Introducing APEC: What it is and why it matters.

1. ISLAND OF THE GODS
APEC Summit, Bali
Hosted by Indonesia
October 2013
INTRODUCING APEC:
WHAT IT IS AND WHY IT MATTERS
Image: Embassy of Indonesia

2. Contents
What is APEC?
ABAC and Business
Official themes of the APEC Summit 2013
What does it all mean? Actual major themes…
ASEAN and APEC interplay, and the TPP
Insights from APEC

3. WHAT IS APEC?

4. 44% global trade
21 countries
40% world’s population
55% world GDP
THE WORLD’S BIGGEST TRADE BLOC
APEC accounts for over half of
the global economy; it is a
talking shop, but one that
changes your world…
Image: APEC

5. WHAT IS APEC?
• The Asia-Pacific Economic Cooperation is one of the most important global
economic forums, with 21 “member economies”.
• It is the leading Asia-Pacific forum for discussion of enhancing:
ECONOMIC TIES
INVESTMENT
TRADE
• Its primary goal is to support sustainable economic growth and prosperity in the
Asia-Pacific region.

6. APEC’S VISION & PURPOSE
• Since its founding in 1989, APEC has put a central
focus on attempting to increase free trade and the
free movement of goods and services amongst its
members. Free and open trade is central to the
APEC philosophy – Adam Smith would be a fan.
• APEC’s decisions are not legally enforceable –
unlike ASEAN or the EU – APEC has much greater
flexibility.

7. FROM BOGOR TO BALI
• Bogor is a leafy town in Indonesia, where in 1994 the
last APEC Summit in Indonesia was held. The APEC
meeting set out a pathway for the future of APEC. These
ideas became known as the Bogor Goals.
• The Bogor Goals aim at:
“free and open trade and investment in the Asia-Pacific by
2010 for industrialized economies, and 2020 for developing
economies.”
• In order to meet the Bogor Goals, APEC attempts to
work to reduce tariffs and other trade barriers across
the Asia-Pacific region. Export and investment boosting
policy measures are a key part of this.

8. MEMBER ECONOMIES OF APEC
Seven ASEAN
nations*
Indonesia, Malaysia,
Singapore, Thailand,
Brunei Darussalam,
Philippines, Vietnam
North
America Canada, USA
Latin America Mexico, Chile, Peru
North East
Asia
Japan, Republic of
Korea
‘China’
People's Republic of
China, Hong Kong,
Chinese Taipei
Other
nations…
Australia, New
Zealand, Papua New
Guinea, The Russian
Federation
* Myanmar, Cambodia and Laos, while members of ASEAN, are not APEC members

9. • Note that ‘China’ is technically represented three times,
due to historical reasons, and also due to the fact that
APEC is not attended by member countries as such, but
“member economies” (PRC, Taiwan, Hong Kong).
• APEC is the “sharp end” geo-political pivot point where
Chinese and US economic interests collide; stand-offs and
mutual opposition can be expected

10. ABAC AND BUSINESS

11. APEC IS A BUSINESS FRIENDLY
FORUM!
• The participation of business and the private sector is
actively encouraged in APEC. Increasing business, trade, and
investment is after all one of APEC’s major priorities.
• The APEC Business Advisory Council (ABAC), is a private
sector council that provides feedback and advice to APEC
leaders, through an annual dialogue, which provides advice
on private sector priorities and issues.

12. ABAC CONTINUED…
• ABAC representatives also attend Senior Officials' Meetings,
the Annual Ministerial Meeting and the sectoral Ministerial
Meetings.
• ABAC comprises up to three senior business people from each
APEC economy. The appointments are made by the Leader of
the member economy concerned. The Chair of ABAC comes
from the APEC host nation for that year.

13. ABAC PRIORITIES FOR APEC 2013
• Accelerate trade and investment liberalization
• Promoting regulatory coherence
• Initiate the new services agenda
• Enhance supply chain connectivity
• Strengthen food security
• Address energy security
• Encourage infrastructure investment and development
• Foster the development of SMMEs

14. APEC CEO Summit
• On the side lines of APEC, leaders from the private sector
will also gather to take part in a dialogue session with
heads of state and policy makers.
• This forum allows for an exchange of ideas and views
between the leaders of the private sector and leaders in the
policy realm.
• Securing inclusive sustainable growth and achieving shared
development will be the main focus of the forum.

