APEC Bali – not your usual tropical holiday NBR – 2 October 2013

By Stephen Jacobi ¹

Stephen Jacobi profiles what’s on the agenda as APEC meets in a tropical holiday spot this week.

Bali is perhaps an unlikely backdrop for this week’s APEC Summit, but perhaps no more so than Vladivostok, the venue for last year’s meeting. Bali’s infrastructure is likely to cope well with the influx of Leaders, Ministers, senior officials and some 1200 business people. The holiday atmosphere should not mask the seriousness of the discussions that will be held ? ensuring the economic health of the Asia Pacific region and building a platform for growth and jobs is not a togs and jandals affair.

Indonesia, as this year’s host, is keen to use the APEC gathering to mark its emergence as a regional power-house. And rightly so ? today, as the world recovers slowly from financial slump, Indonesia, a proud member of the G20, is growing at over 6 percent and on a course to challenge the UK as the world’s sixth largest economy. That’s good news for New Zealand if we can organize ourselves effectively to grasp the opportunity ? at present our economic relations barely scratch the surface of Indonesia’s potential as a market for food, education, tourism and for co-operation on renewable energy. Partly this is a matter of Indonesian policy ? while Indonesia is a signatory to the Australia-New Zealand- ASEAN FTA, barriers to food imports have remained a problem and need to be resolved. Building stronger relationships with Indonesian business is also critical.

Indonesia has so far shown little interest in the Trans Pacific Partnership (TPP) but TPP will be front of mind for many at the Bali meetings. After five years of effort and nineteen rounds of negotiations TPP is entering what many hope is its closing phase. TPP Ministers will meet in Bali and finalise their recommendations to TPP Leaders who will decide on a course to guide the negotiations to the end of the year. Make no mistake about it ? TPP has the potential to transform the way business is done in the region but only if the political will can be found to maintain the vision for an high quality, ambitious and comprehensive outcome which was agreed back at APEC Honolulu in 2011. TPP has come a long way since then with four major economies – Canada, Mexico and, most recently, Japan – joining the negotiations adding both to the attractiveness but also complexity of the negotiations. Participants at the 4th Japan NZ Partnership Forum in Tokyo last week were reassured about Japan’s seriousness in joining TPP, which has a central role to play in Japan’s economic recovery strategy.

Right now some serious issues remain to be resolved, including the perennial issues of market access for agriculture, but also intellectual property rights, which impact on the climate for innovation and the role of state owned enterprises, which in many economies are over-supported by governments. TPP Leaders will be mindful of the need to find ways for trade and investment to be the engine of growth in the region and for TPP to become a pathway for wider liberalisation amongst all 21 member economies of APEC. A complementary pathway exists in the form of the Regional Comprehensive Economic Partnership (RCEP) in which both New Zealand and Indonesia are involved ? the second round of negotiations has just been held. Ways of ensuring that TPP and RCEP move forward together is also a matter requiring attention in Bali.

Because APEC is a voluntary and non-binding forum, both TPP and RCEP are being negotiated outside of APEC’s formal structure but both impact directly on APEC’s agenda. It was in Bogor, Indonesia, in 1994 that the region adopted the vision for free trade and investment in the region by 2020. In Hanoi in 2006 the concept of a Free Trade Area of the Asia Pacific (FTAAP) was adopted. APEC’s work programme, overseen by Alan Bollard as Executive Director, is directed to strengthening regional co-operation on a wide range of issues, including regulation, supply chain security, food security, education and science to name just a few.

Business input into this process is provided by the APEC Business Advisory Council (ABAC) and the three senior business representatives appointed by each APEC government. Tony Nowell, Maxine Simmons and Wayne Boyd will participate in ABAC’s annual face-to-face dialogue with Leaders on 7 October. Freer trade, inclusive growth, infrastructure investment, women’s entrepreneurship and financial issues are all high on the list of ABAC’s recommendations.

This year’s APEC CEO Summit, which coincides with the Leaders’ Summit will focus on the big picture of the region’s economic health. The Summit will be addressed by President Yudhoyono of Indonesia, President Obama, President Xi of China, Prime Minister Abe of Japan as well as Prime Minister Key and a host of CEOs from around the region. The CEO Summit provides an unparalleled opportunity for the New Zealand team to build and enhance the key relationships, which will sustain our drive into the region.

Bali’s tourist charms will certainly not be lost on those attending the APEC meetings. APEC is fundamental to New Zealand’s economic security. Amidst the surf and sand, there’s some serious stuff going down in Bali this week.

¹Stephen Jacobi is Executive Director of the NZ International Business Forum ( www.nzibf.co.nz) and Alternate Member of the APEC Business Advisory Council (ABAC).