Moving beyond Market Volatility to Foster Food Security, Taipei, December 1-2, 2011

This conference was sponsored by the Chinese Taipei Pacific Economic Cooperation Committee and took place during December 1-2, 2011 at the Riviera Hotel in Taipei. (Program agenda with individual presentations for download)

The goal of this conference was to explore the global issue of food security with particular attention to implications for the Asia Pacific. How policy affects food security and may need to adjust or be implemented differently will be of particular interest. Speakers from various sectors were invited to address the underlying causes of price instability, and how to foster resilience and food security by building sustainable agricultural-food systems to better serve the future needs of consumers, producers and the entire food chain.

The participants examined pragmatic policy options to deal with the numerous elements of food security while helping to accelerate economic growth, social progress and environmental quality. The aim of the project was also to look for ways to enhance coordination and cooperation on APEC and international policies to address food security as an important element of individual security in the broader context. 

Food security is not a challenge that countries can adequately address individually. Regional cooperation and an open APEC food system utilizing the strengths of trade and private sector involvement are the approaches with the most promise to address the many facets of food security.  Regional dialogue and involvement of the range of private sector, nonprofit organizations and think tanks, and the academic community can set the stage for a PECC-driven regional plan for collaboration and cooperation to assure food security in the Asia-Pacific region and internationally in today’s global economy. This can then lead to guidelines or a framework in which individual economies operate internally, but consistent with region-wide food security.

The business community must be an integral part of developing a food secure region. The topics explored in this project will have implications for the business community engaged in food production, processing and marketing as well as for government policy.  Implications of the analysis will be drawn out for both the private and the public sectors, including areas in which joint efforts are likely to be most productive. 

Initially set up with funding from PECC more than ten years ago, Pacific Food System Outlook (PFSO) has long focused on identifying policy implications for the APEC/PECC region’s economies collectively and individually for the topics addressed.  These may be couched in terms of recommendations for consideration by policy leaders and provide a strong framework for dialogue within the region to develop a set of policies consistent with food security. The discussion in Taipei will provide valuable ideas as PECC assumes a more assertive role in a dialogue that goes beyond the region in the current global economy and complements and invigorates policies proposed by those representing other regions and global institutions. PECC has an important role to play in making certain that the region is not neglected in the broader discussions.

[photo courtesy of the APEC Secretariat, www.apec.org]

Statement to APEC Ministers Responsible for Trade

Big Sky, Montana, 18-19 May 2011

Dr. Charles E. Morrison

Co-chair, Pacific Economic Cooperation Council

Thank you for this opportunity to talk to you about our views on trade and regional economic integration in the Asia Pacific region. Founded in 1980, our organization, the Pacific Economic Cooperation Council is a forerunner of APEC. While our footprint is much the same as APEC’s, our membership is broader, drawing on experts from business, government, and civil society.

We establish task forces to focus on issues we believe of importance to the promotion of regional cooperation in the Asia Pacific region.

Post-2010 Trade Agenda for the Region

Two years ago we established a task force to consider the trade policy challenges facing the region post-2010. The view of the task force was that 2010 was a watershed year as a result of the systemic changes wrought by the financial crisis; the 2010 Bogor Goal deadline; and the widely held view that the Doha Development Round would need to be completed by this time. The task force considered trade policy challenges for the region at two levels: the multilateral and the regional. This statement is largely based on the work of that task force.  

The World Trade Organization

When our task force met there were hopes that the sequence of high-level meetings at the end of 2010 would give the political impetus to reach a conclusion in the Doha Round. Strong statements of support in both the G20 and APEC meetings stimulated renewed efforts in early 2011 but this has now given way to a profound sense of despair as it has become apparent that leaders in the major economies are not prepared to spend the political capital necessary to complete the Round. Under these circumstances we frankly doubt the value of statements of support for the Round that are not backed up by concrete demonstrations of a clear intent to constructively address the key issues.

Need to Emphasize Institutional Value of WTO

We are especially alarmed at how quickly the view appears to be gaining ground even among the strongest supporters of the WTO system that the latest developments in the Doha Round threaten the very viability of the WTO as an international institution. We therefore wish to emphasize the vital importance of the WTO in today’s global economy not only as a venue for trade negotiations but also as an international treaty through which its members agree to abide by the rules of the game and as an international organization providing a venue for dispute resolution. These latter functions will be increasingly important in the international trading system as it confronts the formidable challenges that loom in the future, such as those posed by demands for carbon tariffs as part of the policy response to climate change, or the threat of increasing use of both import and export restrictions in the name of food security.

Trade in Services

One area of trade that offers enormous potential for gains in global as well as regional welfare is trade in services. The services sector now accounts for 68 per cent of value-add in the Asia Pacific region making it the biggest sector in the regional economy. However, while services have come to dominate the modern economy, international trade in services lags behind. Exports of goods from APEC member economies are 5 times larger than exports of services.

This points to large benefits that can be reaped by new thinking about services trade.  We note the increasing gap between commitments made in bilateral and regional trade agreements and the WTO, although this is still fairly limited across the APEC region. A key conclusion from our trade task force is that the current approach to services trade liberalization is simply not working.  It was noted that services offers on the table in the Doha Round contain “not one iota” of genuine liberalization in the form of new market access, and that some members still appear unprepared to enter into commitments binding current levels of liberalization.  It was also emphasized that the modalities currently being used for services trade liberalization are not seen by business as meaningfully connected with the way that services trade is structured and conducted in reality. We have established a task force with the Asian Development Bank Institute to consider these changes and consider innovative ways in which services trade can help deepen economic integration in our region. Our work will bring together experts from business, government, the research community and regional and multilateral institutions including the WTO, World Bank, OECD, and ASEAN. We will present our findings to you at SOM 3.