15. OFFICIAL THEMES OF THE APEC
SUMMIT 2013

16. OFFICIAL THEMES OF THE APEC
SUMMIT 2013
• Under Indonesia’s leadership this year in Bali, APEC’s theme will be:
“Resilient Asia-Pacific, Engine of Global Growth”
• In the aftermath of a significant economic slowdown and market volatility in the last few
months, APEC economies will be looking for resilience and certainty.
• The G20 Summit was regarded as a failure in terms of finding a global economic
pathway; there are high expectations for APEC.
• This will also be the last major economic forum in 2013 before the most recent set of
WTO “Doha” trade talks, scheduled for later this year in December, again hosted by
Indonesia in Bali

17. OFFICIAL THEMES OF THE APEC
SUMMIT 2013
The official APEC 2013 Priorities are:
• Attaining the Bogor Goals (nearly 20 years on)
• Achieving sustainable growth, but equitable
• Promoting connectivity (note this is a big Indonesian priority; it also
ties in with the ASEAN AEC 2015)

18. WHAT WILL INDONESIA BE PUSHING
FOR AS CHAIR?
• It is no secret that infrastructure development and promoting
connectivity is a key priority area for Indonesia in this year’s APEC.
• Indonesian government ministers have frequently cited PPP
development as a priority.
• Everyone “talks” about PPP, but Asia’s future economic growth really
will depend on a hard PPP program; Asia has an $8 trillion
infrastructure gap.

19. APEC PUBLIC-PRIVATE PARTNERSHIP
(PPP) PILOT PROJECT
• During the APEC Leaders meeting, Indonesia will unveil a plan to create a Public-
Private Partnership (PPP) Pilot Project.
• The idea behind the project is that a “best practice” PPP project mechanism would be
created, in which other APEC countries could then follow in order to boost flagging
infrastructure development in the region.
Indonesia’s Finance Ministry will set up a unit that would specifically look at project
design, in conjunction with various PPP experts from APEC who would sit on an APEC
PPP Experts Advisory Panel.
Indonesia is scheduled to present the first design in another APEC meeting in Hong Kong in
September 2014.

20. WHAT DOES IT ALL MEAN? ACTUAL
MAJOR THEMES…

21. RISING INEQUALITY
• Average incomes in APEC have more than doubled since its founding, but
income inequality has got worse – the gap between rich and poor is widening.
• The problem is especially acute in Asia. The Asian Development Bank (ADB)
states that:
“of the 28 countries that have comparative data between the 1990s and
2000s, 11—accounting for about 82% of developing Asia’s population—
experienced rising inequality of per capita expenditure or income, as
measured by the Gini coefficient”
• Within East Asia and the Pacific 250 million people still currently scrape by on
$2 a day.

22. RISING INEQUALITY
• APEC needs to work to ensure prosperity is shared; for example
working to increase access to financial products – such as credit
and bank accounts. Vulnerable occupations – such as those
working in agriculture and fishing – need to be able to access
finance, so they can plan ahead and deal with short-term
shocks. Agriculture for example, is still a major employer in
APEC.
• Unchecked rising inequality can also lead to political instability.
In Brazil this year mass protests took place at rising inequality,
poor public services and corruption. The rich maybe getting
richer, but the middle class in Brazil saw their incomes squeezed
and the gap between rich and poor widening. Inequality also has
detrimental effects on long term economic growth.

23. INFRASTRUCTURE
• APEC economies national state budgets
will not be able to fund the huge
investments needed, (predicted to be
over $8 trillion in Asia alone), substantial
private sector involvement is therefore
critical
• Strengthening the Public-Private
Partnership (PPP) mechanism is
necessary, as APEC lacks project ready
investments that the private sector can
invest in – a continued private sector
lament.
Image: The Jakarta Post

24. INFRASTRUCTURE
• Infrastructure development is being pushed
in APEC by a number of mechanisms…
• Via the ABAC and Australia backed Asia-
Pacific Infrastructure Partnership (APIP),
which provides advice and investment
checklists on PPPs.
• Via the APEC Public-Private Partnership
(PPP) Pilot Project, backed by Indonesia.
Regional growth will
require regional
infrastructure
• Ports
• Roads
• Rail
• Airports
All APEC members,
including the US, need
an infrastructure
upgrade

