Asia-Pacific business leaders welcome Korean official’s strong support for current global trading system

The 2nd ABAC Meeting (Seoul, 26 April 2017)

Chairman Huh Chang Soo of FKI,
Chairman Hoang Van Dung of ABAC,
Dr. Alan Bollard, Executive Director of APEC Secretariat Distinguished Members of ABAC
Excellencies, Ladies and Gentlemen,

It is my great privilege to welcome such a distinguished group of business leaders from across the Asia-Pacific.

As someone who has previously served as APEC Senior Official for Korea, it is especially gratifying to see ABAC leaders gather in Seoul once again for the first time in six years.

Since its inception in 1989, APEC has been playing an important part in liberalizing trade and investment in the Asia-Pacific and beyond.

Today, the Asia-Pacific stands out as one of the world’s most dynamic and inter- connected economic regions. The average tariff rates of APEC economies have

dropped from 17 percent in its founding year to 5.6 percent in 2015 – one third of the previous level. Trade in the region has grown nearly sevenfold, while per capita income has increased by 76 percent.

But APEC would not be where it is today were it not for the close partnership of the business community. Indeed, ABAC has been serving as a critical bridge between APEC governments and the business community. It has made valuable inputs from the real world of business throughout APEC’s quest to free up trade and investment.

Likewise, APEC has been collaborating very closely with ABAC to facilitate business activities across the region. The APEC Business Travel Card (ABTC), Ease of Doing Business, tariff-cuts on environmental goods, and strengthening of Supply Chain Connectivity – these are just a few examples.

Perhaps most importantly, in 2004, ABAC put forward a seminal recommendation to APEC Leaders – the Free Trade Area of the Asia Pacific, or FTAAP, as a pathway for realizing the Bogor Goals.

Ladies and Gentlemen,

As staunch proponents of trade and investment, many of us feel disheartened by the recent backlash against free trade.

The rise of protectionist measures by governments presents a critical challenge for the global economy. According to the WTO Trade Monitoring Report, in 2016 alone a total of 182 trade-restrictive measures were introduced in the form of TBT or SPS measures.

Also, 222 anti-dumping and other trade remedy measures were newly taken

last year. This is the highest figure since the global financial crisis of 2008.

More worrisome still is the widespread resentment towards trade and globalization among the broader public. Many people seem to be losing faith in free trade. They fear that free trade is taking away their jobs.

What is striking is that such hostility towards trade is most conspicuous in advanced economies that have previously spearheaded the free trading system such as the US and Europe, rather than in developing countries. Kevin Danaher, an American anti-globalization activist, best captures this mood: (quote) “The global economy works for about twenty percent of the world, for about eighty percent it doesn’t.”(unquote)

The free trading system – the key engine of global economic growth for the last 70 years – is under siege. Multilateral negotiations that have gone on for 15 years at the WTO have lost momentum. Plurilateral negotiations on Trade in services and Environmental goods at the WTO are in a stalemate.

The Trans-Pacific Partnership, – once touted as the highest level of liberalization – is almost dead. The TTIP negotiations between the US and the EU are stalled.

We all know why free trade matters. Division of labor, comparative advantage, global value chains – these are straightforward concepts that have stood the test of time. History tells us that when economies trade, they are more productive and competitive, and enjoy more choices and higher living standards.

APEC economies bear testament. Singapore, Hong Kong, China, Chinese Taipei, Korea, and ASEAN economies, have achieved unprecedented growth by becoming integrated into a free and open multilateral trading system.

Sadly, however, we hear more loudly today the downsides and side effects of free trade. Free trade gets blamed for just about everything : for killing jobs and widening income gaps; for destroying the environment and degrading culture; for making capital flows more volatile and benefitting only multinational corporations. These arguments are heard more loudly because the countless businesses and consumers who benefit from free trade remain silent. In contrast, those who are adversely affected are more organized and vocal.

Ladies and Gentlemen,

There are several things we should do to maintain and improve world’s trade environment.

First, we must not take Free Trade for granted. By no means is it like the air we breathe. Today’s international trading system was consciously created as a means to support peace in the aftermath of two world wars. And we should not forget that free trade was essential in enabling nations to rise from the ashes and achieve peace and prosperity.

So, we must redouble our efforts to further liberalize trade, multilaterally, regionally and bilaterally. APEC must continue to actively play a leading role in championing free trade. The moment our collective efforts for freer trade weaken, protectionism will prevail.

Second, it is imperative that we revive public confidence in free trade. We must counter the fast-spreading resentment towards trade and globalization across the world. A research by the OECD shows that for every $1 of tariff levied, there is a 73 cent fall in world income.

We need to raise awareness about the serious repercussions that protectionism will bring. For as long as hostility towards trade and globalization resonates among the public, protectionism will always find a place to thrive.

Third, we need to work harder to address public concerns about the downsides of free trade. While the vast majority of people actually benefit from free trade and globalization, there is no denying that some lose out. Those unable to reap the benefits of globalization should be better looked after, through inclusive trade policies.

Ladies and Gentlemen,

Free trade rests on the conviction that the free exchange of goods, services and ideas will help push back the frontiers of technology and advance human progress. Centuries of human history have shown this to be true. I remain optimistic that today’s setbacks are only temporary – in the end, free trade will carry the day.

In closing, let me simply stress that free trade doesn’t come free. Free trade is built through collective endeavor. It will be sustained when nations continue to speak out on its behalf. When governments are unable to speak out, then the business community should.

When other regions are reluctant to speak out, then APEC should do so. So, we look to ABAC’s stewardship as APEC continues to chart the path towards freer trade. And rest assured that Korean Government will always stand with you.

Thank you.