Food Security

Another area we addressed in this project is food security. The international food economy faces a range of formidable challenges, including increasingly frequent supply disturbances caused by natural phenomena, increased pressure on key resources such as water and fisheries, competition for land from energy-related demands for biofuel, changing demand patterns reflecting demographic changes and rising incomes, and associated requirements for major improvements in agricultural productivity and heightened concerns over food safety. Well-functioning international markets have a key contribution to make to enhancing the security of food supplies to the global community.

The diversity in our region offers a unique environment to caucus on food trade issues and food security issues, exploring how more open trade in agriculture can contribute to more stable and secure food supplies at the same time as we search for politically palatable solutions to the Doha impasse. 

A more comprehensive approach is clearly needed to these issues. One example of the new elements that need to be embraced in such a comprehensive approach is an agreement to refrain from export restrictions which could do far more for global food security than trying simply to address a symptom of the problem such as by creating food reserve mechanisms.

Regional Economic Integration

There is no doubt that the region is becoming increasingly integrated. Our index of economic integration tracks this process across a number dimensions and demonstrates that flows in goods, investment and people are increasing throughout our entire region.

There are two main processes being pursued for policy-led integration in the Asia-Pacific: the ASEAN plus agreements and the Trans-Pacific Partnership. Our task force discussed both platforms during their deliberations last year.

Pathways to a Free Trade Area of the Asia Pacific (FTAAP)

When we undertook a study on the Free Trade Area of the Asia-Pacific (FTAAP) with ABAC in 2006, we noted that a high-quality agreement would be desirable but that the region faced complex political economy questions. We recommended APEC adopt a building block approach which should include deepening the WTO, aligning existing free trade agreements, extending outreach, and undertaking organizational reforms.

Our annual survey of opinion-leaders conducted in 2010 reflected a degree of ambivalence on the pathways available to pursue an FTAAP, with around 36 per cent of respondents preferring the TPP path and 38 per cent preferring the ASEAN plus agreements. However, when asked if regional economic integration should be pursued on multiple tracks, close to 70 per cent of respondents were in agreement.   We note that APEC leaders have given equal endorsement to each of the possible paths – ASEAN Plus Three (EAFTA), ASEAN Plus Six (CEPEA) and TPP. Our trade task force has analyzed the progress to date and prerequisites for further progress in each of these paths.

The Missing Link in ASEAN Plus Approaches: China-Japan-Korea

One critical element missing from both ASEAN Plus proposals is a commitment to economic integration among China, Japan and Korea. Among the three, there have been various studies and attempts to negotiate an agreement. Bilateral initiatives between Japan and Korea and between China and Korea have made varying degrees of progress at different times. On a more positive note, agreements on the rules of origin signed by East Asia’s three biggest economies are showing a degree of convergence especially in their deals with developed partners. We have no doubt that a decision to move ahead on economic integration among China Japan and Korea would impart a powerful impetus to the dynamic of integration both among the ASEAN Plus participants and across the Asia-Pacific region as a whole.

The Trans-Pacific Partnership

The aforementioned PECC-ABAC 2006 study also looked at the then nascent P4 agreement as another pathway to FTAAP now known as the Trans-Pacific Partnership (TPP). Momentum has been gaining on the TPP pathway since 2006 with nine APEC member economies including the United States now negotiating the expansion of the agreement beyond the original four.

Although it is a newcomer to the equation, the TPP is now into its sixth round of negotiations. It is an ambitious effort to address old trade policy issues in a 21^st century way as well as address next generation trade policy issues.

The work ahead cannot be underestimated, but significant results (even if not a final agreement) by the November APEC meeting are possible.  This would send a welcome signal of the region's continuing pursuit of deeper integration and would represent a breakthrough in the consolidation of bilateral and plurilateral agreements.

If the TPP is to be an effective pathway to the FTAAP. It is crucial that the agreement should be designed with a view to the eventual inclusion of all APEC economies, even not all are ready to make the adjustments needed to join now. Inclusiveness should not be sacrificed to the narrow pursuit of the interests of individual participants.  

Next Generation Trade Issues

We note with interest the effort being made by APEC to address regulatory issues and other behind the border issues. We believe this work will have great support from our community. In our annual survey, the top impediments to doing business in the region were: poor intellectual property rights protection; multiple standards for products and services; and regulatory impediments.

SMEs and RTA/FTA Utilization

We welcome the holding of a join session between Ministers Responsible for Trade and Ministers Responsible for Small and Medium Enterprises. We hope this dialogue will shed light on the difficulties our region’s SMEs have in entering global chains and promoting the most efficient use of resources. This initiative is critical to broadening domestic support for the trade liberalization.

Studies by PECC and others show that the utilization rate of RTAs/FTAs is low especially by SMEs. However, data is uneven and analysis is more anecdotal than based on hard facts. There are two concrete initiatives APEC could adopt in this regard: the first would be to consolidate existing data to give policy-makers a better understanding of the challenges SMEs face in using preferential agreements; and the second would be to encourage all APEC members, perhaps through a pathfinder agreement at first, to ask customs agencies to collect data on usage and obstacles to usage.

Expanding the Constituency for Asia Pacific Cooperation

In these challenging times for regional and global cooperation, there is an urgent need to proactively reach out to stakeholders. We stand ready to help in this effort through our member committees. Our member committees organize events throughout the year on various issues related to Asia-Pacific cooperation. For example, immediately after this meeting our US committee will hold its annual Washington Conference, just a week after these meetings our China Committee is holding the bi-annual PECC trade and investment fair in Tianjin and at the end of June our Singapore Committee also be holding a conference on the challenges facing APEC economies.

The Asia-Pacific and the Global System

Much has been made in recent months of the shift in the global economy towards the Asia-Pacific region. Both PECC and APEC were created in recognition of the increased interdependence within our region as well as its increased weight as a whole in the global economic system. We hope that this regional community will as represented here will take up both the benefits that this shift brings as well as the responsibility as a steward for the global economic system.

