Report to New Zealand Business on the APEC Business Advisory Council, February 2020 


Summary

The three new New Zealand members of the APEC Business Advisory Council (ABAC) – Rachel Taulelei, Toni Moyes and Malcolm Johns – played an active role in the first ABAC meeting of the year in Sydney from 12 to 15 February.  The Council’s discussions focused on the future of the region and how best to address current challenges, including those relating to the multilateral trading system, to climate change and sustainability, to achieving greater inclusion, and to the risks and opportunities in the digital economy.  These topics also formed the basis for the annual Dialogue with APEC Senior Officials (including New Zealand Senior Official Mark Talbot), and a separate session with officials on the post-2020 Vision for the APEC region.  On the latter, ABAC’s goals are for a seamless, dynamic, resilient and sustainable Asia-Pacific economic community, underpinned by the Free Trade Area of the Asia Pacific, and committed to improving equity and inclusion.

The New Zealand members made a number of well-received contributions throughout.  Rachel, as part of the ‘troika’ of past, present and future Chairs, helped set the strategic direction for the year’s work.  In her role as co-Chair of the Regional Economic Integration Working Group, Rachel gave a presentation on the importance of ABAC’s continued advocacy on the World Trade Organisation (WTO), linking a well-functioning global rules-based trading system to positive outcomes for business, inclusion and the environment.  She also spoke as part of a “Mega-Trends Forum” on the impacts on the food and agriculture sector from sustainability and digitisation, and featured in a panel discussion on indigenous women in business during the ABAC Women’s Lunch.  Malcolm, co-Chairing the Working Group on micro-, small and medium-sized enterprises (MSMEs), spoke about leveraging e-commerce platforms for greater MSME success, as well as offering well-received comments on the leadership role that business could play in the transition to a low-emissions economy.  He also participated in a small group leading ABAC’s strategic input into the Post-2020 Vision.  Toni, as co-Chair of the Digital Innovation Working Group, gave a presentation on empowering start-ups and new technologies, and separately provided a business perspective on the new Digital Economy Partnership Agreement.  Toni also introduced a new research report which ABAC New Zealand had championed last year (and to which New Zealand businesses had contributed), undertaken by the USC Marshall School of Business, on barriers to digital trade.

Report

Meeting for the first time since mid-2019 due to the unprecedented cancellation of the November 2019 APEC meetings in Chile, the APEC Business Advisory Council (ABAC) was convened in Sydney from 12 to 15 February.    Incoming New Zealand members Rachel Taulelei, Malcolm Johns and Toni Moyes attended, with Stephen Jacobi and Stephanie Honey in support.

Discussions took place in Plenary sessions and in five themed Working Groups: Regional Economic Integration (Rachel serves as co-Chair); Digital and Innovation (Toni serves as co-chair); MSMEs & Entrepreneurship (Malcolm serves as Co-Chair); Sustainable Development, and Finance & Economics.    The Council also held its regular annual Dialogue with APEC Senior Officials, including New Zealand representative Mark Talbot, and also held a separate session with Senior Officials on the Post-2020 Vision for the APEC region.  

The ABAC meeting proper was preceded by a “Mega-Trends Forum”, launched with a keynote from futurist Rocky Scopelliti, which looked at the impact of major disruptive factors, such as climate change, digital transformation and demographic change, on key sectors including services, energy and agriculture.  Key Australian political and business leaders, including Trade Minister Simon Birmingham and Minister for Small and Family Business Senator Michaelia Cash, provided keynote speeches at various points through the programme.

Achieving integration and inclusion in the age of disruption

The major focus for the meeting was agreeing the work programme for the year (Rachel helped play a role in this, as part of the ‘troika’ of past, present and future Chairs), along with holding the annual ABAC Dialogue with Senior Officials (including New Zealand’s Mark Talbot), a separate session with officials on the Post-2020 Vision for the APEC region, and work on a suite of major topics including supporting the WTO and advancing regional economic integration; addressing the challenges of climate change and sustainability; leveraging the digital economy; assisting small business to thrive in the modern economy; and deepening inclusion, including for women and indigenous communities.   

The concluding press release – ‘Achieving Integration and Inclusion in the Age of Disruption’ – emphasised the need for more, not less, regional cooperation in the face of disruption and volatility in regional geopolitics, trade and markets, communities and society, the digital economy and even in the physical environment.   The week was also marked by many expressions of sympathy and concern for China and others affected by the coronavirus outbreak, and calls to work collaboratively to counter this.   (APEC and ABAC China colleagues were unable to travel to the meeting, but participated virtually through digital channels at various points.)

