REPORT TO NEW ZEALAND BUSINESS – APEC Business Advisory Council, August

APEC BUSINESS ADVISORY COUNCIL – THIRD MEETING, SHENZHEN, 1-4 AUGUST 2016

REPORT TO NEW ZEALAND BUSINESS

SUMMARY

The third meeting of the APEC Business Advisory Council (ABAC) for 2016 took place in Shenzhen, China, from 1 to 4 August.  ABAC Members discussed a wide range of trade and economic issues.  Major themes included the prospects for a Free Trade Area of the Asia-Pacific (FTAAP); the role of the digital economy (including a new initiative for e-Commerce in which New Zealand Post is involved); and how best to grapple with public anxieties about globalisation and trade, which risked provoking protectionist responses.  On the latter, there was agreement that governments and business needed to make greater efforts to explain the benefits of open trade and investment while pressing ahead with trade liberalisation and structural reform to secure durable economic growth.

ABAC New Zealand took a leadership role on food issues, on non-tariff barriers, structural reform, optimising supply-chain connectivity and the WTO Trade Facilitation Agreement.  We gave presentations on food industry priorities, the upcoming ‘Food Security Week’ in Peru in September, and the ongoing Marshall School research on non-tariff barriers in food trade, a project championed by ABAC New Zealand.  (Prior to the ABAC meeting, we also convened a well-attended fourth meeting of the Asia Pacific Food Industry Forum, which agreed key messages for APEC food ministers and Leaders.)  We also gave well-received presentations on principles to mitigate non-tariff barriers, on the use of global data standards to optimise supply chains, on the importance of the structural reform agenda, particularly as it relates to services trade (and the need for more ambition in respect of insurance services), and on WTO issues.

REPORT

ABAC New Zealand members Tony Nowell, Katherine Rich and alternate member Stephen Jacobi, supported by staffer Stephanie Honey, attended ABAC’s third meeting for 2016 in Shenzhen, China.  The meeting was hosted by ABAC China and chaired by ABAC Peru as host economy for 2016.

The five working groups (Regional Economic Integration; Sustainable Development (co-chaired by ABAC New Zealand member Tony Nowell); Connectivity (co-chaired by ABAC New Zealand member Katherine Rich), Finance and Economics; and Micro-, Small and Medium Enterprises (MSMEs)) traversed a wide range of topics on the trade and economic agenda.   This message reports on the key issues from the New Zealand perspective.  (Information about how to find out more on those issues and the wider agenda is given at the end.)

Liberalising trade and investment: FTAAP, WTO, NTBs and services

Throughout the week, ABAC members touched on the unprecedented rise in public anxiety over globalisation and trade.   Members agreed that it would be very damaging if public concerns provoked a protectionist response.   The prospects for the global economy in the coming period were modest, with GDP growth forecast to slow to 2 percent by 2020-25, and a large number of downside risks, including uncertainty created by Brexit. Economic and trade reform had lifted millions from poverty and had enabled the development of new technologies and new business models, which had in turn enhanced job creation and growth.  But this message had not been conveyed persuasively to civil society.  Governments and business needed to do a better job explaining the benefits of open trade and investment to the public, and getting policy settings right. Above all, the global economy needed more, not less, structural reform and trade liberalisation to deliver sustained prosperity.

There was considerable interest in the prospects for the Free Trade Area of the Asia-Pacific (FTAAP), with determination that APEC should press ahead as quickly as possible towards negotiations. The prospects for TPP ratification and for conclusion of the RCEP negotiations were also discussed.  ABAC agreed that it would be important to ratify TPP, both on its own merits and as a pathway towards FTAAP.

Building on a series of presentations over the past year in ABAC on non-tariff barriers and private standards, Katherine Rich proposed a “principled approach” to tackling NTBs. The presentation canvassed the challenges in identifying and addressing NTBs but the importance of doing so, particularly to enhance the operation of global value chains. (A list of the NTB “principles” is attached at the end of this report.) This series of discussions has usefully drawn attention to a growing challenge for exporters in regional and global trade.  ABAC New Zealand succeeded in securing the inclusion of references to addressing NTBs (and the proposed principles) in the annual Letter to Leaders.

A further significant focus for ABAC work during the week was on the services agenda.  Presentations were given on a range of services-related topics including the finalisation of draft APEC Services Cooperation Roadmap.  Helpful input from the New Zealand Insurance Council on the Roadmap was noted and endorsed.  Subsequently (in the context of a broader discussion on structural reform) staffer Stephanie Honey gave a presentation on the need for and value of structural reform in the services sector, focusing in particular on the international education sector.  This was endorsed, along with an agreement to recommend to Leaders that structural reform, including unilateral reform, be included in the APEC Services Cooperation Roadmap.