Download the PECC Statement to APEC MRT

Download the PECC Statement to APEC SOM2

The 20th General Meeting of the Pacific Economic Cooperation Council was held in Washington D.C. on September 29, 2011. The gathering of policy experts from business, government and the academia met under the theme of the "State of the Region". The meeting tackled critical issues to spurring sustainable growth including: how to make it easier to trade services which now are the largest part of most of the region's economies; how to make growth more inclusive to ensure no segments of society get left behind; and how to make progress on the TransPacific Partnership.

Also addressed in the meeting were some of the underlying structural issues in the Asia-Pacific economy: the risk of long-term unemployment and policy frameworks to create jobs; energy security issues; and the fundamental changes that have taken place in the trading system since the launch of the WTO Doha Round.

The meeting opened with a discussion on the latest economic forecasts from the International Monetary Fund (IMF) and the results of the annual State of the Region report issued by the PECC. Despite the gloomy outlook and rising pessimism, there is an opportunity over the coming 6 weeks for leaders to take concrete actions to restore confidence to global markets and the international system at the G20 summit in Cannes, the APEC leaders' meeting in Honolulu and the East Asia Summit (EAS) in Bali.

According to the annual survey conducted by the Pacific Economic Cooperation Council (PECC), 80% of the respondents, made up of about 430 opinion-leaders from the government, business, academia, and the media, expect slower growth in the next 12 months in the United States and the same for the European Union. The same survey placed investment in new tecnhologies and innovation systems as the top policy priority for achieving sustainable growth in the region.

While structural reforms and rebalancing must continue, the participants gathered at the 20th General Meeting of PECC agreed that the Pacific economies must invest in new technologies and innovation systems while actively looking for ways to enhance cooperation in areas such as the services trade, energy, and green growth. As the core of the global economic shifts to the Pacific Basin the world is looking increasing to the region for leadership. The report highlights APEC's ongoing agenda for economic integration and support for the global multilateral system as critical to the process of restoring confidence. Progress in these areas will send a strong signal to the business community that protectionism will not close off markets to their goods and services. Efforts to make the regulatory environment easier to navigate and less burdensome, especially for small and medium enterprises, need to bear fruit. Under Secretary of Commerce for International Trade, Francisco J. Sanchez highlighted how few small and medium enterprises are engaged in global trade so making it easier for them to do business across borders would open a huge new market for their products and services across the world. PECC' s survey findings show “behind-the-border” problems like regulatory impediments the most burdensome.

A special paper commissioned by PECC highlighted, however, that there was significant potential for transpacific energy trade and job creation in the energy sector with the recent discovery of shale gas deposits in the United States. Such developments would help ease the trade deficit problem with Asia for the US while it could also help Asian economies diversify their sources of supply and therefore improve energy security for the region as a whole.

Assistant Secretary of State for East Asian and Pacific Affairs, Kurt Campbell underscored the importance of continued strategic alliance with the Asian economies and reaffirmed the US’s commitment to the region at the opening address.

Youth delegates urged PECC to play a more active role in reaching out to the general public with the aim of bridging the information divide between the policy-makers and public about the many multilateral frameworks and institutions such as the Asia-Pacific Economic Cooperation (APEC), G20, and East Asia Summit (EAS). This is the fifth time that PECC invite a group of selected youth delegates from various economies to participate and interact with the members of PECC and other eminent individuals from the government, academia and the business community.

The 20th General Meeting of PECC was hosted by USAPC in Washington D.C. and was held back-to-back with the Standing Committee meeting of PECC (28 and 30 September 2011).

Program agenda with papers and presentations

Speakers' profile (59KB, pdf)

Three concurrent sessions at the General Meeting:
Session 1: Enabling 21st Century Services in the Asia-Pacific
Session 2: The Trans-Pacific Partnership (TPP): Views from the Inside and the Outside
Session 3: Paths to Inclusive Growth

Media reports related to the 20th General Meeting

The first of a series of three under the PECC International Project on marine resources (2011-2012), 'Oceans at Risk: Protection from the ocean to the coast, sharing marine resources' took place in Noumea, New Caledonia on 22-24 November 2011. The seminar brought together academics, scientists, policy-makers, and business executives to discuss and examine the consequences of climate change on oceans, exploitative versus responsible usage of marine resources as food, energy, and goods, treatment of solid and liquid waste in coastal areas, as well as ways to achieve sustainable management of biodiversity in and around the oceans. Case studies from different economies, best practices and innovative approaches were shared at this seminar.

The Chair of France Pacific Territories committee for PECC and former prime minister of France, Michel Rocard urged that it was important to reinforce the message to the international community that global warming is an imminent threat to international security and well-being. Scientists and academics gathered also agreed that it was desirable that research funding and investments on data-gathering be secured on a long-term basis and that more could be done to raise awareness through vigorous public education and local community outreach.

Key recommendations emanating from the seminar included the following:
- Increase solidarity among the Pacific economies - Taking into consideration compatibility with local communities as well as inter-governmental cooperation;
- Adopt a new form of governance to improve the management of coastal areas and marine resources - Responsible management and control of resources and clean water; increased cross-sectoral cooperation and transparency; better management of the competing interests of land and water usage;
- Enhance capacity-building with innovation and education - Appropriate technology transfer and knowledge-sharing (long-term funding, investments needed to deepen research and data-gathering capabilities);
- Diversify options for food security (e.g. aquaculture, freshwater and microalgae farming).

Seminar One: Oceans at Risk - Protection from the ocean to the coast, sharing marine resources (November 2011)
Program agenda and presentations available for download

Seminar Two: Oceans as a Source of Renewable Energy and the Management of Ocean's Natural Resources (last week of March 2012)

Seminar Three: Oceans as a Means of Communication and the Effects of Tourism (November 2012, TBC)

Over the last 20 years, economic crises have hit the region almost every ten years. There is a need to consider not only the short-term economic rescue policy, but also the resilient infrastructure against frequent economic crises in the long term.

