1998: A Challenging Year for APEC

Speech by the Australian Deputy Prime Minister and Minister for Trade, The Hon Tim Fischer to the APEC Business Forum, Sydney, 1 May 1998.

Madame Chairman, Tan Sri Tajudin, Distinguished Guests, Ladies and Gentlemen.

It is my pleasure and great honour to welcome you to the 1998 APEC Business Forum. I would like to extend a special welcome to the members of the APEC Business Advisory Council who are with us today, and thank them in advance for the valuable contribution I know they will make to today's proceedings.

The APEC Business Forum is an important opportunity for me as Minister, and for officials of the Australian Government, to discuss the APEC agenda directly with the Australian business community. This is particularly important to me as you are the ones out there competing for, and winning, business in the region. We in government need your input as we develop our approaches to APEC.

Our Forum this year is particularly timely because it coincides with the second meeting for 1998 of the APEC Business Advisory Council. ABAC, as you know, is the council established by APEC leaders in 1995 and comprises senior business people from across the region. It provides high-level advice on business perspectives and priorities. It is a central part of APEC's institutional structure and its existence is a reflection of the value that all APEC member governments place on business input to our work.

ABAC has an important job to do at its meeting here in Sydney. We are delighted that you have taken time out from your meeting to join us in this Forum.

And we are particularly fortunate to have on our panel today a group of very eminent business people from around the region who can represent both the role and views of ABAC and their own perspectives on the challenges facing the region.

I would like to make only some brief scene-setting remarks. The major aim of this Forum is to hear the views of business people, so I urge you to speak freely and frankly. This afternoon is your opportunity, as is dinner tonight.

The Challenges Ahead

1998 will be a challenging year for APEC.

APEC has, since 1995, moved into the difficult implementation stage of its work, where the bold visions of Bogor and Osaka must be translated into practical trade and investment liberalisation and facilitation programs.

This is no easy task. The Bogor goal and the Osaka Action Agenda are ambitious, and getting there will involve doing the hard yards.

But 1998 will be a particularly challenging year because we are now working in an environment of less robust economic growth, with the overlay of additional economic difficulties brought on by regional financial instability in some parts of Asia.

It will make our job in APEC more difficult. Human and financial capital in neighbouring economies is being diverted - understandably - to address domestic needs. Tough political decisions become even more difficult as the costs of the economic adjustment process are felt acutely - and in very human ways - by the wider community in these countries.

But none of this is a reason for delay, or for inaction. Quite the contrary: it is a reason for even more intensive cooperation at the regional level.

Timothy Ong will speak after me on the regional financial instability. But first I would like to make one or two brief observations about where APEC fits in.

APEC has been criticised for failing to respond to the crisis - for allowing itself to be left out in the cold. It is a criticism I reject.

It must be remembered that APEC is not a financial institution like the IMF. Nor should it become one. But it can be an important influence on the broader environment in which responses to the crisis are being formulated.

In Vancouver last year - at a time when the financial instability was having a real impact - it is significant that APEC Leaders reinforced their commitment to continuing down the path of trade and investment liberalisation. Leaders also expressed their support for the IMF and its reform programs. This is an important expression of unity and confidence in the future of our region.

APEC is also contributing in practical ways to helping regional economies deal with the crisis. Economic and technical cooperation is one of APEC's three main areas of activity. Cooperation is being developed on issues like strengthening capital markets, export finance and financial market supervision. APEC Finance Ministers are meeting later this month in Canada to review these cooperative activities and look at other ways APEC can assist.

And I would be happy to hear any ideas you have for additional APEC involvement.

However, one of APEC's most valuable contributions is to continue to focus on regional trade and investment liberalisation and facilitation, and economic and technical cooperation, rather than attempt to duplicate the role of the IMF.

APEC's Agenda

Let me move on now to explain what it is that APEC is doing in these areas. Trade and investment liberalisation is at its core. Last year saw some further incremental liberalisation undertakings announced through the Individual Action Plans (IAPs).

Some highlights included Korea reducing tariffs on 182 items, including sugar and wool. China reduced its average tariff rate from 23 percent to 17 percent. Thailand increased the size of quotas on soybean and skim milk powder and Singapore has introduced competition in electricity supply.

These represent only modest gains. But they are welcome gains nonetheless, which will generate some further access improvements for Australian exporters.

A significant outcome last year on trade liberalisation was agreement to pursue a program of early sectoral liberalisation in fifteen selected sectors. Nine of these - including energy, chemicals, fish, precious metals, and environmental goods and services - are to be implemented from next year. A further set of six, which includes food products, will be developed for consideration at the end of this year.

Detailed and difficult negotiations are now underway to finalise the scope and implementation details of these sectoral commitments. They will not be easy, particularly in the current environment.

But the sectoral liberalisation process is of potentially very great benefit for APEC. The fifteen sectors involve over US$800 billion of intra-APEC trade. Liberalisation would generate not only economic benefits for the region, but would send an important signal to the wider international community and the World Trade Organisation.

I hope we will have a deal ready for APEC Leaders when they meet in Kuala Lumpur at the end of the year. As I said earlier, it will involve some hard decisions. Business communities can play a crucial role in encouraging governments to take these hard decisions and not to seek refuge in short term responses.

APEC's trade facilitation agenda has also continued to address the many administrative and regulatory impediments to trade and investment in the region. Harmonisation and mutual recognition of standards, for example, have a central role in improving the environment for business in the region, and reducing transaction costs.

In many ways APEC's trade facilitation program has a more immediate impact on business in the region than does trade liberalisation. But it is up to you to tell us where the difficulties are so that we can see what can be done through APEC.

One issue I would like to mention briefly is electronic commerce - the new frontier of international trade.

This is a vast area with potential to open global markets for companies whose reach is otherwise limited to their local neighbourhood. Many of you have heard me use the example of a certain whip maker in a remote outback location who is now selling whips all over the world through use of the internet.

Australia is well advanced in setting up an appropriate regulatory framework for electronic commerce. But e-commerce is borderless by its nature and we need to ensure also that the international environment is right. APEC is taking the lead on this issue . An important part of this work will be to help the developing economies of the region strengthen their capacities in electronic commerce. I know this is also an issue of close interest to ABAC, and I look forward to hearing ABAC's views.

This brings me to the third of APEC's main pillars, economic and technical cooperation. There is much good work being done here, but we have also been saying for some time that the program needs greater focus and needs to respond better to business priorities.

Conclusion

I hope that gives some of the flavour of APEC's work this year and where the Government's priorities lie. It will be a difficult year, and we have to be realistic in our expectations. But we can continue to press forward toward the long-term goal, with the prosperity that will bring to the Asia-Pacific community as a whole. That certainly is what Australia, as one member of APEC, will continue to do.

Your views are important to this Government as we refine our APEC priorities. I look forward to hearing them.