Perspectives on 2008: A Dialogue with Peru's Ministers
Identifying regional solutions to the financial crisis which continues to unfold, bringing together diverse interests to achieve a conclusion for the Doha Development Agenda, and supporting structural reform and capacity building as well as new issues like corporate social responsibility all remain on the agenda.
Peru's Minister for Trade, Mercedes Araoz and Minister for Foreign Relations, José Antonio García Belaunde, discuss below their perspectives on the issues.
APEC Newsletter (APEC E): What are the most important issues Leaders and Ministers will focus on this November?
José Antonio García Belaunde (JAGB): We are facing the most challenging economic circumstances that we have seen in decades. Leaders will focus on shaping a regional response to the crisis. A strong economy is fundamental to achieving results in many other areas of the APEC agenda. That will also be discussed by Leaders and Ministers in November.
Mercedes Araoz (MA): The high level of the Leaders' Meeting creates a great scenario for the discussion of priority issues in the region. On November 22-23, Leaders will discuss the progress towards greater economic integration in the Asia-Pacific region, the current economic situation in the Asia-Pacific as a result of the global financial turmoil; and the important issue of climate change.
At the APEC Ministerial Meeting, to be held on 19-20 November, Ministers, will cover the main issues of this year's APEC agenda. Progress on economic integration in the Asia-Pacific region is the most important issue, as we have received from the APEC Economic Leaders in 2007, very specific instructions on how to advance this work in the current year.
Another important issue is the progress on APEC's Second Trade Facilitation Action Plan (TFAP II), which by 2010, aims to reduce transaction costs by a further 5%. It is worth noting that APEC is a world leader in trade facilitation.
Besides these two issues, it is important to mention the importance of APEC adopting the Investment Facilitation Action Plan during the Ministers Responsible for Trade Meeting held on 31 May - 1 June in Arequipa, Peru; and on progress on behind-the-border reforms, or as it is also known, the Leaders' Agenda on Structural Reform (LAISR).
APEC E: What impact will the current financial turmoil have on the Asia-Pacific region and what, if there are any plans, does APEC have to address this issue?
MA: I am afraid that there are going to be very significant impacts in the region and in the world. A generalized reduction in the rate of growth, that I hope will be short lived, could be the most important one for all of us. Trade flows will decrease and credit will tighten.
In these dire circumstances, APEC members should reiterate their commitment to open markets and free trade as the best tools to quickly overcome this financial turmoil. A positive message that APEC could send to the rest of the world could be, for example, a declaration stating that we will not increase our barriers to trade until the financial problem is solved. Another message could be the reiteration of APEC´s strong support for the prompt finalization of the Doha Development Round.
JAGB: The Asia-Pacific has played a pivotal role in sustaining world economic growth rates over many years and many APEC economies have experienced solid economic growth for over a decade. The problems in the financial markets may soon reach the real economy, consequently impacting on future economic growth.
APEC Finance Ministers met in Peru on November 5-6. They analyzed the financial crisis and how to coordinate a response. APEC economies can support the excellent work undertaken by the Financial Stability Forum which is examining how to enhance market and institutional resilience.
APEC E: Leaders have consistently supported a successful conclusion to the Doha Round. What actions do you expect APEC Ministers and Leaders to take this year to create urgency for concluding these negotiations?
JAGB: We are very disappointed that it has not been possible to reach an agreement until now. The Round is likely to be complicated by the ongoing political and financial uncertainty. Nevertheless, the WTO has made very good progress so far on many aspects of Doha and we should keep working to achieve a result.
MA: I think that all APEC economies are disappointed by the impasse that the Doha Round had reached in July, but we believe in the early revival of negotiations. I am sure that, as APEC, we can work together to achieve an ambitious and balanced outcome of the Round.
Since its inception, support for the multilateral trading system has been a key priority in APEC´s work agenda. At this year's APEC Ministers Responsible for Trade Meeting in Arequipa, Peru, we decided to adopt a stand-alone statement to demonstrate our commitment to progress towards an early and successful conclusion of the Doha Round.
APEC E: Can you discuss the progress made on the priorities that Peru set earlier in the year?
JAGB: At the beginning of the year, Peru took responsibility for leading the implementation of the APEC agenda set out in the Sydney Declaration of 2007. These priorities included regional economic integration (REI), trade and investment liberalization and structural reform.
We are especially pleased that we have been able to raise the level of awareness of Corporate Social Responsibility (CSR) within APEC this year. Leaders will be discussing this issue in November. This year's theme for APEC is "A New Commitment to Asia-Pacific Development" and improving levels of CSR in the region promote that goal.
MA: I really believe that this year has been a very successful one because APEC has made great progress on the main 2008 priorities.
We have advanced the regional economic integration agenda, including the prospects for a Free Trade Area of the Asia-Pacific (FTAAP).
We have continued with the implementation of actions to advance trade and investment liberalization and facilitation: for example, the completion of model measures for RTAs/FTAs, the endorsement of the Investment Facilitation Action Plan, the development of Key Performance Indicators for the Second Trade Facilitation Action Plan and the discussion on the rationalization of rules of origin.
We've also been working on strengthening the policy agenda on ECOTECH; especially in the areas of education, small and medium enterprises, tourism, information and communication technologies, anti-corruption and transparency.