The Japanese National Committee for Pacific Economic Cooperation (JANCPEC) launched Social Resilience research project in 2009. The project was the first attempt by the PECC members to discuss social policy in the Asia-Pacific region in depth. This year, the project members are examining the current status of social safety nets in Asian economies not addressed in last year's research and are pursuing horizontal research approach that sheds light on the overlapping areas and interactions between different social protection areas.

JANCPEC held PECC International Workshop on Social Resilience on 12 July 2011 in Tokyo to discuss measures to strengthen social safety nets in the Asia-Pacific region. The workshop consisted of four sessions including pension system, health care system, unemployment insurance scheme, and macroeconomic analysis. Experts presented situations and prospects of social securities in the region to discuss how to make the region's societies more robust and resilient against economic crises. Ambassador Kenji Hiramatsu, Director-General for Global Issues, made a keynote speech regarding sustainable growth and green economies. Attended by about 70 participants, the workshop served a good opportunity to share the progress of research and to re-emphasize on the importance of social safety nets in the Asia-Pacific region. The final outcome of this year's SR project is expected to be delivered towards the end of the year.

Program agenda with speeches, papers, and presentations for individual download (video streaming also available)

To learn more, please contact:

[photo: Singapore's Minister for Trade and Industry, Mr. Lim Hng Kiang delivers the keynote speech]

PECC conference organized by the Singapore committee for PECC in partnership with USAPC (US Asia Pacific Council/ US member committee for PECC), "Growing APEC Economies: New Challenges and Approaches" took take place in Singapore on 29-30 June 2011. (Presentations and speeches are available for download.)

The conference served as an opportunity to share interim findings in the run up to the 20th PECC General Meeting hosted by USAPC in Washington D.C. in September 2011. The effort aimed to contribute to increasing more direct input to the APEC process by the regional experts in their respective fields. This year, the key motivation was to help APEC economies cope with external shocks such as the US Government's quantitative easing, and rebalance export-driven development model by identifying services as an alternative growth pillar. The conference addressed four main areas:

- Taking stock on the latest development amongst APEC economies in terms of sustainable and inclusive growth;

- Sharing experience in exploring how services can also be a pillar of growth for emerging economies

- Evaluation of how APEC economies can better cope with volatile capital flows;

- Re-examination of the effectiveness of APEC amidst the growing complexity in regional institutional architecture.

Focus on new growth strategies for Asia-Pacific economies

Unemployment, high inflation, and income inequality continue to be key concerns for Asia-Pacific economies. Natural disasters have taken a catastrophic toll.  Although the Asia-Pacific region has managed to overcome the worst from the economic crisis of 2008-2009, the recovery has been patchy and the growth trajectory is far from assured.

“While growth may have returned somewhat, the issue is the quality and composition of growth – creating jobs and ensuring resilience,” emphasized Dr. Charles E. Morrison, co-chair of PECC and President of East West Center. In November 2009, when Singapore hosted APEC at the height of the crisis, the Council had released a report, “Inclusive, Balanced, and Sustained Growth in the Asia-Pacific,” which outlined a set of policy objectives in the form of bold structural reforms for many of the region’s economies or sub-regions. Many of the report’s recommendations were echoed in APEC’s growth strategy.

Services liberalization one of the keys to drive growth

In addition to the green sector, PECC identified services trade as an area that could significantly contribute to rebalancing and reinvigorating growth in the region. Services account for 68% of economic output and 61% of jobs in the region.

Singapore’s Minister for Trade and Industry, Mr. Lim Hng Kiang stressed in his keynote speech that “the potential of the services as a source of growth is constantly growing” and that in order to tap on such growth, it is crucial for economies to liberalize their trade in services.

Services, traditionally perceived as non-tradable across the border are increasingly becoming significant yet there is inadequate data available on the real volume of trade in services as well as the impact of restrictions on services on trade and economic growth. With trade negotiations at the WTO stalled, mostly as a result of disagreements over industrial tariffs, environmental concerns and agriculture, trade in services has also not realized its full potential.

Professor Christopher Findlay (University of Adelaide), of the leadership group for PECC signature project on services, urges, “in order for us to move ahead from the stalling Doha Round, economies can make pre-commitments by pledging to implement reforms by a certain date in the future to liberalize trade in services.” They could also consider a ‘services-only approach’ in the WTO as proposed during the recent PECC-ADBI conference that took place in Hong Kong earlier this month. The challenges are having to deal with domestic regulations and implementing policies that address market failures without restricting competition. 

Managing the capital flow

A new challenge that the region is struggling with is the massive flows of hot money coming into the region as a result of the liquidity increases that came with the stimulus policies adopted by the US and European central banks in response to the crisis. While foreign direct investment is much needed, the Council warned of the dangers of hot money flows and the policy challenges they present. Many of the Asian economies remember the dangers of possible capital inflow reversals from the 1997-1998 financial crisis experience.  “The increase in capital flows that we’ve been seeing over the past 24 months comes with the risk of creating new asset bubbles. We have to think creatively about the best way to manage this situation,” said Prof. Tan Khee Giap, the Chair of Singapore National Committee for Pacific Economic Cooperation.

“Massive capital inflows can pose serious policy challenges to emerging Asia in terms of macroeconomic and financial system stability,” warned the Dean and CEO of Asian Development Bank Institute (ADBI), Dr. Masahiro Kawai. The best policy mix of fully flexible exchange rate, capital account openness, and low-inflationary monetary policy is appropriate for advanced economies with deep, liquid and broad financial markets. “Emerging economies would need a combination of prudent structural, macroeconomic, and macroprudential measures such as allowing adequate exchange rate appreciation, limiting credit growth, and using capital controls,” said Dr. Kawai.