Stephen Jacobi gave a brief update on the WTO’s Trade Facilitation Agreement (TFA), emphasising the importance for broader strategic and credibility reasons that APEC economies should take every step to ratify the TFA.  ABAC New Zealand, in concert with others, also took care to ensure that sufficient weight was given in the final Letter to Leaders on the importance of APEC leadership on WTO issues and indeed the pre-eminence of the multilateral rules-based trading system itself.

Towards sustainable development and food security: food trade, energy

Tony Nowell (in his capacity as Co-Chair of ABAC’s Sustainable Development Working Group and Vice Chair of the APEC Policy Partnership on Food Security (PPFS)) gave an update on various food security issues.  These included socialising a list of food industry priorities and concerns that had been finalised at an immediately preceding meeting of the Asia Pacific Food Industry Forum (AP-FIF) that ABAC New Zealand had convened.  (The Key Messages are included at the end of this report.) ABAC New Zealand succeeded in having these key messages included in both the ABAC Letter to Ministers Responsible for Food Security (which will be conveyed at a Food Ministerial Meeting in September in Piura) and in the Letter to APEC Economic Leaders.

Tony Nowell also gave an update on the expectations for APEC Food Security Week (to be held 23-27 September in Peru), including a PPFS meeting, a food CEOs’ executive dialogue with ministers and a meeting of Food Security Ministers.  He additionally provided an update on the ongoing Marshall School research (initiated and championed by ABAC New Zealand) on addressing non-tariff barriers in food trade, urging ABAC members to encourage their food sectors to continue to contribute to the research, including by participating in a questionnaire that would be circulated shortly to all APEC economies.

There was also discussion on sustainability and energy issues, including a presentation from ABAC China on green low-carbon energy development in the (energy-intensive) Asia Pacific region.

Promoting connectivity in the region: structural reform, the digital economy and global data standards

As noted above, ABAC New Zealand (staffer Stephanie Honey) made a presentation on the importance of structural reform, particularly in the services sector, good regulatory practice and the value of this for boosting productivity growth, trade and GDP resilience going forward.  This was endorsed by ABAC members.

There were also detailed discussions on aspects of connectivity in the region, including broader institutional connectivity (including digital economy issues and global data standards), physical connectivity and people-to-people connectivity.

On the digital economy, discussions focused on the new opportunities and business models that the internet and other digital technologies were generating.   ABAC members agreed on the importance of polices that enabled a strong digital economy, encouraged innovation (including through the use of cross-border data flows and the elimination of customs and regulatory trade barriers) and increased spending on ICT infrastructure.  It was agreed that APEC economies should be urged to recognise digital trade as a ‘Next Generation Trade and Investment Issue’ in APEC policy discussions.   Of particular relevance to New Zealand, there was a detailed discussion on the APEC Cross-Border e-Commerce Training Network (CBET) developed by ABAC, in which New Zealand Post is involved along with DHGate, Tencent and others.

Global technical organisation GS1 provided an update on ongoing work to develop robust region-wide approaches to global data standards (GDS), an initiative championed by ABAC New Zealand and now fully embraced by APEC.   Region-wide GDS is intended to promote supply-chain optimisation, and the current work on pilot projects is intended to inform policy directions to that end. ABAC affirmed its support for this work.

Letter and report to APEC Economic Leaders

ABAC members finalised their Letter and Report to APEC Economic Leaders.  This will form the basis for engagement with Leaders in Lima in November.  The Letter sets the ABAC Report to Leaders in the context of rising public anxiety about globalisation and trade, touches on the wide-ranging ABAC agenda and highlights several topics of keen interest to New Zealand.  We played an active and engaged role in the drafting of the Letter and Report, and secured language which calls for ongoing ambition for FTAAP, on the WTO, on the need to address non-tariff barriers, the value in optimising supply-chain connectivity including through adoption of global data standards, on the importance of structural reform especially in services trade, and the centrality of food security, including the contribution that open food markets, trade and investment make to durable food security.  We also helped to craft some of the overarching messages about the importance of engagement with civil society on trade and globalisation.

Next meeting and further information:

ABAC IV will be held in Lima, Peru, from 14 to 16 November 2016.   The APEC CEO Summit and Dialogue with Leaders follow ABAC IV.

Further information is available at www.nzibf.co.nz.  Copies of reports and studies mentioned in this report, and additional information about other issues on the ABAC agenda, are available on request from Stephen Jacobi, stephen@jacobi.co.nz or from Stephanie Honey, stephanie@honeyconsulting.co.nz.

ABAC New Zealand

August 2016