to APEC Leaders

Members of the APEC Business Advisory Council (ABAC) are faced with just such a challenge each year. This committee of prominent business leaders, representing all 21 APEC economies, meet directly with APEC Leaders each year in order to deliver their recommendations, and to discuss the most pressing concerns of the day for business.

And ABAC, presenting the collective and studied views of important business leaders from across the region, play a critical role in the APEC process. ABAC members contribute the skeptical, rational logic of business, and they speak with the practical experience of living and working in the markets that policy makers discuss. This is critical to keep APEC leaders focused on measures aimed at delivering meaningful economic benefits, and to challenge APEC's credibility and relevance. In this sense, ABAC might be seen playing the role of APEC's conscience.

So what are business's most pressing concerns? In its annual report, ABAC highlighted 5 key areas:

ABAC members emphasized that successful conclusion of these WTO negotiations is the single highest priority for business. ABAC applauded the breakthrough achieved by World Trade Organization (WTO) members in approving a framework for the continued negotiation in the Doha Round, and urged APEC economies to work together to achieve an early and substantive outcome to the Doha Development Agenda (DDA). Specific areas of concern to ABAC included negotiations on: agriculture, non-agricultural market access (NAMA), services, anti-dumping, and trade facilitation.

Regarding the WTO DDA negotiations, 2004 ABAC Chair Hernan Somerville said, "there is no other issue with such overarching importance to business, across the APEC region or globally, and we urged Leaders to creatively and vigorously seek an early conclusion of the round."

Noting that the Bogor Goals are the cornerstone of APEC's trade and investment liberalization and facilitation agenda, ABAC expressed concern that it appears increasingly unlikely that industrialized APEC members will achieve the Bogor Goals of free and open trade and investment by their 2010 deadline. ABAC called on Leaders for vision, and to take bold measures to ensure that APEC meets its goals and remains credible.

ABAC went a step further by offering three recommendations to stimulate APEC's trade and investment agenda. First, APEC should develop and economies should follow a set of best practices covering regional trading arrangements (RTAs)/free trade agreements (FTAs) to ensure that they serve as 'building blocks' toward the achievement of the Bogor Goals. ABAC proposed that APEC and ABAC undertake a joint scoping study of a Trans-Pacific Business Agenda, to move toward greater integration of regional markets. And ABAC proposed that APEC examine the feasibility and potential scope and features of a Free Trade Area of the Asia-Pacific (FTAAP).

Somerville said, "We are asking you (APEC Leaders) to consider an ambitious new Trans-Pacific Business Agenda - to enhance the scope and effectiveness of APEC's trade facilitation initiatives", and about the FTAAP that it "could bring significant economic benefit to the region as a whole".

ABAC expressed concern that the new security environment and security compliance costs not jeopardize APEC's progress on trade facilitation or its commitment to reducing trade transaction costs. ABAC called on APEC to balance trade and security requirements through greater consultation and information sharing with the business community. Other related recommendations included: adopting specific measures to reduce transaction costs, strengthen market infrastructure and capacity to improve legal and regulatory enforcement, intellectual property protections, transparency, and provision of necessary capacity building assistance to ensure these measures, including security, can be implemented across the region.

Somerville said about the report, "We examine the impact of new security threats, and the costs of countermeasures, on business" and "offer recommendations to Leaders on ways to enhance APEC's effectiveness and relevance" and noted that ABAC is arguing for deepening of the consultative processes between public and private stakeholders in the regional economy.

The report stresses the importance of strengthening financial systems by accelerating reforms; helping vulnerable economies deal with volatile capital movements; improving economies' understanding of how to deepen capital markets; developing effective public/private partnerships to improve financial system security, improve governance and combat corruption. ABAC also provided leadership during the year aimed at advancing progress towards the future establishment of a regional bond market.

One of ABAC's most tangible and groundbreaking accomplishments of 2004 was to take strong steps to combat corruption in the Asia Pacific region. Even five years ago, the topic of corruption was too sensitive to raise in a multilateral forum. This year, ABAC members developed and all signed a statement of commitment to take action in their businesses to fight corruption. The ABAC Chair saying, "we stress the urgent need to address the debilitating effects of corruption."

ABAC also stressed the continuing importance of capacity building, at the institutional, organizational and human levels, in order to achieve APEC's Bogor Goals. APEC economies should work in a coordinated way to identify and address critical capacity building needs at each of these levels. Such capacity building measures are not only a foundation upon which to undertake reforms, they are vital to building popular confidence in liberalization and to ensuring that the benefits of economic growth can be widely and equitably shared.