Boosting social resilience

An important part of the rebalancing and structural reform agenda is the enhancement of social resilience. PECC established a project group last year to look at three core elements of social resilience: pensions, health/ medical care, and unemployment plus the macro-economic analysis. This project comes at a critical time for the region for two main reasons: a) the economic crisis has once put the spot-light on the ability of social security to provide support for our people when jobs are scarce; and b) the demographic profile of the region is rapidly changing (e.g. aging societies) putting pressure on existing systems. “APEC is more than a trade forum; the fact that it is focusing on inclusive growth and addressing income inequality in the region is an achievement worth noting,” added Amb. Yoshiji Nogami, chair of Japan committee for PECC and president of Japan Institute of International Affairs.

The project research findings indicate that the enhancement of social safety nets can make an important contribution to rebalancing and boosting economic growth in the region. Asia-Pacific economies need to consider what infrastructure we should establish to build resilience against economic crises. “Crisis management has been effectively handled by cooperative mechanisms such as G-20 but it is now time to focus on structural reforms that can buffer the region against such volatility and changing circumstances in the future,” said Mr. Jusuf Wanandi, co-chair of PECC (Board of Trustees, Centre for Strategic and International Studies, Jakarta).

Final program agenda

Press release

News reports from the press

Keynote speech by Singapore's Minister for Trade and Industry, Mr. Lim Hng Kiang

Opening speech by PECC Co-chair, Dr. Charles E. Morrison

'Services Trade: New Approaches for the 21st Century' conference was held on 1-3 June 2011 in Hong Kong, China in collaboration with the Asian Development Bank Institute (ADBI), the Economic Research Centre of the Hong Kong Institute of Asia-Pacific Studies (HKIAPS), and the Institute of Global Economics and Finance at the Chinese University of Hong Kong (CUHK).

Download program

View the opening addresses (via YouTube)

Download presentations and relevant research papers

Services are key to economic growth and competitiveness. The idea of fragmentation and complexity on global supply chains for services has not been adequately understood or studied. There is evidence that services firms, just like manufacturers, take a supply chain view of their business. The task of rebalancing the economies in the aftermath of the recent global financial crisis could be helped by clarifying the priorities for policy options in services reform, by reducing costs in the supply chain, and overall by designing innovative and effective services policies.

At the opening session during the conference in Hong Kong, PECC Co-chair Dr. Charles Morrison said that “service trade area is where we want to see how Asia Pacific countries not only promote liberalization, efficiency and delivery of services within the region, but also how we can promote global trade in services.” 

Dean of ADBI, Dr. Masahiro Kawai emphasized that offshore outsourcing has grown dramatically since the end of the 20th century and that outsourcing is no longer restricted to manufactured goods coming out of factories. Many services, even in highly specialized and technical areas, can now be delivered electronically by outsourcing.  “Like previous industrial revolutions and technology advances, offshore services are expected to deliver higher standards of living, raise productivity, and alleviate poverty in the developing world, especially in those economies that are ready to benefit because of their better education, adequate numbers of trained workers and access to advanced communications technology,” he added.

PECC-ADBI joint project aims to analyze the impact of services trade on economic growth, specialization, investment, human resource development, and regulatory policies as well as study how competitiveness and governance can be improved in the sector. 

More information on the project is available here. 

Short interviews with some of the speakers at the conference (accessible by YouTube):

Dale Andrew and Massimo Geloso Grosso
Gloria Pasadilla
Bob Vastine
Sherry Stephenson
Pascal Kerneis
Stewart Forbes
Kaaren Koomen
Julian Arkell

A three-year international project that has been running throughout 2009-2011, PECC held its concluding seminar in Perth, Australia on 11-13 April 2011 to summarize the findings and to prepare for the publication of "PECC Voluntary Guidelines to Promote Environmental Sustainability in Urban Centers." The project aims to compile the best practices from around the Pacific region in respect to providing the public services and infrastructure that are environmentally friendly as well as efficient. Changing urban lifestyles, technological advancements, consideration of high density in mega-cities, various elements of conflict in land use and the protection of environment conservation are just some of the topics addressed through this project. Speakers from relevant government agencies, technical research, and multinational corporations contributed to this multisectoral project led by the national committees of France, New Zealand, and Australia.

Program agenda

Executive summary

Presentations in PDF

The recent global crisis had serious impacts not only on economic development but also on labor markets in the region. Current unemployment rates are still much higher than the pre-crisis level despite a GDP upturn, which implies that the unemployment problem could be structure-related. Accelerating the recovery of job markets is essential for reviving the economy as well as maintaining social stability. With the objective of addressing and studying the causes and impact of structural unemployment on the region post-crisis, PECC launched a new international project this year: “Examining the Mid to Long-Term Structural Unemployment in the Asia-Pacific”.  Chinese Taipei will lead the year-long project.

The 26th Pacific Economic Community seminar on the topic was held during 13-14 October 2011. The objectives of the seminar were:

a) to examine the structural unemployment issues, phenomena and relevant impacts;

b) to analyze and explore factors that have caused structural unemployment; and

c) to identify potential solutions to the problem of structural unemployment within economies as well as throughout the Asia-Pacific region.

Program agenda (31KB, pdf)

Building on the work carried out last year, PECC will continue its international project led by its Japanese committee, JANCPEC, throughout 2011. Over the last 20 years, economic crises have hit the region almost every ten years. There is a need to consider not only the short-term economic rescue policy, but also the resilient infrastructure against frequent economic crisis in the long term. 

