Ernest Micek, Paul Song, and Sy Sternberg
Cover by Greg Berger Design, Inc
Cover Photo by Gregory S.Heslin
A progess report from the US APEC Business Advisory Council on its past work and future goals on the eve of the Shanghai meetings ABAC communicates directly with ministers on a range of topics. This year, key issues included the importance of launching a new round of trade negotiations under the World Trade Organization (WTO), as well as making progress on the WTO's built-in agenda on agriculture and services. One private-sector-led initiative that has just been launched this year is the E-Learning Project, which nine companies from the APEC region are undertaking with ABAC's support. This project will look at best practices--in both the public and private sectors--that can advance e-learning in the region and help achieve the APEC leaders' commitment to triple online access by 2005.
Ernest Micek, chairman (retired), Cargill, Inc.;
Paul Song, president and CEO, Noetix Corp.; and
Sy Sternberg, chairman, president, and CEO, New York Life Insurance Co.,
are US members of the APEC Bu
siness Advisory Council.
The As ia-Pacific Economic Cooperation (APEC) forum, established in 1989 in Canberra, Australia, is unique in that it includes the private sector as an integral part of its policymaking process. It is a good partnership, as business needs governments to address key issues, and the APEC economies need the private sector to implement their commitments to trade and investment liberalization in the region.
The role of business in implementation is particularly important because APEC is not a rules-based organization but rather a forum for members to design, through consultation and consensus-building, voluntary programs aimed at trade and investment liberalization, trade facilitation, and economic and technical cooperation.
John F. Smith, Jr., chairman of General Motors Corp., who served on the APEC Business Advisory Council (ABAC) from 1997 to 1999, noted the importance of APEC to the region and, in particular, the value of the annual meeting of APEC leaders: "APEC is a unique forum that offers government officials at the highest levels, on their own and in partnership with the private sector, a venue for advancing economic issues that significantly impact the stability, peace, and prosperity of the people of the Pacific Rim. One of APEC's most valuable contributions is the institutionalized meeting of its leaders each year. While meetings can become highly charged over various issues, the APEC traditions of consen sus and confidence building serve as a solid foundation for communication and cooperation.
"APEC's relevance is based on a balanced platform of trade liberalization, trade facilitation, and economic and technical cooperation. Its focus on capacity building is unique and ensures that gains from trade liberalization and facilitation efforts, once achieved, will be sustainable for all APEC economies."
To formalize the private sector's role in APEC, APEC leaders created ABAC in 1995 to serve as a permanent body to advise them on APEC's progress in achieving its goals. ABAC, which consists of three CEOs appointed by each APEC economy's leader, meets four times a year. In addition to formal reports to APEC leaders and input to various APEC activities, the 63 ABAC members participate each year in the APEC Leaders Dialogue with ABAC--the only time the 21 APEC leaders meet with an outside group.
Business focuses on results
Some of APEC's strongest results have evolved out of private-sector initiatives that have moved through ABAC onto the official APEC agenda. The 2001 ABAC chair, Qin Xiao of China, noted the importance of private-sector involvement in his remarks to APEC trade ministers in early June: "In order to make ABAC more representative, we call upon enterprises of the region, especially the SMEs [small and medium-sized enterprises], to pay attention to and participate in the APEC process. Meanwhile, businesses should make efforts to build their own capacity in such fields as corporate governance and adoption of international standards. We hope that through establishment of support organizations of ABAC within member economies, ABAC's influence over business circles as well as the general public will be extended. With involvement of more enterprises in its activities, ABAC could better reflect the interest and concern of business circles, especially of the SMEs."
APEC's annual Individual Action Plans (IAPs) record the actions member economies are taking as they move toward the "Bogor Goals"--announced at the APEC Leaders Meeting in Bogor, Indonesia, in 1994--of total liberalization in trade and investment by 2010 for developed economies and 2020 for developing economies. The IAPs are where APEC members must prove their commitment to achieving the goals they set for themselves at Bogor. As a result of ABAC pressure, for the first time these IAPs have been put online (with donated help from Microsoft Corp.) in a searchable format that allows comparison among economies. The ABAC goal is eventually to make the IAPs an effective business tool that accurately describe the timetable and actions an economy will take to accelerate liberalization or to attract investment and business interest.
ABAC has brought several key initiatives forward: the historic plurilateral Air Services Agreement, which five APEC economies have signed; the APEC Business Travel Card, to which 11 APEC economies have agreed; the launch of both the APEC Auto Dialogue and the APEC Chemical Dialogue; the building of support for the E-Commerce Readiness Assessment Initiative, which 19 of the 21 APEC economies have committed to undertake; and the APEC leaders' adoption of the APEC Food System. ABAC's endorsement of or support for these and other projects has provided momentum toward their acceptance and rapid implementation.