APEC E: For the first time ever, APEC Ministers met to discuss structural reform issues this year. What approaches do you expect APEC to take in order to advance this agenda item?
JAGB: We all know that implementing structural reforms can be very difficult, but the benefits speak for themselves. APEC can support individual member economies in several ways.
The Structural Reform Ministerial Meeting held this year in Melbourne approved a Good Practice Guide on Regulatory Reform. This will help economies to voluntarily review existing regulation and assess the impact of new regulation. Most importantly, ministers agreed to voluntary reviews or self-reviews of member economies' institutional frameworks that support structural reform. I think this process will help economies focus on priority areas for reform and is a good way to exchange information on how to best tackle this challenging area.
MA: Structural reform must remain at the top of the APEC agenda. We have advanced on the implementation of the Leader's Agenda but further work is necessary.
We need to work on strengthening cooperation and coordination between the Economic Committee (those who are in charge of the structural reform issues), the Committee on Trade and Investment and the Finance Ministers' Process, as well as with the private sector.
A good step has been the establishment of the APEC Policy Support Unit which will strengthen the capacity of the APEC Secretariat to assist member economies in policy dialogue on structural reform and in strengthening domestic institutions and policies that support the reform process.
APEC E: What do you think will be Peru's main contributions to the APEC agenda this year?
JAGB: We have been committed to implementing the decisions made by Leaders last year, but additionally this year, Peru wanted to emphasize the social dimension of the APEC agenda with the inclusion of Corporate Social Responsibility, besides other issues such as education, reducing the digital gap, support for small and medium enterprise and joint efforts in anti-corruption matters. Two successful Ministerial meetings in education and in small and medium enterprises have contributed to this cause.
Regarding corporate social responsibility, Peru is keen to ensure strong compliance with labor and environmental standards but also to involve the private sector in a partnership to ensure sustainable development where they have operations.
MA: We have chaired many meetings, including Sectoral Meetings of Ministers responsible for Trade, Tourism, Small and Medium Enterprises, Education and Finance.
In the area of trade and investment, we have assumed a leading role on the discussion of a Free Trade Area of the Asia-Pacific. Peru has conducted a study of existing bilateral and plurilateral free-trade agreements in the region with the aim of increasing knowledge of their similarities and differences, thereby enabling economies to identify possible ways in which the FTAAP concept could be furthered. New Zealand, the United States, Japan and Chile, as well as the IADB, have also contributed to this important activity. Moreover, we are collaborating with Korea and Indonesia on a review of existing analysis relevant to a possible FTAAP and are assessing the need for future work.
APEC E: In your view, how has APEC made progress on its issues under the theme, "A New Commitment to Asia-Pacific Development?"
MA: Peru proposed the theme "A New Commitment to Asia-Pacific Development" in order to give APEC the opportunity to work on the social dimension of its agenda. The objective is to encourage initiatives on the social issues that have a substantial influence on the advance towards the goals of trade and investment facilitation. To this end, we have highlighted the role of education in the social and economic development of member economies and have supported the development and modernization of small and medium enterprises
JAGB: This theme reflects our approach to bridging the development gap in the region. I consider it essential to show how an open trade and investment policy can make a positive impact on economic development. But at the same time, we have to take account of the social dimension of trade, and that is why we have been promoting a greater uptake of corporate social responsibility in the region.
APEC E: How has APEC's capacity building program prepared member economies to better participate in the global economy?
MA: Capacity building programs are a vital part of the APEC process because they allow capacity to be developed in key priorities areas regarding trade and investment liberalization and economic and technical cooperation. These programs cover a wide range of activities, such as seminars, publications and research.
They allow developing economies such as Peru to learn from developed economies' experiences, in order to reduce the technological gap and enhance the economic growth and prosperity of the region.
This year, APEC has financed 21 Peruvian projects, which have been implemented successfully. They have allowed us to strengthen our knowledge of key areas of common interest in the region, such as the single window initiative and the data privacy pathfinder. For 2009, 16 projects were approved by the Budget and Management Committee meeting last October.
JAGB: Economic and technical cooperation is critical to APEC's work. This is especially true in areas such as the competitiveness of small and medium enterprises, and human resources development. APEC's commitment to capacity building demonstrates how the region as a whole works together to address the gap in the various levels of development.
APEC E: Corporate social responsibility has made it to the APEC agenda. How does this issue contribute to the economic growth of the region?
JAGB: I think CSR plays a key role at the local level to promote sustainable development. We have seen this in some projects undertaken by mining companies in remote communities of Peru, where the firm has invested in local infrastructure and development. I think it is clear that this has a positive reward for the individual company - it can improve the local workforce and promote better relations with local communities. .
MA: We have introduced the issue of Corporate Social Responsibility on a voluntary basis to encourage the incorporation of social and environmental concerns into business operations, as a complement to existing public policies and programs.
As an example of our efforts in advancing this issue, we held the 5th Tourism Ministerial Meeting under the theme "Towards Responsible Tourism in the Asia-Pacific Region" to promote continuous sustainable growth in the tourism industry. We hope that the meetings' outcomes will help to generate income and employment in local communities and to promote the conservation and preservation of our environment, including the social and cultural aspects.
I am sure that a strong discussion on this issue could address challenges of great significance in the achievement of socio-economic development and equitable and sustainable growth.