The APEC Summit is over for another year. Indonesia proved to be an excellent host, managing the logistics of the event very smoothly (they built a whole new airport and toll road to coincide with the occasion). They also managed to achieve some tangible outcomes from the Summit - which in itself is impressive - from a Summit that many critics deride as a talking-shop low on substance. Journalists were also suitably impressed, receiving free massages as well as free food. To top it off, the President of Indonesia, Susilo Bambang Yudhoyono, even surprised President Putin, (and everyone else), by picking up a guitar and singing a birthday serenade to the Russian President. No one can say Indonesia was not a hospitable host!

1. APEC:
SHAPING THE
REGION AND
THE WORLD
Outcomes from the APEC Summit 2013

2. WHO IS IN APEC?
21 member economies
40% world’s population
55% world GDP
44% global trade
WHO IS IN ASEAN?
10 countries
600 million people
2.4 trillion GDP
(around 1/3rd of China’s)

3. CONTENTS
1. Scene Setting: Key Themes
2. Tangible Outcomes: What came out of the APEC
Summit?
3. The Big Conversation: Free Trade
4. Conclusions: Global Trade Dynamics

4. BIG WINNERS:
INDONESIA AND BALI
• Indonesia and Bali have seriously
boosted their international
standing – pulling off a huge
international summit well, with all
the world’s media looking on. The
9th WTO Ministerial Conference
talks will soon follow in December.
• Bali is also a big winner, with a
brand new airport and
infrastructure – not to mention
global media exposure. Future
tourism boost…

5. US-CHINA POWER SHIFT
• China was left largely unopposed to work its
agenda at APEC this year, as the US was
preoccupied with political dysfunction at home…
• China’s successful APEC came hot on the heels of
key state visits to Jakarta and Kuala Lumpur, as
well as boosting support for “upgrading” the
ASEAN-China Free Trade Area (ACFTA) at the East
Asia (ASEAN) Summit, following APEC.*
• China is looking very closely at building its ties
with ASEAN and enhancing connections between
the two. Talk of a modern ‘silk road’ is doing the
rounds…
* The East Asia Summit involves the 10 ASEAN members plus the US, China, Russia, Japan, India, Australia and New Zealand.

6. OBAMA DI MANA? (WHERE IS OBAMA?)
• The US suffered serious international
embarrassment as President Obama was
unable to attend APEC and put forward
his personal push for the Trans-Pacific
Partnership (TPP); a huge free trade
agreement being pushed for by the US
government.
• Further questions are being asked of the
US’s supposed “Asian pivot”: a foreign
policy or a PR strategy?
• Political gridlock at home is increasingly
hurting perceptions of American power
and influence abroad…

7. US STILL RELEVANT
• Despite the absence of Obama
and the intense media hype, US
power is “diminished” not
removed entirely…
• Many countries in the region are
still more favorable to the US than
China; China has a number of
ongoing territorial disputes with
other states in the Asia-Pacific
region. This makes some of these
states much more partial to US
influence.

8. HOWEVER….
• Chinese influence is growing in the
Asia-Pacific…
• They are also making inroads in
ASEAN…
• This is to the detriment of the US, and
to a smaller extent, Japan.
• Russia enjoys the status it gets in a
special relationship with China at
APEC, but Russian influence over APEC
member policy is limited.
Image: APEC 2013

9. CHINESE CHEER
• President Xi Jinping’s trip to
South East Asia was
undoubtedly a success.
• President Xi concluded his first
visit to South East Asia, rounding
of separate bilateral trips to
Indonesia and Malaysia with the
APEC Summit.
China signed $28.2
billion worth of trade
and business deals
with Indonesia
China signed a five
year trade deal to
triple two-way
trade to $160
billion by 2017,
with Malaysia