Key theme: The post-2020 Vision for the APEC region

ABAC members engaged throughout the week’s meetings on discussing the future shape of the region – the so-called “Post-2020 Vision”.   Members discussed how ABAC should respond to the December Report of the APEC Vision Group ahead of a Senior Officials’ meeting taking place on 20 February, recalling both ABAC’s own inputs into the Vision process along with a recent report by the Pacific Economic Cooperation Council.    

At the conclusion of the week’s discussions, ABAC members agreed that the Vision should focus on the need for a peaceful and interconnected Asia-Pacific economic community, which sought to achieve the prosperity and well-being of all.  They argued that the Vision should include a commitment from APEC economies to take measurable steps to enhance free, open and non-discriminatory trade and investment and deeper regional economic integration, including through the Free Trade Area of the Asia Pacific (the latter being an element that had not featured prominently in the AVG Report but which should serve as a fundamental building block to deeper and more prosperous regional economic integration).   Council members also reiterated that ABAC’s goal remained for a seamless, dynamic, resilient and sustainable region, in which economies were committed to improving equity and inclusion.

Key theme: the WTO and advancing regional economic integration

At the outset of the week, there was a constructive dialogue with Senior Officials on the importance of progressing the reform agenda of the WTO and sustaining and strengthening the multilateral trading system.  Senior Officials strongly encouraged ABAC to continue to champion the WTO both at home and regionally.  Both ABAC and SOMs agreed that there was a more systemic focus on issues of inclusion, including for MSMEs, women and indigenous groups, in the trading system.

Building on this scene-setting discussion, Rachel subsequently gave a warmly-received presentation to members on the World Trade Organisation, linking a well-functioning global rules-based trading system to positive outcomes for business, inclusion and the environment, and proposing that ABAC should step up advocacy ahead of the mid-year WTO Ministerial Conference.  To that end, members agreed to prepare a further ABAC Statement on the support for and reform of the WTO (building on the influential Statement that the Council had shared last year with Trade Ministers and Leaders), and to plan on a visit to Geneva to meet with WTO member representatives and other business groups later in the year.  ABAC also voiced support for the conclusion of the WTO Joint Services Initiative and for the WTO e-commerce negotiations and moratorium on Customs Duties on electronic transmissions.  

Beyond the WTO, ABAC members emphasised the need to press ahead with preparations for a Free Trade Area of the Asia Pacific, including concluding the ‘pathway’ agreements – notably the Regional Comprehensive Economic Partnership agreement – and deepening their understanding on specific elements including competition policy, where a new study has been commissioned.  

Members also emphasised the importance of ongoing work on strengthening services trade in the region, including through the effective implementation of the APEC Services Competitiveness Roadmap, deepening understanding of the regulatory environment for services through the forthcoming APEC Services Index, which ABAC urged to be broadened to include other sectors, and a focus on the La Serena Roadmap for Women and Inclusive Growth, seeking to increase opportunities for women in the services sector.  

Key theme: climate change and sustainability

ABAC members focused on the challenges of climate change and sustainability in meetings through the week, including with Senior Officials.  Many noted the importance of greater collaboration within economies and at the regional and global levels to tackle these cross-cutting challenges.  

Malcolm, in both his role as co-Chair of the MSME Working Group and in the Sustainable Development Working Group, shared his insights on the important leadership role that business could play in driving the transition to a low-emissions economy, based on his own experience with the Climate Leaders’ Coalition; the private sector should not wait for policymakers to take action to address sustainability, he argued, and a more gradual transition actively embraced now would engender a less painful transformation than if action were delayed.  These comments were endorsed wholeheartedly by many members and SOMs, with some noting that business could also play a crucial role in creating innovative technological solutions to mitigate climate change impacts.  

Rachel also took part in a panel discussion on sustainability, the future of work and the food and agriculture sector, as part of the Mega-Trends Forum, emphasising that sustainability was not just the ‘right’ thing to do, but also the smart thing, calling for the elimination of environmentally-harmful subsidies to agriculture, fisheries and fossil fuel use (a call she reiterated in her presentation on the WTO), and noting that the environment would have to be at the heart of conversations about the future of food. More broadly on food security, a number of members foreshadowed that they would be making presentations on food-related issues at ABAC II in Manila (1-4 April), and that there would be a dedicated seminar on “smart agriculture” in the margins of that meeting.  Members also discussed energy security, reducing the water footprint, the circular economy, the business contribution towards de-carbonisation, and climate risk and response – the latter following a presentation from the McKinsey Global Institute on steps that stakeholders could take in formulating an effective response to climate change impacts.  

