APEC 2013 by The Group of Nations

APEC › THOUGHT LEADERSHIP › Nusa Dua / Bali. Indonesia ❙ October 2013

The APEC Publication 2013

› Food: A World of Adundance

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› Cybersecurity: Public Data

THOUGHT LEADERSHIP

INSIDE APEC

› WELCOME: WISHNU WARDHANA

› Trade: Trans Pacific Partnership

› Nusa Dua/Bali ❙ Indonesia ❙ October 2013

The APEC Publication 2013

Sponsored Feature / Soneva Fushi

Soneva Fushi The original Soneva, the blueprint for all desert island hideaways, with a pristine Maldivian reef and legendary service.

Soneva Fushi is the original desert island hideaway. Everything about it feels right. The seaplane arrival. Picture book palm trees. Perfect white sand. Secluded beachside villas within touching distance of pristine reef. Nesting turtles and bunny rabbits co-habiting happily on a jewel of emerald green in a vast ocean of turquoise. It’s the kind of place that makes you feel like a child again. Every guest has a bicycle to explore the island. At a kilometre long by half a kilometre wide with sandy paths criss-crossing dense jungle, the island is big by Maldivian standards. Whereas some Maldives islands can be toured in seconds, Soneva Fushi is a proper island with hidden treasures to explore at every turn. The unique sense of discovery, optimism and innocence begins the moment you arrive at ‘Soneva Fushi International Airport’, a floating pontoon no bigger than a small living room. You 50 ❙ theapecceosummit.com

are met by smiling hosts, arriving in a traditional Maldivian dhoni boat with cold towels to wipe away the dust of the real world. Once your shoes are handed over, the ‘no news, no shoes’ philosophy kicks in and your whole being relaxes. Accommodation fits the idyll. Fifty five villas and private residences are hidden away behind dense foliage a few steps in soft white sand from the warm sea and three or four strokes from pristine coral reef, the villas are located sunrise or sunset side of the island. Their style defines the efortless, rustic chic synonymous with Soneva. Luxurious

yet understated. Vast, sigh-inducing beds with a choice of four duvet types as well as an extensive pillow menu. Open-air bathrooms and a selection of showers with Bose sound systems, intoxicating jungle aromas, waterfalls and sounds. Organic amenities that smell good enough to eat. Impeccable, intuitive service courtesy of Mr./Ms. Fridays who know what you want before you want it. Many guests stay ‘home’, enjoying unrivalled peace and privacy with the best ‘takeaway’ food in the Indian Ocean. Others head out to explore the nine diferent dining options. To breakfast at Mihiree Mitha, the social hub of the island, restaurant Nine on the beach, or dine in Fresh In The Garden, a restaurant cooled by breezes above the heady scents of the famous organic herb (delicious rocket)

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THE UNIQUE SENSE OF DISCOVERY, OPTIMISM AND INNOCENCE BEGINS THE MOMENT YOU ARRIVE AT ‘SONEVA FUSHI INTERNATIONAL AIRPORT’, A FLOATING PONTOON NO BIGGER THAN A SMALL LIVING ROOM. Contact Information: Reservations-fushi@soneva.com www.soneva.com

and vegetable garden. The spa is always a great temptation. Watching movies at Cinema Paradiso, the open-air movie theatre with only the starlit sky above, is not to be missed. Nor is counting Saturn’s rings in the world class Observatory in the company of Dr Parag Mahajani, one of India’s leading astronomers. Opportunities to venture beyond the island including games in (the soon-to-be launched) children’s Den, sunset dolphin cruises, picnics on the island’s own private sandbank or three deserted islands, breathtaking diving such as watching the majestic rays feed at Manta Point, or fascinating cultural visits to nearby islands. Soneva Fushi is the ultimate pioneer of memory-making experiences. Choices abound. How do you decide between sixty flavours of ice cream? Eleven types of pillow.

Five hundred wines. Umpteen freshly squeezed juices. The freshest line-caught tuna prepared in a hundred diferent ways. As is the Soneva way, all this is ofered while treading as lightly as possible on the earth. Sonu and Eva Shivdasani’s passion for enriching lives while protecting nature’s precious resources pervades every aspect of this magical island. At the heart is Eco Centro, proving ground for the sustainable culture Soneva extols, where everything from the sun’s rays – the island is part powered by solar panels – to fallen timber and driftwood is re-used. Serious goals for sustainability do not repress Soneva Fushi’s sense of fun. They enhance it. The proximity to nature, the innate respect for the ocean’s wonders, 24/7 bare feet, all help to

enhance a feeling of liberation and inner peace. Pleasure goes hand in hand with respect for the planet. Lounging on the nets at Bar(a)bara sipping cocktails as dolphins scoot by in front of the setting sun is hedonism of the best kind. Snorkelling the house reef in the company of the resident marine biologist before enjoying a Kurumbaa Kaashi rub with coconut oil, milk and flesh harvested minutes earlier from a freshly fallen nut simply restores your long forgotten sense of wonder.... Nothing else compares. ■

