REPORT ON SOM-I MEETINGS

  Mexico City 19-28 February 2002

The following is a brief report on meetings attended during the SOM-I sequence of meetings over the period 20-28 February 2002.

Group on Services (GOS) 19-20 February

The third phase of the PECC Menu of Option project for the Group on Services, led by Dr Sherry Stephenson, was initiated with a workshop on “Towards Improving Regulation in the Services Sector.  The workshop, chaired by Dr Stephenson, occupied most of the second day of the GOS meeting, and was divided into two parts. 

The first part consisted of presentation and discussion of background papers presented by PECC experts as follows:
- “Transparency in Regulation of Services” by Soonhwa Yi (Korea) and Sherry Stephenson (USA)
- “What Constitutes Good Regulation for Services” by Peter Mumford (New Zealand)
- “Horizontal Versus Sectoral Disciplines for Services Regulation” by Christopher Findlay and Alexandra Sidorenko (Australia)
These papers were of a very high standard and generated extensive discussion by the GOS delegates. 

The second part of the workshop comprised a practical exercise on determinants of good regulation in services, in which regulatory experts presented case studies on services sector regulation.  The case study on regulation in the electricity sector presented by Dr Michelle Foss from the University of Houston Law Centre was particularly instructive and drew extensive comment and questions from the delegates. 

Phase III of the Menu of Options programme is a key element in the 2002 work programme of the Group on Services and represents a major contribution to APEC’s work on trade and investment liberalisation and facilitation. 

The GOS, like other CTI subfora, is heavily preoccupied with the task of implementing the APEC Trade Facilitation Principles, as stipulated in the Shanghai Accord.

Market Access Group (MAG) 21-22 February 

Implementation of the APEC Trade Facilitation Principles was also a major focus of the MAG meeting.  Stemming from the leaders’ instruction to achieve a 5% reduction in transactions costs over the next five years, a particular concern was the issue of how reductions in transactions costs through implementation of trade facilitation initiatives might be measured. 

Detailed reports were tabled and discussed on two TILF-funded projects which have the potential to throw light on the issue.  The first project, entitled  “The Economic Impact of Trade Facilitation Measures: A Development Perspective” is being undertaken jointly by the Asia Pacific Foundation of Canada, the Institute for International Economics, and the World Bank.  A detailed presentation on this project was made at a separate session by Dr Catherine Mann of the IIE.  The project employs a gravity model methodology.  Indicators have been devised for four types of trade facilitation measure, and the gravity model is used to estimate the contribution of each type of measure to the volume of trade flows. 

The second project, on “The Benefits of TILF in APEC” is being undertaken by a Korean project team from KIEP.  This project uses survey techniques to predict the reductions in transaction costs attainable through improvements in trade facilitation.  Econometric estimates will then be made of the impact of transaction costs on trade flows, and computable general equilibrium (CGE) simulations will be used to estimate to overall effect on each APEC member economy. 

Both projects clearly aim to produce very useful quantitative information on the benefits of trade facilitation, although neither directly addresses the issue of how reductions in transactions costs should be measured.   There were suggestions at the MAG meeting that dialogue between the two project teams might lead to further progress on this issue. 

Japan also has an Economic Committee project dealing with measurement issues in relation to investment facilitation.

Two other initiatives that are relevant in this context are the Australian project on “Breaking Down the Barriers” and a proposal by the United States for a seminar on quantitative methods for assessing non-tariff measures.   Canada and Thailand have also jointly proposed a seminar on trade facilitation later in 2002, and there is also a proposal for case studies on trade facilitation measures drawn from selected APEC members.

Discussion at the MAG highlighted what was to prove a significant difference of views among member economies on how far implementation of the Trade Facilitation Principles should extend to development of performance targets for trade facilitation, benchmarks on trade facilitation practices, and periodic performance reviews undertaken by the private sector, SOM, or CTI.  Differences on these points continued to be evident at the CTI and SOM meetings, and were not fully resolved.  The actions required for implementation were however less controversial.

WTO Capacity Building Group 23 February

A feature of the WTO Capacity Building Group meeting was the participation of the WTO and World Bank.  The ADB was also invited but did not attend on this occasion.   World Bank and WTO representatives emphasised the importance of APEC’s work in this area.  A Matrix of WTO Capacity Building Activities has been prepared, which documents the very extensive work programmes being undertaken by APEC member economies.  There was some discussion as to whether the matrix should include activities of multilateral agencies.

Canada expressed interest in development of regional centres of excellence in WTO capacity-building. 

There were indications that a number of proposals for APEC-funded projects in this area may come forward for inter-sessional approval.  The deadlines for this process are very tight.

Canada and Thailand gave notice of  possible WTO capacity-building project.

High Level Policy Dialogue on Agricultural Biotechnology 24 February

This meeting focused largely on technical issues. There were impressive presentations by representatives from the Consultative Group on International Agricultural Research (CGIAR), International Rice Research Institute (IRRI) and Codex Alimentarius.  These highlighted the extent of technological progress in the biotechnology area and the scale of the potential impact on a range of potential indicators of human well-being, as well as the need for urgent development of appropriate regulatory frameworks to guide the commercial application of the technology.

PBEC also made a presentation summarising the outcomes of a symposium it had held in Mexico City on the day preceding the Policy Dialogue.  The PBEC presentation emphasised the need for APEC to address trade and investment issues relating to biotechnology, as well as the desirability of greater harmonisation and mutual recognition of regulations applicable to biotechnology.

