Op-ed: Sustainable growth in APEC
The recent meeting of APEC Leaders in Honolulu was a resounding success.
Not only did Leaders agree to a series of measures to further break down trade barriers in the Asia-Pacific, they committed to strengthening cooperation in the region. Uncertainties facing the global economy and a succession of natural disasters in the region galvanised Leaders to firmly resolve to work together to support strong, balanced and sustainable growth.
At the Honolulu meeting, Leaders agreed to take concrete steps in three priority areas, all of which are geared towards generating growth and creating new jobs by promoting free trade and investment. Specifically, Leaders focused on strengthening regional economic integration and expanding trade; promoting green growth; and advancing regulatory cooperation and convergence.
APEC also addressed “next-generation trade and investment issues” that future free trade agreements and indeed an eventual Free Trade Area of the Asia-Pacific should contain. High-quality trade agreements have the potential to open up markets, throughout the region, boosting businesses, improving livelihoods and giving customers better deals.
The “next generation” issues identified for action include fostering the participation of small and medium-sized enterprises (SMEs) in global production chains. SMEs account for around 90% of all businesses and employ as much as 60 percent of the work force in the region. Increasing their participation in global markets is vital.
Leaders also agreed to encourage innovation, recognizing that generating and commercializing new ideas is critical to future growth and prosperity. Specifically, they agreed to promote non-discriminatory and market-driven policies that foster competition and encourage development of innovation. APEC will work, for example, to remove restrictions on foreign direct investment, and provide effective protection of intellectual property rights.
For APEC, this means forging ahead in 2012 with a myriad of initiatives to further trade and investment liberalization and regional economic integration, such as improving the region’s supply chain to reduce the time, cost and uncertainty of moving goods and services throughout the region. APEC’s working groups are tackling eight key chokepoints, including customs inefficiencies, inadequate transport networks and infrastructure and regulatory impediments, with a goal to improve supply chain performance by 10% by 2015.
To make green growth a reality, APEC economies agreed in Honolulu to a series of actions, including reducing tariffs on environmental goods to 5%. APEC will develop a list of these goods in 2012 targeted for tariff cuts. Current estimates suggest that tens of trillions of dollars of investment will be required in the coming years to meet our clean energy, clean air, sanitation and other environmental goals. Ensuring that member economies can meet these goals at the lowest cost, using the latest technologies, while also creating new, green jobs will be a significant challenge. Lowering tariffs on green goods will increase availability and use in the region, supporting sustainable economic growth. Going further, APEC Leaders also committed to phase out inefficient fossil fuel subsidies that encourage wasteful consumption. And to increase energy efficiency, they agreed to reduce the region’s energy intensity by at least 45% by 2035, almost doubling the previous commitment.
On the third priority, Leaders agreed to take specific steps to implement good regulatory practices in their economies by 2013, including by ensuring internal coordination of regulatory work; assessing regulatory impacts; and conducting public consultation. Transparent, efficient and harmonised regulations significantly ease the burden on businesses, especially SMEs, trying to comply with them.
Leaders also instructed APEC to push ahead with its initiative to encourage economies to undertake structural reforms to achieve balanced and sustainable growth. This five-year initiative also focuses on advancing inclusive growth by promoting reforms that create labor market opportunities, training and education, and develop social safety net programs, as well as advance SMEs, particularly so that opportunities are created for women and vulnerable populations.
The Honolulu meeting was the culmination of 12 months’ hard work and cooperation among members under the stewardship of the United States. This cooperation is set to continue in 2012 when Russia, and then in 2013 Indonesia, take over as chair. In fact, cooperation has been at APEC’s core since its inception in 1989.
We have taken great care to measure the results of our efforts. In Honolulu, Leaders were presented with the successful outcome of APEC’s work on trade facilitation, including cutting the cost of doing business in the region. An independent assessment showed that trade transaction costs were reduced by 5% across the region between 2007 and 2010, saving businesses a total of US$58.7 billion.
APEC’s work to break down trade barriers, facilitate business and enhance economic and technical cooperation delivers real, concrete benefits for people living across the region. Over a 10-year period, from 1999 to 2009, APEC’s collective GDP grew by 29.2 percent, employment by 10.8 percent, while poverty was reduced by 35 percent.
Such figures support the fact that this region has seen steady growth in recent years. The prognosis is that this will continue, but significant risks, including contagion from the Eurozone crisis and inflation in some economies, loom large. APEC will therefore continue to work to break down barriers to free trade and investment to achieve growth as well as enhance job creation and regional development.
APEC Leaders have shown over the years that through cooperation we can help bring increased prosperity to the Asia-Pacific region and its people.
This op-ed by APEC Secretariat Executive Director Ambassador Muhamad Noor was first published in Business World online in the Philippines.