President Barack Obama, third right in front, poses for a family photo with other leaders at the Asia-Pacific Economic Cooperation summit in Manila, Philippines, Thursday, Nov. 19, 2015. Leaders in front row are, from left, Chiles President Michelle Bachelet, Canadian Prime Minister Justin Trudeau, Brunei’s Sultan Hassanal Bolkiah, Australia’s Prime Minister Malcolm Turnbull, Chinese President Xi Jinping, Philippines President Benigno Aquino III, Perus President Ollanta Humala Tasso, Vietnam’s President Truong Tan Sang, Obama, Thai Prime Minister Prayuth Chan-ocha and Taiwan’s envoy Vincent Siew. (AP Photo/Susan Walsh)
Amid a more challenging global landscape, leaders of 21 economies under the Asia-Pacific Economic Cooperation (Apec) bloc vowed Thursday to promote free trade, food security, technology and innovation, build eco-friendly infrastructure and ensure quality growth that will benefit even those at the bottom of the pyramid.
Wrapping up the Philippines’ yearlong hosting of 229 brainstorming sessions, the region’s leaders Thursday mapped out a detailed road map to reduce and eradicate poverty, their aspirations summed up by the theme “Building Inclusive Economies, Building a Better World.”
Based on the Boracay Action Agenda, Apec will address barriers to help link up MSMEs to global trade. Trade facilitation, trade finance, e-commerce and institutional support were identified as priority areas of cooperation.
“We live in a connected world in which many goods and services are no longer produced in one location but are the result of firms cooperating within and across our borders. This benefits consumers, creates jobs, and fosters development. We need all our businesses, regardless of size, to connect to where opportunities exist. We need to develop policies that take full advantage of global value chains and encourage greater participation and added value. We will promote competition, entrepreneurship and innovation through effective and comprehensive measures, including balanced intellectual property (IP) systems and capacity-building,” the leaders added.
“We recognize the significance of enabling the full participation of all sectors and segments of our society, especially women, youth, people with disabilities, indigenous peoples, low-income groups and micro, small and medium enterprises (MSMEs), to achieving inclusive growth,” the Apec leaders said in a communique issued at the end of the summit.
“We underscore the importance of empowering them with the ability to contribute to and benefit from future growth,” they said.
The Apec leaders committed to strengthen the multilateral trading system. They agreed to dismantle trade barriers within the region in a way that won’t undermine the “value, centrality and primacy of the multilateral trading system under the auspices of the World Trade Organization.”
In light of global concerns brought about by the turmoil in China, the Apec leaders likewise vowed to refrain from competitive devaluation and resist all forms of protectionism.
Fears of currency wars were triggered when China’s central bank devalued the yuan by almost 2 percent in August, bringing the Chinese currency to its steepest fall since the previous devaluation in 1994.
There have been talks that further devaluation may be sanctioned for China to regain competitiveness, which in turn may trigger the “beggar-thy-neighbor” currency wars, referring to an international trading policy that utilizes currency devaluation and protective barriers to alleviate economic difficulties at the expense of other countries.
Amid fears that some countries may engineer a weakening of their own local currencies to cope with shock waves from China, the declaration to refrain from competitive devaluation is significant to financial markets.
“We also acknowledge that inequality acts as a brake on economic growth and that reducing it is essential to spurring development and prosperity in the Asia-Pacific,” the leaders said.
They supported an “open, predictable, rules-based and transparent environment for trade and investment that enables meaningful access to economic opportunities,” adding that this provided the best means to deliver sustained and inclusive growth, quality job creation and financial market stability.
“We reaffirm the commitment to jointly build an open economy in the Asia-Pacific that is based on innovative development, interconnected growth and shared interests,” the leaders said.
Free Trade
The Apec leaders reiterated their commitment to achieve the Bogor Goals of free and open trade and investment by 2020 and eventually achieve the dream of turning the region into the Free Trade Area of the Asia-Pacific (FTAAP).
The Bogor Goals refer to a set of goals for realizing free and open trade in the Asia-Pacific region as agreed by member economies in 1994 in Bogor, Indonesia.
Initiatives include efforts to improve the time and costs for goods, people, investment and services to cross borders. Key reforms include streamlining customs procedures and reducing tariffs as well enhancing the business climate in individual member-economies.
On the FTAAP, Apec members agreed last year to endorse a road map for free trade in the region. Apec is now doing a strategic study on how to realize this goal and identify the challenges along the way.
The Apec leaders also reiterated their belief that the FTAAP should be pursued as a comprehensive free trade agreement by building on ongoing regional undertakings.
“We also reaffirm our vision contained in the pathways to FTAAP that it should be high-quality and incorporate and address next generation trade and investment issues. In this connection, we note the recent development on the free trade agreements in the region and the progress of the possible pathways to the FTAAP, including the finalization of Trans-Pacific Partnership (TPP) negotiations, and we encourage the early completion of negotiations for Regional Comprehensive Economic Partnership (RCEP).”
MSMEs
The Philippines is not yet part of the TPP—an economic grouping of nations intending to boost trade and investments by dismantling trade barriers—given that there are existing provisions in the Constitution that restrict foreign investment in certain industries.
As host country, the Philippines succeeded in incorporating into the Apec agenda its call for strategic interventions for MSMEs, regarded as a significant factor in global commerce to inclusive growth.
“We recognize that internationally oriented MSMEs can make substantial contributions to poverty reduction through employment creation, productivity improvements and economies of scale. However, because the costs of doing business impact disproportionately on our MSMEs, especially in terms of cumbersome rules and regulations, we need to address the barriers to their internationalization and integration into global value chains. Toward this end, we adopt the Boracay Action Agenda to globalize MSMEs and instruct ministers to implement actions laid out in the agenda and report their progress to us by 2020,” the declaration stated.