According to Cyril Murphy, longtime airline industry expert and an architect of the Air Services Agreement, "ABAC's support was absolutely key to our success on the Air Services initiative; the leaders listened to the ABAC's recommendations, and ABAC continues to follow up to encourage implementation" (see A Step Toward an Open Aviation Marketplace).
Business urges APEC to "seize the moment"
David Barnes of IBM Corp. agrees. "We worked very hard to put together an E-Commerce Readiness Assessment Initiative for APEC. The government officials discussed the idea, but I believe the enthusiasm of the ABAC to seize the moment really helped gain broader acceptance of the readiness initiative. Now 19 of the 21 APEC economies are undertaking the readiness assessment and we are working with ABAC's help to encourage governments and the private sector to wor k together to resolve obstacles to rapid growth in e-commerce identified by the assessments."
ABAC also communicates directly with ministers on a range of topics. This year, key issues included the importance of launching a new round of trade negotiations under the World Trade Organization (WTO) as well as making progress on the WTO's built-in agenda on agriculture and services. Concerning the APEC Food System, ABAC has recommended milestones to keep progress going. Among them are calls for APEC leaders to announce in Shanghai that APEC members will forswear food embargoes and that APEC will become a "food export subsidy-free zone." ABAC is also encouraging a first-ever meeting of agriculture ministers to discuss the results of self-assessments of the barriers to food trade and implementation of the APEC Food System (see The APEC Food System).
The Shanghai Model Port Project is a special focus this year for ABAC. Victor Fung, ABAC member from Hong Kong and chair of ABAC's Trade and Investment Task Force, sees the Shanghai Model Port Project as the kind of tangible result that APEC should produce. "This initiative was born in the private sector and has been brought to fruition with the cooperation of China and US customs agencies and the private sector companies. The project highlights the importance of intellectual property rights protection and serves as a model not on ly for other customs-related projects, but also for other capacity building efforts throughout APEC," said Fung (see The Shanghai Model Port Project).
New economy initiatives
One private-sector-led initiative that has just been launched this year is the E-Learning Project, which nine companies from the APEC region are undertaking with ABAC's support. This project will look at best practices--in both the public and private sectors--that can advance e-learning in the region and help achieve the APEC leaders' commitment to triple online access by 2005.
ABAC supports ongoing work that will strengthen the region's financial systems and cushion the region from the effects of future financial crises. In addition to supporting private-sector-led projects in capacity building (through the Insurance Education Initiative and Risk Management Training Project) and analyzing ways of building domestic capital markets, the Finance Task Force has taken a hard look at whether commercial financial institutions on the ground are carrying out much-needed reforms. Under the chairmanship of David Murray of Australia, the Finance Task Force has surveyed industry on the ability of financial institutions to provide capital against acceptable risk.
Boosting economic growth
The understanding that renewed economic growth is critical to the region under scores all of these efforts. The business community believes that the best way to ensure that economic growth resumes is to launch a new WTO round, as well as to advance services and agriculture liberalization efforts already embedded in current WTO talks.
ABAC's recommendations
Echoing areas of progress achieved to date, and taking them a step further, ABAC will recommend that the APEC leaders in Shanghai:
- Support the Shanghai Model Port Project;
- Implement the APEC Food System and, specifically, renounce the use of all food embargoes;
- Continue reform and restructuring of financial systems and improve transparency and corporate governance;
- Broaden access to technology by adopting requisite policy reforms and encouraging public-private partnerships, thereby supporting the APEC leaders' goal of tripling Internet access in the region over the next five years;
- Continue to support policy initiatives that provide a conducive legal and regulatory environment for e-business growth;
- Support continued trade liberalization and facilitation and APEC's commitment to achieving the Bogor Goals;
- Support the launch of a new WTO round at the November WTO ministerial conference in Doha, Qatar, and admission of all APEC members applying for WTO membership at the earliest possible date.
ABAC has had a full plate this year. It looks forward to a lively dialogue with the APEC leaders on October 20 in Shanghai. ABAC will continue to emphasize that cooperation between the private sector and APEC is critical to APEC's success. Indeed, the recommendations ABAC has made for strengthening economic performance can help APEC in its role as an instrument of positive change in the region.
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APEC Calendar, September-October 2001 APEC Finance Ministers Meeting September 6-9, Suzhou, Jiangsu Province APEC Ministerial Meeting October 17-18, Shanghai CEO Summit October 18-20, Shanghai APEC Business Advisory Council (ABAC) Meeting October 18-21, Shanghai Informal APEC Economic Leaders Meeting October 20-21, Shanghai For more information, please see www.apec-china.org.cn. |
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