Realising that trans Pacific opportunity
Dominion Post - 22 November 2011
By Stephen Jacobi
Amidst the funk of the annual APEC meetings in Honolulu were some announcements which could contribute to the country’s future economic success including the release of the “broad outlines” of TPP.
For an organisation linking both sides of the Asia Pacific, this year’s APEC Summit had some special symbolism: APEC was held in the Pacific itself, in Honolulu, against a background of continuing global economic fragility but also some guarded optimism about the future of the Asia Pacific region.
APEC’s 21 member economies account for 40 per cent of the world’s population,
close to 44 per cent of the world’s trade, 54 per cent of global GDP and around 80 percent of New Zealand’s exports. That should make the annual APEC gathering of more than passing interest to New Zealanders.
This year’s APEC Economic Leaders’ meeting was chaired by President Obama and attended by Deputy Prime Minister Bill English. It focused largely on securing the region’s economic recovery in the light of the sovereign debt crisis in Europe. Trade, job creation and regulatory reform were all high on the agenda of the large number of officials and CEOs who mingled amidst the honeymooners and surfers in Waikiki.
President Obama surfed a wave of his own in Honolulu as he engaged personally with the region’s free trade vision. The President arrived in Honolulu having at last succeeded in getting Congress to ratify the three trade agreements (Korea, Colombia and Panama) signed by his predecessor. Facing a jobs crisis at home which can only be addressed by further export growth, Obama used the opportunity of Honolulu to demonstrate his Administration’s commitment to the region and to show some welcome new leadership on trade.
A lot of attention was focused on the Trans Pacific Partnership (TPP). Honolulu was the occasion for the release of the broad outlines of TPP, including an ambitious timetable for concluding the negotiation in 2012. Japan, Mexico and Canada all signalled their willingness to join the nine other parties in the negotiation. The Japanese announcement came after significant public and policy debate in Tokyo and marks a major new step for Japanese trade policy.
The TPP announcement more than meets business expectations at this point. Importantly, TPP partners reaffirmed that the final agreement must be comprehensive, high quality and innovative. These were all criteria listed in a joint statement by Asia Pacific business organisations issued in Honolulu.
TPP is positioned as a new generation agreement aimed at making a first step towards creating a seamless economic space in the region and achieving the rather elusive goal of a Free Trade Area of the Asia Pacific. By “new generation” is meant an agreement which finishes the “old” agenda of eliminating over time remaining tariffs and border restrictions and moves on to address the new needs of business in areas like services, investment, innovation and behind the border, regulatory issues. Such an agreement will need to factor in environmental and labour concerns, be relevant to small and medium size business and promote capacity building for developing countries.
TPP remains a work in progress. As negotiations continue the emphasis will be on building on the significant new momentum of the negotiations, retaining a high level of ambition and finding a way to open the negotiation to the three new aspirants without delaying the negotiating process. Aspects of the negotiation are controversial and will require close consultation with stakeholders. When the negotiation is completed New Zealanders will have the opportunity to assess the outcome through the Parliamentary and Select Committee process prior to ratification.
A raft of other business got done in Honolulu. The APEC Business Advisory Council (ABAC) with its three New Zealand members presented its report to Leaders and engaged in direct dialogue with President Obama, President Hu Jintao and other leaders. This year’s report was informed by a study of the new ways business is being done in the region through the development of complex supply and value chains. Finding ways to optimise these chains, to get them working better, faster, cheaper, was a major focus. The ABAC team was joined by a delegation of senior business leaders attending the APEC CEO Summit at which some of the world’s leading companies participated. Trade Minister Groser went into overdrive in Honolulu playing a key role in the TPP discussions, announcing new access for kiwifruit in Mexico, a new project to boost trade with Thailand and holding discussions with counterparts across the region. The Honolulu Declaration commits APEC to a range of initiatives in the areas of trade, green growth and regulatory co-operation.
When President Clinton hosted APEC in Seattle in 1993 he used the occasion to engender a new round of trade-creating initiatives ? a “triple play” including APEC, the WTO and NAFTA. Last week’s Honolulu meetings in the heart of the Pacific had a similar feel to them and demonstrate the optimism that exists about the future of the Asia Pacific region.