The SR Project is designed to shed light on the importance of social safety nets and to closely examine the mechanism of their roles in the domestic economy. This topic has never been discussed in depth among APEC economies. Overly focused on the liberalization of investment and trade, APEC has let slip opportunities to discuss the sense of security of those persons who underpin liberalization and brisk domestic demand as well as social safety nets for them in connection with a major paradigm shift toward the construction of a resilient model for sustained economic growth. In this regard, the SR Project is a very good opportunity to focus more on the social and living conditions of people and to share good or bad practices for social safety nets in the Asia-Pacific region. Comparative research on the actual status of Asian social safety nets would definitely be useful if we are to make our society more resilient against economic crises that may occur again in the future.

The first working group discussion for the project on social resilience was held at JIIA on 31 January 2011.

The APEC Symposium and Informal Senior Meeting took place on 8-9 December at the East West Center in Honolulu. The meeting kicks off an important year for APEC as the region continues to deal with uncertainty over future growth and high levels of unemployment. PECC international co-chair, Dr Charles E. Morrison delivered welcoming remarks in his capacity as President of the East West Center.

The APEC Symposium was an opportunity for senior officials to hear views from outside experts on some of the key issues that APEC could be addressing in the coming years. The topics addressed during the symposium were: Growth for the 21st Century: Green growth; Developing a Next Generation Trade and Investment Agenda for APEC; and Promoting Regulatory Cooperation and Convergence in the Asia-Pacific. Former USTR, Ambassador Susan Schwab delivered the keynote address highlighting the role the APEC group of economies can play in bringing a conclusion to the WTO Doha Round of negotiations. 

The focus on these issues is likely to have strong support from the PECC community which recently highlighted poor intellectual rights protection; multiple standards for products and services; and regulatory impediments as the top 3 challenges to doing business in the region in a survey undertaken last September. 49 percent of respondents ranked regulatory impediments as the most important to next most important challenge to doing business in the region. 

This issue is likely to have the most resonance in the business community where 53 percent of respondents ranked regulatory issues as the highest to next highest challenge to doing business in the region, compared to 43 percent of respondents from the government sector.  For more details see:  State of the Region Report 2010 (857.4 kB) 

PECC is one of the official observers of the APEC process.

Dr Charles E. Morrison, co-chair of the Pacific Economic Cooperation Council and President of the East West Center, delivered PECC's statement to APEC Ministers on behalf of the organization and co-chair, Mr Jusuf Wanandi, vice-chair of the Board of Trustees of the Center for Strategic and International Studies.

The statement highlighted the results from PECC's ongoing research program. PECC's 19th General Meeting was held in Tokyo a few weeks before APEC Leaders' Week in Yokohama. The statement highlight the uncertain economic outlook and need for rebalancing, ways to enhance social resilience, the challenges facing the multilateral trading system, pathways towards regional economic integration.

PECC's State of the Region Report 2010 was also released during APEC leaders' week in Yokohama. The PECC delegation to Yokohama included Dr Charles E. Morrison (co-chair), Dr Tan Khee Giap (SINCPEC chair), Mr Yuen Pau Woo (coordinator State of the Region report), Ms Naoko Saiki (JANCPEC Executive Director), Mr Eduardo Pedrosa and Ms Jessica Yom (PECC International Secretariat). 

PECC Statement to 22nd APEC Ministerial Meeting
Plenary Session
11 November 2010
From the Co-chairs of the Pacific Economic Cooperation Council
Dr Charles E. Morrison and Mr Jusuf Wanandi

On behalf of the members of the Pacific Economic Cooperation Council (PECC) we would like to express our appreciation to APEC for its continued openness to our ideas and suggestions from the second track. We would also like to extend our congratulations to Japan for their leadership during a very difficult year for the region and the world. 

We recently concluded our 19th General meeting in Tokyo which was hosted and organized by the Japan National Committee for Pacific Economic Cooperation Council. We express our appreciation to Minister of Foreign Affairs, HE Mr Seiji Maehara and Deputy Minister of Foreign Affairs Mr Yoichi Otabe for taking the time to speak to us during our meeting. A summary report of our discussions is attached for your reference. 

Economic Outlook
According to the latest forecasts from the IMF, the APEC region is expected to grow by about 4.8 percent this year, a substantial rebound from the contraction of 1.4 percent last year. Looking ahead, the forecast is for a slight moderation over the next two years of around 3.5 percent growth. Some rebalancing appears to be taking place with savings rates in deficit economies increasing and domestic demand in surplus economic also on the rise. As we discussed in detail in our annual State of the Region report, looking ahead the concern is more about the composition of growth rather than the absolute number.

There are no simple solutions to this. There is a need for economies throughout the region and world to implement structural reforms to rebalance economic structures to prevent the re-emergence of unsustainable imbalances.

APEC has a critical role to play here. Since the APEC Ministerial Meeting on Structural Reform in 2008, APEC has been deepening cooperation on this issue and through the work of the Economic Committee has been creating a valuable body of knowledge of experiences and networks of reform-oriented policy-makers. 

Social Resilience
An important part of the rebalancing and structural reform agenda is the enhancement of social resilience. We established a project group to look at various elements of social resilience this year and the team reported its findings at our General Meeting held in Tokyo a few weeks ago. The project had four core elements: pensions, health and medical care, unemployment and macro-economic analysis. Under each element we commissioned case studies looking at how various economies in the region have been addressing these key elements of social protection. 

This project comes at a critical time for the APEC region for two main reasons: 

• the economic crisis has once put the spot-light on the ability of social security to provide support for our people when jobs are scarce; and 
• the demographic profile of the region is rapidly changing putting pressure on existing systems 

The detailed findings of the project are too large to go into here. A detailed report of the project’s findings and recommendations was released at the PECC General Meeting in Tokyo and is available from our Japan Committee. 

The project's research findings indicate that the enhancement of social safety nets can make an important contribution to economic rebalancing in the region. Their availability obviates the need for households to worry about unexpected contingencies and retirement security. The research also indicates that the availability of credit is an important determinant of household savings and serves as a buffer against unexpected expenditures while increasing individuals’ ability to consume. Therefore a two-pronged approach of simultaneously developing social safety nets and capital markets may be most effective way for the region to address the resilience issue. 

