Opportunity Too Good to Waste

The Australian Financial Review


By John W. H. Denton
Chairman, BCA Trade and International Relations Task Force
Partner and Chief Executive Officer, Corrs Chambers Westgarth

Australia as host of the Asia–Pacific Economic Co-operation leaders meeting in Sydney has a unique opportunity to shape the future priorities of the grouping’s 21 members.

As our government considers its approach to this vital event, it is important that we determine clearly what we want to achieve by way of policy outcomes.

The Business Council of Australia believes there should be a focus on four key areas of policy, including practical domestic reform, energy security and climate change, longer-term aspirations for free trade, and structural support for APEC as an institution. We argue that enabling increased investment and trade between the members of APEC should be the first priority as this will deliver benefits for all of the members’ economies.

While we have seen significant progress with reducing tariffs and other barriers imposed at the border, there is a need to address domestic or “behind the border” barriers.

In particular, the effectiveness of domestic regulation holds the key to new investment and business development opportunities. What business is looking for is a robust legal framework that underpins the working of free markets by protecting private property rights, including intellectual property safeguards.

High quality regulation also depends on establishing and maintaining well resourced and impartial institutions. And within institutions there needs to be a high standard of governance. Specific issues of concern for business in the wider Asia-Pacific region include the time and paperwork requirements for registering a business, onerous licensing arrangements, and the need to improve ethical conduct.

These issues are important because they directly affect cost structures, broader competitiveness and economic performance.

Given where responsibilities for these issues lie within governments, we see the need for a greater involvement by finance and treasury ministers, and better integration between economic and trade policy, if we are going to successfully upgrade the focus on behind-the-border issues.

A second priority for APEC is to build a framework for addressing the related challenges of energy security and climate change.

The key to achieving energy security is for energy importing nations to have open and competitive markets that support the most efficient allocation of energy resources.

The BCA believes APEC leaders should use the meetings in Sydney to begin the process of building an international consensus for a balanced and practical approach to tackling climate change. The discussions ought to focus on agreeing principles for an international emissions trading system, support for research and the development, including the development of new methods to reduce emissions, and arrangements for implementing an international framework for reducing greenhouse gases.

A third priority is to agree on the way forward for a potential free-trade area in the Asia Pacific. The idea of negotiating an FTAAP has received significant support in recent months, driven largely by lack of progress with the Doha multilateral round.

An FTAAP is viewed by business as a desirable longer-term goal. One very important advantage of an FTAAP is the potential it offers to strengthen the economic linkages between Asia and America.

The fourth priority relates to APEC’s support structures. APEC relies on a limited permanent secretariat. Strengthening the secretariat would help to make sure that policy research and development reflects an APEC-wide perspective.

It would also allow APEC to better identify and understand problems and issues unique to the combined regions of Asia and the Americas.

Business also envisages a greater role for the secretariat in monitoring, assessing and reporting on the implementation of APEC’s decisions. This could strengthen the institution by putting pressure on members to follow their decisions with requisite actions.

The BCA believes there is a strong incentive for all the APEC members to work toward these goals, including lower costs and prices, better productivity, and a wider range of goods and services available to both business and consumers.

This can provide a platform for locking in economic growth, a higher standard of living and greater stability for the wider APEC region.