Canada made a presentation on work on biotechnology being undertaken within the APEC Agricultural Technical Cooperation Working Group (ATCWG).  Biotechnology is one of seven areas being addressed by the ATCWG.  In relation to biotechnology ATCWG’s work focuses on four areas:

• transparent science-based approaches to risk assessment and management

• technical cooperation

• communication and information exchange (including development of Best Practice Guides)

• capacity building

There was some discussion as to whether the Policy Dialogue should be treated as a “one-off” event or whether such dialogues should become a regular feature of APEC’s work.   There seemed to be consensus that an annual dialogue could be valuable.

Committee on Trade and Investment (CTI) 25-26 February

The CTI meeting as usual featured reports from subfora and formulation of the CTI’s own report to the SOM.  Implementation of the Shanghai Accord, in particular the instructions regarding implementing of the Trade Facilitation Principles, was a major concern.

Highlights of the CTI meeting included:

• Arrangements were announced for the first IAP peer reviews involving independent experts.  Yuen Pau Woo and Malcolm Bosworth have been selected as the independent experts for the first two peer reviews under the new format.
  

• Delegates were unable to agree on a single paper to be submitted to SOM on implementation of trade facilitation.  One paper prepared by Hong Kong dealt with issues on which there was consensus among delegates, but a separate paper prepared by the United States also went forward.
  

• Canada argued the need for a regional seminar on responses to the Doha agenda.  It was suggested that this could be held either in Mexico on the margins of SOM-III, or alternatively in East Asia if support is forthcoming from the ADB.
  

• A growing recognition was evident that APEC should be adopting a proactive approach in relation to the “Singapore issues” on the Doha agenda.  The relevant developments included:
  - A proposal by Mexico to hold Trade Policy Dialogues on Competition Policy and Investment at SOM-II and SOM-III respectively, either during the CTI meeting or as separate events.  Some delegations notably the United States wished to reserve their position on this proposal.
  - A proposal by Japan, Thailand and Vietnam for APEC funding for a further training programme on Competition Policy.
  - An indication by Japan that it will seek inter-sessional approval for a further work programme on the “Singapore issues”.
  - The second and third meetings under the APEC/OECD Cooperative Initiative on Regulatory Reform will be held respectively in Peru in April 2002 and Korea in October 2002.
  - A Competition Policy and Deregulation workshop is scheduled for Merida in May 2002, in conjunction with the SOM-II meetings.
  

• A Trade Policy Dialogue was held on Mobility of Business People.
  

• A statement was tabled from PECC outlining the proposed work programme of the Trade Forum.
  

• The Chair of the Ad Hoc Group on Gender Integration (AGGI) addressed the meeting integration of gender into the CTI’s activities.
  

• The Investment Experts Group (IEG) will hold a seminar on Bilateral/Regional Investment Rules and Agreements at Merida on 22-23 May.  Meantime the PECC is assisting the IEG with a study on Mergers and Acquisitions.
  

• Japan proposed the establishment of an APEC IPR Service Centre Network as an APEC-funded project.
  

• In response to the leaders’ endorsement of the concept of “pathfinder initiatives” in the Shanghai Accord, Australia submitted a paper suggesting possible “pathfinder initiatives” for 2002.
  

• There was no mention of the issue of RTAs

Senior Officials Meeting (SOM) 27-28 February

The SOM had an enormous agenda covering issues ranging through TILF, Ecotech and Counter-terrorism.  Many of the issues covered had already been addressed extensively at the previous CTI and subfora meetings.

Additional issues covered at the SOM included the following:

• More work is to be done on broadening and updating the Osaka Action Agenda.  The CTI will coordinate this work.
  

• There was a lack of consensus on how to further develop work programmes in the area on “strengthening markets”.  The SOM will collate ideas on this.
  

• There is a concern to respond to the Shanghai Accord’s call for implenetation of “pathfinder initiatives”.  One point to be clarified was that while “pathfinder initiatives” may be definition involve only a subset of APEC members, there must be consensus among the full membership that the initiative should proceed, and the initiatives must also be open to participation by the remaining members when they are ready.
  

• There was extensive discussion of E-Commerce issues and the E-APEC strategy, including the need to ensure that the Osaka Action Agenda adequately reflects developments in these areas.  The Economic Committee also has active work programmes in the areas of the Knowledge-Based Economy and New Economy.
  

• The proposed Human Capacity Building strategy is expected to be ready for consideration at the SOM-II meetings.
  

• Experience of the initial Ecotech Action Plans was reviewed and there appeared to be a consensus to persist with this development, with further work to be done of how to make the EAPs an effective mechanism for coordinating APEC’s Ecotech work.
  

• A review of the mandate and functioning of the Ecotech Subcommittee concluded that the ESC’s mandate is adequate for it to be fill its allotted function, so that attention should be focused on improving the effectiveness of the ESC rather than amending its mandate.
  

• A review of actions undertaken by APEC subfora to implement the APEC Food System led to a sharp debate on the issue of  including a section on APEC Food System-related actions in the IAPs.  Some members argued that this had already been mandated by APEC leaders whereas others claimed that this was a new proposal for which they questioned the need.
  

• Reports were received on a number of initiatives from the APEC Finance Ministers’ Process, including measures on combating money-laundering and the financing of terrorism.

A PECC Statement prepared for the SOM was tabled at the meeting, and time was allowed for a very brief presentation of the key points in the statement.

Robert Scollay
31 March 2002 

APEC TILF-RELATED ACTIVITIES
WITH POTENTIAL FOR PECC INVOLVEMENT

This report can also be downloaded: Report on SOM I

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