25. ASEAN AND APEC INTERPLAY,
AND THE TPP

26. Source: nextUp.Asia
Southeast Asia is a post World War
II political concept as much as a
geographic one
An example of Jaw-jaw to prevent
war-war – e.g. Indonesia/Malaysia
conflict 1963-1966
ASEAN is Southeast Asia’s geo-
political and economic grouping. It
does not have the same economic
scope or geo-graphical scope as
APEC.
ASEAN AND APEC INTERPLAY

27. • ASEAN and APEC goals however do cross over…
• Increasing regional integration, trade, investment
and interconnectivity are also goals that ASEAN
works to further.
• For example, through the ASEAN Economic
Community 2015.
ASEAN AND APEC INTERPLAY

28. ASEAN CONNECTIVITY: ASEAN ECONOMIC
COMMUNITY 2015
ASEAN Economic
Community 2015
ASEAN Connectivity is a
three part initiative
- Physical
- Institutional
- People

29. REACH OF FREE TRADE AGREEMENTS
RCEPTPP ACFTA

30. THE TRANS-PACIFIC PARTNERSHIP
• The TPP traces its origins from the 2005 Trans-Pacific Strategic Economic
Partnership Agreement (TPSEP/P4) where the founding members were
Brunei, Chile, New Zealand, and Singapore. In 2010, with the entrance of the
US, the TPP was formed.
• The TPP is a huge free-trade agreement between 12 countries, which seeks
to co-ordinate trade regulations. Although not yet agreed upon, APEC 2013
could well be the breakthrough point.
• The TPP covers a huge array of regulations and tariffs – from agricultural
products to intellectual property to public tendering. The aim of which is to
remove tariff barriers and streamline trade regulations across the group.

31. THE TRANS-PACIFIC PARTNERSHIP
two-fifths of
global output
one-third of
international
trade
Nations Involved
Australia
Brunei
Canada
Chile
Japan
Malaysia
Mexico
New Zealand
Peru
Singapore
US
Vietnam

32. WHY IS THE TRANS-PACIFIC
PARTNERSHIP CONTROVERSIAL?
• As well as frequently being the focus of anti-globalization protests, the sheer scale and
scope of what the TPP covers has caused controversy…
• In many ways, the TPP is a work-around to the stalled WTO backed Doha Round free
trade talks. The TPP gets round this by signing up just the willing members. This has
angered China, who sees the TPP as a US backed geo-political grab, masked as a free-
trade agreement.
• Intellectual property (IP) is also a key issue of contention, as the TPP would put strict
enforcement rules on IP patents – such as drugs. This would outlaw the use of cheaper
generic drugs, apart from in a few specific circumstances. This has been seen as denying
the poor access to life-saving drugs and a win for western manufacturers.

33. INSIGHTS FROM APEC
• Protectionist and nationalistic policies do not work in an economic
slowdown…
• And politicians know this…
• They may speak in a nationalistic tone to appease an audience, but
sign up to free trade agreements nonetheless…
• Private sector engagement and the breakdown of barriers is critical
to solve longstanding problems - $8 trillion infrastructure deficits
cannot be filled by stretched state budgets…

34. SUPPLY CHAINS CAN NO LONGER BE
CONFINED TO ONE NATION…
• In an increasingly interconnected regional
economy - not to mention a global
economy- protectionist one nation supply
chains are increasingly inoperable…
• From cars to cattle, regional and global
supply chains are increasingly the way
forward…

35. FOOD SECURITY MOVES GLOBAL…
• Food security and supply chains are also moving to a more regional/global platform…
• Indonesia has recently proposed to buy control of up to 1.5 million hectares of northern
Australian cattle land to help secure a sustainable beef supply.
• China is also buying huge swathes of land in Ukraine – around 3 million hectares – to
grow crops for back home.

36. THE CLASH BETWEEN
MULTILATERALISM AND BILATERALISM
• Binding forums, such as the WTO, are increasingly
undermined by bilateral (or regional) free trade agreements
signed between nations; such as the TPP…
• APEC will need to show that multilateral forums are still
relevant by producing tangible outcomes…
• A successful APEC may tee up a successful WTO later this
year…Indonesia hopes so: the ‘9th Doha Round’ WTO trade
talks are hosted by Indonesia in December 3rd-6th

37. Stephen Lock
Edelman Indonesia
THANK YOU