The Apec leaders further recognized the need to provide opportunities for MSMEs as they welcomed the Apec Iloilo Initiative: growing global MSMEs for inclusive development, which seeks for the creation of the Apec MSME Marketplace.
They likewise recognized the importance of access to finance as a key enabler of MSME expansion, internationalization and productivity improvement, as well as the significant opportunities that the Internet and digital economy can offer to achieve innovative, sustainable, inclusive, and secure growth, with a view to improving connectivity.
“We welcome the initiatives set out by the CAP [Cebu Action Plan] to maximize the Public-Private Partnership (PPP) modality for infrastructure delivery, to tap long-term investments for infrastructure through capital market development, and to continue efforts in inclusive infrastructure, in urban development, and in regional connectivity,” they stated.
Separately, the leaders welcomed the Renewed Apec Agenda for Structural Reform (RAASR).
The RAASR, which will cover the years 2016-2020, also seeks an improvement, setting its goal at 10 percent, in the ease of doing business across the Apec region by 2018 in five priority areas, namely: starting a business, dealing with construction permits, trading across borders, getting credit and enforcing contracts.
Food, environment
The Apec leaders also backed programs to promote food security and protect the maritime ecosystem. They put emphasis on the need for improved sustainable agriculture, food security, food safety and nutrition to build resilient communities across the region.
“We therefore instruct [concerned] ministers to implement the Apec High-Level Policy Dialogue on Food Security and Blue Economy Plan of Action in the areas of resilient oceans and coastal resources, fish loss reduction and agribusiness development,” the statement said. “Blue economy” refers to the maritime ecosystem.
“We encourage progress on the Apec Food Security Roadmap toward 2020, to contribute to the achievement of Apec’s food security goal,” they added.
Also, related to building sustainable and resilient communities amid the growth of urban areas and the aging of populations, the Apec leaders vowed to enhance efforts aimed at improving security and safety of food supply, sustainable agricultural and water management in the region. They also committed to efforts that increase people’s access to food as well as reduce food loss and waste along the food value chain.
The leaders voiced strong support for renewable energy development and climate resilient infrastructure, two points which the Philippines had sought to highlight for this year’s Apec meetings. US President Barack Obama also made a strong call for global action to mitigate climate change at this summit.
The Apec leaders said that, in transitioning to a low-carbon economy, they would explore the contribution of biofuels, civil nuclear power as a base load power source, advanced coal technologies, liquefied natural gas, solar, wind and marine energy technologies.
“We appreciate efforts toward a diversified, flexible and integrated natural gas market in the Apec region,” they said.
The Philippines, for its part, aspires to expand the role of natural gas and renewable energy in its energy mix by attracting investors in this energy segment.
“In line with our goal to promote sustainable communities, we are firmly committed to achieving a fair, balanced, ambitious, durable and dynamic agreement on climate change at the Paris Climate Conference (COP21) in December.”
As part of efforts to promote sustainable growth, as well as the responsible use of food and energy resources, the Apec leaders also reaffirmed their “aspirational goals” to reduce aggregate energy intensity by 45 percent by 2035 and double renewable energy in the regional energy mix by 2030 to achieve sustainable and resilient energy development within the Asia-Pacific region. This was one of the main points stressed at the Apec Energy Ministers’ Meeting in Cebu province.
“We reaffirm our commitment to rationalize and phase out over the medium term inefficient fossil fuel subsidies that encourage wasteful consumption while recognizing the importance of providing those in need with essential energy services,” the communique said.
The leaders highlighted the importance of forest and wildlife conservation in support of sustainable development, supporting communities and mitigating and adapting to climate change. On wildlife conservation, they vowed to continue efforts from previous years to address the illegal supply, transit and demand; strengthening domestic and global enforcement, enhancing legislative frameworks and other criminal justice tools; enhancing efforts in each of our economies to treat wildlife trafficking crime seriously; and increasing cross-border law enforcement cooperation and other interaction among wildlife enforcement networks as appropriate.
“We reaffirm our commitment to the aspirational goal in the Sydney Declaration of increasing forest cover in the region by at least 20 million hectares of all types of forests by 2020 and to promote sustainable forest management, conservation and rehabilitation, and combat illegal logging and associated trade,” they said.
Financial resilience
“We welcome the Cebu Action Plan and commend our finance ministers for their collaborative efforts in crafting a multi-year road map of deliverables and initiatives to build an Asia-Pacific community that is more financially integrated, transparent, resilient and connected,” the communique said.
The Cebu Action Plan is a 10-year road map with deliverables across four pillars: promoting financial integration; advancing fiscal reforms and transparency; enhancing financial resiliency; and accelerating infrastructure development and financing.
To make financing more accessible to small businesses, Apec last week launched the public-private Financial Infrastructure Development Network (FIDN), the first deliverable under the Cebu Action Plan. The FIDN was aimed at improving access to credit among MSMEs mainly through the establishment of credit information bureaus and systems that will provide credit data to prospective lenders at affordable cost. Also, the FIDN pushes the development of conducive legal and regulatory regimes across Apec that will facilitate the increased usage of movable assets as collateral in credit markets, hence will expand MSMEs’ access to financing, including supply chain and trade finance.
“We recognize that financial integration through moving toward more liberalized financial services and capital accounts, while maintaining adequate safeguards as well as increased access to finance for MSMEs and businesses in the supply chain, will foster greater trade and investment in the region,” the Apec leaders said. With reports from Amy R. Remo, Paolo G. Montecillo, Riza T. Olchondra, Ronnel W. Domingo, Miguel R. Camus and Ben O. de Vera