In summary, while in many OECD economies social, health and pension insurance are provided publicly, developing economies will face challenges implementing similar systems due to large informal sectors and weak administrative capacity. But there is much we can learn from each other as our economies begin developing their own social resilience frameworks. Japan, in particular, has a longer history of social safety nets experience that could be instructive for other economies in the process of reform. 

In the aftermath of the financial crisis of 1997-98, there was much talk of social safety nets but this died down as robust growth returned to the region. There is a need to ensure that as growth returns momentum on social resilience issues is maintained. We therefore welcome the outcome of the APEC Human Resource Development Ministerial Meeting held in Beijing two months ago. We hope as the forward agenda on social safety nets is developed, we will be able to contribute our research findings to APEC. 

APEC needs to keep momentum on this issue and consider what infrastructure resilient against economic crises we can establish in the Asia-Pacific. A working team should be formed to discuss how to make our society more resilient against economic crises and to design effective social policies for the economies of this region.  

A Post-2010 Trade Agenda
This year marks an important milestone for APEC’s core agenda on trade and investment with the review of achievement of the Bogor Goals by industrialized APEC members. We established a task force to look at the elements of a “Post-2010 Trade Agenda” which met in Tokyo in July. The task force’s work was divided between trade policy issues at two levels – the multilateral and the regional. At the multilateral level we discussed the completion of the Doha Round & the future of the WTO, the potential collision between climate change and trade policy, ways to make more effective progress in the vital task of services trade liberalization, the increasing  attention being paid to labor mobility issues, and the trade policy dimensions of the international food economy.  At the regional level we discussed the evolution of trade architecture in East Asia and the Asia-Pacific region. 

We would like to express our appreciation to the Asian Development Bank Institute, the Inter-American Development Bank, the Japan Institute of International Affairs, and the Ministry of Foreign Affairs of Japan for their help in organizing the meeting of the task force. The task force reported its findings to us during our General Meeting in Tokyo a few weeks ago. 

Regional Economic Integration 
Applied tariff rates in the region have come down substantially. Furthermore, the proliferation of trade agreements in the region has led to a substantial increase in the number of items that can enter each other’s markets duty-free. 

However, we note that the utilization of preferential rates is relatively low, although slowly increasing.  It is clear that small and medium enterprises in particular face a variety of handicaps in taking advantage of the trade opportunities opened up by RTAs/FTAs. We would urge APEC to actively pursue ways of overcoming these handicaps, for example by developing a simplified region-wide approach to rules of origin, including the streamlining of compliance requirements. 

Looking ahead, we look forward to the emergence of a coherent regional trade architecture that will allow us to fully realise the vision of a prosperous region integrated by the free flow of trade and investment.  Two major gaps in the regional trade architecture stand out. The first is the lack of an agreement to liberalise trade between East Asia’s biggest economies – China-Japan-Korea.  We hope that efforts to find a way forward on liberalising the trade between these three economies will begin to bear fruit. The second gap is the absence of a coherent approach to achieving trans-Pacific free trade. The Trans-Pacific Partnership has emerged as a potential step toward filling this latter gap.  We hope for a constructive approach on all sides towards realising the TPP’s potential contribution to regional economic integration. 

Challenges to the Trading System
The completion of the WTO Doha Development Round is a major issue that the region needs to confront. In spite of numerous calls by APEC leaders to complete the round it remains unfinished. Looking beyond the Doha Round, we see a need to begin thinking about steps that need to be taken to ensure continued support for the WTO and the multilateral trading system as the core institutions in global trade.  Alternative modalities for negotiating trade liberalization in the WTO may need to be considered. 

We foresee the possibility that policy responses to climate change may give rise to a fundamental challenge to the multilateral rules-based trading system. With the failure to reach agreement on a successor to the Kyoto Protocol, individual economies and businesses are left to implement their own plans for reducing greenhouse gas emissions and will face pressures to use trade policy measures to compensate for resulting changes in cost competitiveness. 

Existing WTO rules do not provide an adequate framework for resolving the trade disputes that will inevitably follow.  Our region, which is so dependent on trade, should be taking the lead in seeking international agreement on how the relevant issues should be addressed, which is essential if we are to avoid the risk of damaging trade conflict and even the potential breakdown of the multilateral trading system.  

Climate Change and Green Growth
We also discussed at our General Meeting recent developments in international negotiations to reduce greenhouse gas emissions. Clearly there are differences between major economies on this important issue. Without adding to an already broad agenda, APEC and the Asia-Pacific can play an important role in contributing to a solution.

As discussed above, there is an important connection between policies to combat climate change and APEC’s core agenda on trade and investment. One angle that we hope economies can agree on is that the adoption of ‘green growth’ and energy efficient policies can serve two important roles: the first is to lower our greenhouse emissions on a per unit of GDP ratio; the second is that the early adoption of these technologies can enable developing economies to leapfrog over industrialized economies with high energy intensity industries. 

In other words, adopting a green growth strategy need not jeopardize developmental goals and poverty reduction targets. Over the coming months PECC will be considering how we might contribute to deeper understanding on this issue. 

Cooperation Essential for Restoring Confidence
While there are many issues which bring our region together there are also issues that divide us. APEC has come a long way over it now 21 year history. Before APEC there was no forum that brought together such a wide-range of both developed and developing economies with such different histories. The narrative has always been one that looked towards a shared future rather than the past. We need to remind ourselves of that.