Separately, in the Finance and Economics Working Group, a number of presentations were made on different aspects of ESG investing (“Environmental, Social and Governance”) in developing economies.  Council members considered different approaches to taxonomy, tools, frameworks and criteria that regulators and investors could use to encourage the achievement of ESG goals.  ABAC agreed to continue to work on these issues, recognising that the Asia-Pacific should seek to play a leadership role here to continue to attract investment and to unlock more inclusive growth. 

Key theme: the digital economy

As always, leveraging the benefits and tackling the challenges of the digital age was a constant theme through the week’s discussions.  Toni, in her capacity as co-Chair of the Digital Innovation Working Group, gave a presentation on fostering start-ups and new technologies such as artificial intelligence and cryptocurrencies, and the importance of trust in the digital economy.  She also provided ABAC with a briefing on the new Digital Economy Partnership Agreement between New Zealand, Singapore and Chile.   

Other areas of interest included AI, cross-border data flows in marine logistics and the Chile Start-Up Challenge, as well as innovations in fintech and open banking.   Several members noted the crucial need to address cybersecurity in order to enable the digital economy.

ABAC also considered a number of research reports on the evolving nature of and environment for ‘digital trade’, including one on blockchain and trade (from the Royal Melbourne Institute of Technology), another still in train looking at the regulatory landscape for data flows in the APEC region (undertaken by Joshua Meltzer of the Brookings Institution) and a third on “digital non-tariff barriers” (with a particular focus on cross-border data flows and privacy regulation), undertaken by the University of Southern California’s Marshall School of Business.  

Toni introduced the latter study on Digital NTBs, which ABAC New Zealand had championed in 2019, setting it in the context of the broader ABAC workstream on non-tariff barriers to trade.  The research found that businesses in the region must contend with a range of inconsistent regulations and standards in the digital economy (the “digital noodle bowl”), and that privacy regulations and other restrictions on cross-border data flows constituted a major impediment to cross-border trade.  More broadly, the report found that there were significant gaps in business knowledge about the digital economy and in the necessary infrastructure; and that competition policy issues (including the market dominance of big players) were also substantial.  A copy can be found here.   Separately, in the SOM Dialogue, there was discussion about the APEC approach to privacy (the Cross-Border Privacy Rules) and the challenges of fragmented and contradictory approaches to privacy and other regulation in the digital sphere.

Key theme: inclusion


As with digital, inclusion was a theme throughout the week – contextualised both by Malaysian Prime Minister Mahathir’s emphasis on “Shared Prosperity” and the ‘inclusion’ theme (along with innovation and integration) of ABAC Malaysia for 2020.  During the discussion with Senior Officials, much was made of the potential for the digital economy to unlock greater inclusion, a message later reinforced by discussions in the various Working Groups.  Several observed, too, that in WTO reform and advocacy, a greater emphasis was needed on more inclusive participation from both developing economies and under-represented groups such as MSMEs, women and indigenous communities – in short, a more people-centred approach.

Malcolm, co-Chair of the MSME and Entrepreneurship Working Group, presented on leveraging e-commerce platforms for small-business success, under the theme of ‘enhancing MSME readiness for the digital future’.  Other area of focus during the week included SME access to finance, and various initiatives for digital trade facilitation, cross-border mobility and e-commerce to assist small businesses to scale up and take part more successfully in cross-border activities.  Members agreed that more research was needed looking at concrete issues and challenges facing MSMEs.    Separately, in the Finance and Economics Working Group, members discussed a number of initiatives aimed at advancing financial inclusion, including for MSMEs and unbanked populations.

On the issue of women’s economic empowerment, ABAC USA urged adoption by ABAC members of an APEC initiative on a set of voluntary principles and actions that aim to achieve full equity for women and girls in STEM (Science, technology, engineering and mathematics) and to create a community of shared values, action and collaboration.  The Council agreed to encourage companies in their domestic economies to sign on to the principles.  Separately, Rachel joined Kristal Kinsela-Christie on a panel discussion on the experiences of indigenous women in business, moderated by Joanne Gray, Managing Editor of the Australian Financial Review, at the regular ABAC Women’s Lunch.

Next meeting

The next ABAC meeting will be held in Manila from 1-4 April 2020.   It will be preceded by a public-private dialogue on services.

Further information

Further information about ABAC and ABAC New Zealand is available at www.abaconline.org and at www.tradeworks.org.nz.   Copies of reports and studies mentioned in this update may be available on request from Stephanie Honey, stephanie@honeyconsulting.co.nz.  

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