10. CHINA, APEC
AND ITS FREE TRADE AGREEMENTS
Both would give China unrivalled
market access to ASEAN and the
Asia-Pacific, and exclude the US!
The US is backing the TPP – which
China does not support and refuses
to join.
China backed trade agreements include the Regional
Comprehensive Economic Partnership (RCEP), between 16
Asia-Pacific nations – the 10 ASEAN states plus Australia,
China, India, Japan, South Korea and New Zealand. The
RCEP is slated to operate from the end of 2015.
The RCEP includes more than 3 billion people, has a
combined GDP of around $17 trillion, and makes up about
40% of world trade.
Also the ASEAN-China Free Trade Area (ACFTA), which
would create an economic area of 1.9 billion people and a
regional GDP of around $10.2 trillion.
TPP
RCEP
ACFTA

11. DON’T KNOW YOUR TPP FROM YOUR RCEP?
Trans-Pacific Partnership (TPP)
(12 Nations)
• Australia
• Brunei
• Canada
• Chile
• Japan
• Malaysia
• Mexico
• New Zealand
• Peru
• Singapore
• US
• Vietnam
Regional Comprehensive
Economic Partnership (RCEP)
(16 Nations)
• Australia
• China
• India
• Japan
• South Korea
• New Zealand
• (PLUS THE ASEAN 10)
• Brunei Darussalam
• Cambodia
• Indonesia
• Laos
• Malaysia
• Myanmar
• Philippines
• Singapore
• Thailand
• Vietnam
“We’ve gone from 5 free trade
agreements in the region to 75
and another 82 being
negotiated.” –
Singaporean Prime Minister Lee Hsien Loong,
on bureaucracy of free trade (FTA)
agreements in the Asia region.

12. THE FTA PYRAMID
TPP - 12 countries – mirrors Transatlantic Trade
and Investment Partnership (T-TIP) between US and
EU. The TPP is “wide and deep” in its scope.
RCEP – “ASEAN+3” (China, Korea, Japan)
+ India, Australia and New Zealand. This is the
only time India appears in a major Asia
regional FTA.
WTO – BASELINE GLOBAL TRADE
RULES!

13. TANGIBLE OUTCOMES

14. THE APEC WAY…
Remember,
APEC is not a binding forum…
APEC’s role is to form political agreement and
consensus on economic issues and trade.
Its members can work as willing
individual nations or groups of nations to
pursue bilateral, regional or multilateral
agreements, especially on trade issues.

15. PLEDGES TO FACEDOWN PROTECTIONISM
A commitment was made to
extend through the end of
2016 an agreement to reduce
and roll back protectionist
measures – such as tariffs,
import bans and quotas.

16. APEC MINISTERIAL MEETING
Indonesia got three of its proposals in the bag during
the Ministerial Meeting:
 A connectivity framework;
 Multi-year plans for investment in infrastructure
development;
 A study of products that could contribute to poverty
alleviation, (and therefore should have tariffs
reduced), as they promote rural development and
sustainable growth.
•
•
The latter is a real breakthrough for Indonesia, as it
tries to get crude palm oil (CPO) and rubber in a list
of tariff reduced or exempted goods; both are major
Indonesian products. (A breakthrough on this
certainly would benefit Indonesia, Malaysia, and
Singapore's big palm oil producing companies).
•
This moderate success is also good political PR for
Indonesian Trade Minister Gita Wirjawan, who has
Presidential aspirations for 2014.
Image: APEC 2013

17. A RENEWED FOCUS ON INFRASTRUCTURE
• Boosting connectivity is
a must for Asia and APEC; poor
infrastructure is increasingly
impeding the growth potential
of the region.
• Connectivity is already a
big issue in ASEAN – the
primary focus ahead of the
ASEAN Economic Community
2015 is connectivity – the
question is how to make it
happen…
In APEC/ASEAN
speak,
connectivity
means roads, rail
& ports

18. ARE PPPs THE ANSWER?
• Public Private Partnerships (PPPs) are frequently touted as
the answer, but suffer from capacity gaps, a lack of
finance, legal uncertainty, regulatory impediments and
less than certain government guarantees. These are
major barriers to the private sector…
• Ensuring that PPPs have a solid legal framework will be
the main challenge in getting projects up and going.
• Legal systems will need strengthening. Investors need to
know they have solid legal ground for the lifecycle of the
project – often decades long…

19. A PPP PILOT CENTER AND EXPERT PANEL
• A greater emphasis on private sector
involvement through boosting the PublicPrivate Partnership (PPP) mechanism,
was one of the key announcements.
• Indonesia has announced a pilot PPP
center, supported by an expert panel,
which will bring together national,
regional and international financial
institutions to boost PPP projects within
APEC.