Over the past 24 months cooperation between leaders at the G20 summit and indeed APEC helped to restore confidence and prevent a global meltdown and a descent into protectionist policies. This is an important achievement that should not be overlooked. This recovery is fragile. Investments in both new jobs and productive capacity need to be made, for this to happen, businesses and the public need assurance from policy-makers about the future. We have a unique opportunity with the G20 summit now happening in Seoul and the APEC leaders who will meet here over the coming days to send a strong message that in spite of differences, our region is united in finding solutions to our common problems and is committed to a shared vision of a stable and prosperous Asia-Pacific region.

At the Standing Committee meeting held back-to-back with the 19th General Meeting, we are pleased to report that the PECC members have agreed to embark on the following priorities throughout 2011 in the form of new signature and international projects: unemployment, trade and investment in services, protection and management of marine resources, how the region cooperation can facilitate the adoption of green growth strategies, while continuing the current projects, State of the Region, and social resilience.

Thank you.

Forty youth delegates from nine PECC member economies joined the PECC General Meeting in Tokyo on 21-22 October. They came from Canada; China; Hong Kong, China; Japan; Korea; Malaysia; New Zealand; Singapore; and Chinese Taipei.

On their first day of activities the youth delegates discussed "Food and our Interdependence" at Chiba University in discussions facilitated by Prof Ishido. The delegates presented the results of their discussions to the PECC Standing Committee at the conclusion of the General Meeting. They noted 4 main factors that need to be taken into consideration in regards to food security for all economies: dietary transition; climate change; demographic change; free trade, specialization and globalization. 

They also visited JFE Steel Corporation to see how production processes - from raw materials to steel sheets actually takes place. Delegates noted that the materials came from Australia and Brazil and the factory was seeking ways to make production more energy efficient and more environmentally friendly. 

Prof Ishido facilitating discussions on food security for PECC XIX youth delegates

The 19th PECC General Meeting concluded in Tokyo on 22nd October. Participants highlighted the need to regain the spirit of cooperation at the forthcoming APEC and G20 leaders' meetings.

The Asia-Pacific region is leading the global economic recovery but needs to begin implementing structural reforms to ensure that the imbalances that characterized the region’s growth in the lead up to the crisis do not re-emerge.

Eminent opinion leaders and economic experts from around the Asia-Pacific region reiterated their concerns over the continued fragility of the global economic recovery and urged G-20 and APEC leaders to take credible measures to achieve balanced, inclusive and sustainable growth over the longer-term.    They also expressed a strong desire to see the economies of the Asia-Pacific region providing increased global leadership.

 “The APEC and G20 meetings come at a critical time to restore confidence in international cooperation at a time of rising tensions,” said Jusuf Wanandi, Co-Chair of the Pacific Economic Cooperation Council.

A key part of the economic policy equation is the enhancement of social resilience through social safety net and financial sector reform. “The enhancement of social safety nets such as pensions, healthcare and unemployment insurance will help reduce precautionary savings and increase domestic consumption in surplus economies,” said Ambassador Yoshiji Nogami, President of the Japan Institute of International Affairs and host of the Meeting.

While there are signs that adjustments were under way such as higher US household savings and stronger domestic demand in China, persistent high unemployment was a critical issue confronting the region.

Experts noted that the availability of credit also reduced precautionary savings noting that there low rates of banded that a critical measure was making credit more available pointing to a future agenda for financial market reforms.

The 19th General Meeting of the PECC, involving over 300 participants from 22 economies, took place against the backdrop of increased tension over currency values. Participants said that this issue needed to be managed appropriately in order to increase business confidence in the economic environment and to maintain focus on the core G-20 and APEC agendas.  Participants strongly supported G-20 work in the areas of macroeconomic cooperation, reform of IMF quotas, and endorsement of Basel 3 accord on financial regulation. 

The subsequent APEC meetings in Japan will allow consultations with a broader group of 21 Asia-Pacific economies and focus on regional integration issues.  Charles Morrison, the Co-Chair of PECC and President of the East-West Center said, “with global leadership more diffuse and uncertain, Asia-Pacific economies needed to enhance their collaboration and cooperation on global issues and agendas.”

Among the areas emphasized as supportive of the longer-term balanced, inclusive and sustainable growth agenda, the Council members emphasized the following:

• Structural reforms on both sides of the Pacific to shrink trans-Pacific imbalances;
• Continued efforts to promote regional integration and trade through multiple tracks such as the various ASEAN plus agreements and the Trans-Pacific Partnership;
• Continued development of effective social safety nets.

PECC approved new projects on services trade, structural unemployment, and the protection of maritime resources.  It also approved continuation of its annual State of the Region report and work on social resilience.

Experts from business, government and the academe also discussed:

• Demography and Aging Societies
• Environmental Sustainability in Urban Centers
• Disaster Relief
• Macrofinancial Linkages and Financial Deepening

Youth delegates presented their views on how the region can address food security in the region.

H.E. Mr. Seiji Maehara, Minister for Foreign Affairs of Japan addressing delegates at the 19th PECC General Meeting

The 19th PECC General Meeting was held in Tokyo on 21-22 October 2010, hosted by the Japan National Committee for Pacific Economic Cooperation (JANCPEC). The theme of this year's Meeting was “PECC at 30: New Vision for APEC and Toward Further Regional Economic Cooperation." See www.pecc19.org for more details.

The plenary sessions, covering the following main topics, consisted of presentations and discussions among the region's top visionaries and sectoral experts.   

• Economic Recovery and Growth in Asia and the Pacific
• Towards Resilient Societies
• Climate Change
• A Post-2010 APEC Trade Agenda
• The Future of Global and Regional Cooperation: Looking toward the G-20 and APEC

In addition to the plenary sessions, four concurrent sessions focused on 

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                    • Demography and Aging Societies
                    • Environmental Sustainability in Urban Centers
                    • Disaster Relief
                    • Macrofinancial Linkages and Financial Deepening

In recognition of the importance of engaging next generation leaders, a total of 37 youth delegates were invited from the PECC member economies to participate in the discussions. 

See summary report and presentations