APEC would focus more on long game than new members

It’s important for the different regional architectures of economic cooperation in the Asia Pacific like TPP and RCEP to “potentially converge, APEC Secretariat Executive Director Alan Bollard has said.

“If they diverge, that would be a problem. We don’t want to see that part of the big economies in the Pacific is in one direction and part of the other ones in another, he said in a recent interview with Asia Pacific Daily.

Bollard said, APEC is waiting to see more clearly on the direction of regional architectures like the Trans-Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP), and how they may serve as stepping stones towards a Free Trade Area of the Asia Pacific (FTAAP), a vision endorsed by APEC leaders in 2010.

APEC is expected to be more specific in the upcoming years on what the still vague FTAAP vision means and how the existing regional architectures may be used as stepping stones to achieve it, Bollard said.

Bollard, previously the governor of New Zealand’s central bank for about ten years, took office as the executive director of the APEC Secretariat at the beginning of this year for a three-year term.

He said that the vision of APEC has not been changed much since its early days – to achieve economic advancement for the people of the Asia Pacific and the APEC economies, but the focus of work done by the organization has been changing along the way.

In the early days, the big label was the Bogor Goals, which the member economies signed up to in 1994. The focus had been on traditional reduction of barriers to trade and investment and some non-tariff barriers across the region.

Since then, APEC has also gone a long way to focus more on behind-border issues. Many working groups have been set up to address practical issues, including those around quarantine at customers, national data standards, business travel and certificates of origin, or in Bollard’s words, “all the things that make it easier to move goods, services, capital and people across the borders.

The Bogor Goals of 1994 consist of three pillars such as tariff reduction, trade and business facilitation, and economic-technical cooperation, in particular, capacity building.

Indonesia is hosting the APEC meetings this year with a focus on the progress towards attaining the Bogor Goals, increasing connectivity and promoting “sustainable growth with equity.

The average tariff in the APEC region dropped from about 17 percent in 1989 to 5.7 percent in 2011, which is much lower than the average of 10.3 percent for the rest of the world. The member economies reached their target of reducing trade transaction costs by 5 percent across the region between 2007 and 2010, by simplifying customs procedures and cutting red tape. It laid the groundwork for all APEC economies to adopt electronic customs processing systems that reduce the average time needed to clear customs.

Bollard said that there is still a lot can be done in further reduction of tariffs and non-tariff barriers, especially in agriculture. APEC is looking to see if the TPP may give the lead in agricultural tariff reduction.

In 2010, the average tariff in APEC economies in agriculture was 11.9 percent, compared with 4.9 percent for other sectors.

More importantly, the next stage of focus will be on regulatory reforms and harmonization. These include efforts in behind-borders regulatory issues and harmonization of standards across the different economies.

APEC has also been focusing on capacity building. There are some 50 working groups in different areas, including transport.

Supply chain management has featured prominently recently as the economies become ever more interconnected with increasing integration of trade in goods, services and the production chains, Bollard said. Its importance became markedly obvious and APEC has since responded following the earthquake in Japan and the floods in Thailand in 2011.

“Because that’s the time when we became very aware of just how integrated production is across borders in the region. That started a lot of work on supply chain management, choke points for supply chains, Bollard said.

The goal for an APEC supply chain action plan is to have an improvement of 10 percent, by addressing eight priority choke points such as regulatory impediments, customs inefficiencies and inadequate transport networks and infrastructure by 2015.

APEC has been successful despite being a diverse grouping, according to Bollard. They have a common ideal of making people in the region better off with growing economic interdependence, and at the same time, have been “very flexible in the goals and means for the goals to be achieved, he said.

Not everything has been signed up to by all members. Only the programs that have been tried with the best results have ended up going APEC-wide.

The huge success of growth in the Asia Pacific is another factor that has helped keep people’s interest and focus and the organization together.

APEC stays relevant by responding to changes in the region.

Bollard said that he saw an important change in the region from being a manufacturer and exporter of goods to being both a manufacturing base and an increasingly important final market, as the middle class population grew in some of the APEC economies.

The population wants not only better income and living standards, but also other things such as better environment, hence there’re needs to balance growth and sustainability.

They wanted to pursue a more balanced, inclusive, sustainable, innovative and secure growth, APEC leaders said in 2010.

“It’s not just fast growth that is going to work in the future, Bollard said. “The growth is really important, but they want growth with equity without extra environmental issues.

APEC leaders announced in 2010 that it was time to turn APEC’s long-term goal of building a free trade area in Asia Pacific into a concrete vision. They noted that the FTA should be pursued as a comprehensive free trade agreement, by building on the existing regional architecture, with agreements like TPP and RCEP.

But there should be no change to the largely voluntary approach of APEC to regional integration, Bollard said, as it has always been “an incubator of new ideas.

“APEC should be there doing interesting new things, trying out new ideas, he said, “some of them may not work, but some will.

At the moment, APEC would focus more on the long game than consider new members, Bollard added.