20. PPP PILOT CENTER REMIT
1.
Provide technical expertise to the
economy for any stage of the project
cycle, covering technical, economic
and financial questions;
2.
Ensure coordination by developing
and reviewing project structures,
removing bottlenecks, filling gaps
and identifying problems in the
delivery of particular infrastructure
projects; and
3.
Assist to raise the capacity of
relevant entities in the economy to
develop PPPs.

21. OTHER INFRASTRUCTURE
ANNOUNCEMENTS
•
The APEC infrastructure framework and multi-year plan is hoped to expand similar
work already carried out by ASEAN and broaden its scope.
•
In the last few days, China has also announced that it will set up and provide funding
for an Asian Infrastructure Investment Bank, to help facilitate regional connectivity
and infrastructure development in the Southeast Asian region.
• Japan has also made a similar announcement to provide
infrastructure support and technical assistance to the region –
focusing on energy and transportation.
• Both China and Japan are maneuvering for leverage and power
within the increasingly economically critical ASEAN area – not to
mention the US – so, while so far, PPP has had variable take-up
around the APEC region, (and is particularly weak within ASEAN),
this bodes well for scaled-up participation…

22. APEC CEO SUMMIT
•
According to the PWC 2013 APEC CEO Survey – which surveyed CEOs working in the AsiaPacific region – there is still growing business confidence, despite global economic challenges.
•
The China, Indonesia and the United States were cited as the three most likely destinations for
FDI in the region…
•
68% of CEOs will be increasing their investments in APEC economies over the next 12 months.
•
The finding that the US is the 3rd largest beneficiary of investment is also significant. As costs
invariably rise in a more wealthy and aspirational Asia, some jobs and output will be cheaper for
US firms to “bring back home”. This reminds us that Asian economic success, while highly
probable, is not a birth right.

23. THE BIG CONVERSATION: FREE TRADE
The Trans-Pacific Partnership (TPP)
A $28 trillion area of
annual economic
output

24. PROGRESS ON THE TRANS-PACIFIC
PARTNERSHIP
•
Moves to push forward the TPP went ahead without the clout of Obama,
but supported strongly by Secretary of State, John Kerry, and Secretary of
Commerce, Penny Pritzker.
•
Despite the White House spin, many nations are in less of a hurry to get
the TPP to fit an artificial US timetable (end of 2013 as a sign of
economic progress), and are putting more emphasis on getting a good
deal rather than a fast one.
•
The US business community has also voiced its continued concern over
rushing through a watered down TPP, which would leave in place room for
currency manipulation and IP infringement (this division of priorities
between the White House and US Business was very apparent at the
APEC CEO Summit.) US businesses want a strong rule-based agreement.

25. CONTINUED ROADBLOCKS TO THE TPP
•
Malaysian Prime Minister Najib Razak, (note Malaysia backs TPP), said the yearend deadline for completion may not be met and warned some areas of the
talks are cause for “great concern”. Mexico also voiced doubts about the
timeline.
•
Issues such as competition rules from Vietnam and procurement rules from
Malaysia are also still negotiation hurdles.
•
Indonesia has stated a growing interest in the TPP, but has said that it still
needs time to reform its economy and build its “supply side capacity” (also,
Indonesia, which so far has not joined TPP talks, currently would unlikely be able
to meet many of the standards and free trade rules set down in the TPP).
•
It is interesting to see how Malaysia’s position on the “wide and deep” TPP in
some ways mirrors Indonesia’s on aspects of the RCEP. This reminds us that, in
any regional trade agreement, not all countries are at the same level of
development and each has specific concerns, which is why they are nervous. It
is within this reasoning that Indonesia wants success at the WTO Bali talks; the
WTO sets the world trade baseline.
•
Whether the TPP agreement is really “on track” for the end of this year remains
uncertain…

