APEC 2014 and its Future Challenges
    Category: Column By : Jusuf Wanandi Read : 1069 Date : Friday, January 16, 2015 - 18:33:43

    It is opportune that China as host of the 2014 APEC Economic Leaders’ Meeting (AELM) elevates three interrelated themes into the AELM’s agenda, namely (1) the advancement of regional economic integration, (2) the promotion of innovative development, economic reform and growth, and (3) the strengthening of comprehensive connectivity and infrastructure development. I foresee that this agenda will continue to preoccupy Asia Pacific in the foreseeable future. Initiatives that help push progress in the three areas of policy making are needed and welcome, including the China sponsored initiative on the Asia Infrastructure Investment Bank (AIIB) and the emerging Free Trade Area of the Asia Pacific (FTAAP).

    Asia Pacific needs to take policy initiatives to sustain an inclusive growth. We welcome the strong U.S. recovery despite the risk of possible increases in the cost of capital. Even if the U.S. recovery is durable enough to provide growth to the rest of the world, we do have some concerns about increasingly less buoyant sources of future growth in our region. First, macroeconomic stimulus has largely stumbled, though some growth can still be created through government budget reforms. Second, China and Indonesia are entering the most difficult growth phase at the upper end of the middle-income range and are likely to see decelerating growth—this is particularly true of China. Third, new technologies will take time to stimulate growth, such as 3-D manufacturing, big data and synthetic biology. What technology-driven growth can provide is a quicker diffusion of existing technologies to new uses, areas and socioeconomic classes. Four, lethargic reform persists in many economies partly because of wariness created by past crises. Lastly, there are widespread risks of instability in much of the world, political and otherwise, including the Ebola pandemic risk.

    We therefore must find new growth sources, which are closely related and consist mainly of technology progress and structural reforms. On the one hand, technology progress opens new possibilities for policy making, such as the information and telecommunication technology revolution. On the other hand, structural reform can help innovation, such as the removal of trade and investment barriers, good regulatory practices, adaptive regime on intellectual properties, inclusive and comprehensive connectivity, and good financial governance.

    Let me close by touching a little more on the FTAAP. On the sideline of its last General Meeting on 10-11 September 2014 in Beijing the PECC organized a FTAAP workshop. The participants’ view on possible guiding principles for the FTAAP process include:
    (1) Continuity that FTAAP should rely mainly on APEC’s commitments such as the ones on Bogor Goals, the Osaka Action Agenda, and the APEC Regional Integration Agenda even though FTAAP is not designed as an internal agenda of APEC.
    (2) Comprehensiveness in that FTAAP covers issues of trade in goods and services, investment, connectivity, infrastructure, regulatory coherence and practice, and capacity building so as to boost the value chain in Asia Pacific.
    (3) Open by not burdening the world with lasting discrimination.
    (4) Inclusive by opening opportunities for less developed economies to catch-up.
    (5) Good governance by being transparent and accountable.
    (6) APEC-conforming in that FTAAP capitalized on APEC’s inspiration and spirit of cooperation.