26. SOME (SMALL) PROGRESS ON THE NEXT
WTO ROUND
•
A Commitment to make progress in the upcoming WTO Doha Free Trade Talks (better than no
commitment). APEC may give the WTO a lifeline…
•
APEC trade ministers expressed hope of achieving a “trade facilitation small package” for the
9th WTO “Doha Round” Ministerial Conference talks, to be held in Bali in December. This will
consist of trade facilitation, and some breakthroughs on elements of agriculture and food.
The three main components include:
- trade facilitation
- food security
- the development dimension
•
Indonesia is talking up the idea that this will be a limited “Bali Package”, but nonetheless, an
agreement.
•
Restoring credibility to the WTO is a must for it to remain relevant. Multilateral trade institutions
and agreements are becoming increasingly overshadowed by regional and bilateral
agreements of “willing partner nations”.

27. CONCLUSIONS
Image: APEC 2013

28. INTERPLAY OF TRADE AGREEMENTS
• There is a mounting interplay between
bilateral, regional, and global multilateral
trade agreements.
• From the ACFTA*, RCEP, TPP, and the next
WTO meeting – agreements are increasingly
overlapping and interwoven. We are also
seeing a real increase in trade agreements
being used as vehicles for regional influence
– i.e. US vs. China.
TPP
RCEP
• Arguably, APEC itself is yet another
intersecting trade focused forum that also
overlaps/complements the WTO.
*ASEAN-China Free Trade Area (ACFTA
Regional Comprehensive Economic Partnership (RCEP)
Trans-Pacific Partnership (TPP)
World Trade Organization (WTO)
WTO

29. NATIONS ON FORM
LATIN AMERICA AS A DRIVING GLOBAL
FORCE
• This APEC showed that it is not just an
Asia-US focused forum.
• Latin American countries are very
engaged and leading from the front.
Mexico and Chile were big vocal forces,
driving agreements on free trade.
• Both countries however are reliant on
strong leaders, who project their nations
influence. For example, will President
Piñera’s (President of Chile) successor be
as effective on the world stage?
A RESURGENT JAPAN
• Japan’s PM Shinzo Abe was on superb
form at APEC. He described himself as a
“drill bit” fixed on reform and breaking
up encrusted anti-competitive
regulations. The Japan he espoused was
a more open and invigorated nation,
ready to give way on some longstanding
protectionist measures. Abe gave one of
the strongest APEC performances.
• A Japanese Minister also demonstrated
Japan’s strong backing for the TPP,
stating that he viewed the trade deal as
the “fourth arrow” in Abe’s bid to
breathe new life into the previously
stagnant Japanese economy, through his
set of “Abenomics” policies.
SINGAPORE: CONTINUING TO PUNCH
ABOVE ITS WEIGHT
• Despite being a small city-state,
Singapore was another leading player at
this year’s APEC.
• Singapore’s PM Lee Hsien Loong spoke
strongly about the need for countries to
push for free trade, open markets and
resist protectionism, but was also frank
in stating that while many businesses
may push for free trade publicly, they
privately lobby for protectionist
measures in their home markets. Lee
said the test of government was to resist
these calls.
• Singapore’s influence is multiplied by
having a set of very bright, able and
vocal leaders. It is perceived as an
honest broker within the international
arena.
*Counting Abe’s Arrows: Japanese Prime Minister was elected on a platform of three arrows to boost Japan’s economy: a $110 billion stimulus package; a new inflation Central Bank 2% inflation target ,to
combat deflation and structural and regulatory reforms. Some people regard the recently-announced doubling of consumption tax to be a ‘fourth arrow’, but technically it is part of arrow one.

30. APEC’S CONTINUED IMPORTANCE
• APEC continues to play an important role as a
forum for economic discussion, strategy and
direction.
• It brings many people to the tent; this is an
achievement in itself. Talking shops play a
valuable role in building consensus; consensus
building takes time. Free trade agreements
don’t just happen.
• APEC has also lent the next global WTO free
trade talks a lifeline. A small focused “Bali
package” is better than the potential WTO void
that was expected pre-APEC. Disaster averted?
We will see…

31. THANK YOU
Stephen Lock
Edelman Indonesia