Soneva Fushi is committed to the Soneva Group’s SLOW LIFE philosophy: Sustainable-Local-Organic-Wellness Learning-Inspiring-Fun-Experiences. Nusa Dua / Bali. Indonesia 2013 ❙ 51

The APEC Publication 2013

Feature / Global Action Platform Editorial by: Dr. Scott T. Massey

A World of Abundance Building a Global Action Platform to Create Abundance Through Innovation in Food, Health and Prosperity.

ROM PROTESTS IN BRAZIL and Europe over rising costs, to the bankruptcy of Detroit, to sluggish growth in the US and EU, and the potential slowing and rebalancing of the Chinese economy, there remain clear challenges to stimulating and sustaining a new round of economic growth in the Asian-Pacific region and the world. The diverse challenges, like those just mentioned (among many others that could be listed) may appear disconnected, but in fact, are not. Instead, the various economic challenges we face are interconnected

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symptoms of an underlying economic dynamic. Simply put, the world now faces an intensified need to create sustainable prosperity built on platforms of opportunity open to every person. The combination of globalization, mobile technology, free markets, global capital markets, and the increased speed of competition and change have created vast new opportunities for corporations and individuals, but this perfect storm of change has also disrupted economic systems “close to home” in which a majority of the world’s population lives. Because of this, and as the human population grows toward

nine billion, it is now urgent to put strategies in place that “re-localize” economies and create “new growth” at the regional level, like the new growth vegetation in an old growth forest. In short, to move beyond the current spiral of economic crises, we need to take steps to create sustainable, shared, long-term prosperity; and to do this, we need to build dynamic innovation hubs in regions all around the world. Regionally based innovation hubs are the new engines of prosperity and platforms for expanding, broad-based economic opportunity. One new global effort to move toward this goal has been recently launched. In November 2012, four hundred leaders from ten nations, representing the corporate, research, government, finance, media, foundation, and NGO sectors convened at the Global South Summit in Nashville, Tennessee USA. The goal of this international gathering was to begin framing an agenda for abundance with a focus on three interconnected issues–food, health, and prosperity. At the conclusion of the inaugural Summit, an integrated approach to these three issues was defined as an urgent priority needing attention over the coming three to five years.

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ThouGhT LeAdeRShIP Why Food, Health and Prosperity? Founding leaders in this new global initiative started with an economic concern--how to advance sustainable economic growth and prosperity for a growing world population. The organizers found strong interest in mobilizing cross sector leadership to find new paths and models for economic development aimed at sustainable prosperity. Further, it became clear that the growing global challenges of food and health–basics for human capital–had to be addressed while developing ways to expand shared prosperity. This vision of an economic future of sustainable growth and expanding opportunity for everyone requires a special lens. To balance growth, sustainability, and opportunity leaders identified a need for an adaptable model and tools, a nimble, neutral infrastructure wellsuited for the fast-emerging, complex conditions of the 21st century. The elements of this model include industry clusters, disruptive innovations, regional economies, platforms for collaboration, and strategy for competitiveness. New technologies, the Internet, pervasive knowledge/training, and mobile devices are also key to the mix.

A Vision of Abundance Instead of a focus on scarcity and conflict, this new initiative focuses on the creation of abundance as the central organizing idea. How can we focus economic activity in regional innovation hubs to expand opportunity and unleash innovation? How can the whole human population flourish–while also allowing the environment and ecosystems that make life possible also flourish? Key drivers for innovation and prosperity are food and health. If economic growth requires a broad base of talented, innovative people working together, then food and health are critical. In fact, food and health are baseline measures of the asset strength of the major economic driver of today’s economy–human capital. Between the current state of affairs for healthcare and a major transformation of health systems lie thorny issues of realigning financial incentives while managing the demographic shifts toward an older population with greater health needs and while integrating large new populations to modern healthcare. As with economic and food issues, time is running out to address changes in healthcare; and under this pressure there is a growing sense of urgency to

THE GLOBAL ACTION PLATFORM HAS BEEN CREATED AS A MECHANISM TO CONNECT AND ALIGN EFFORTS TO CREATE ABUNDANCE THROUGH INNOVATION.

find transformative healthcare solutions and new financial models. In terms of food, while the world currently produces enough food to feed everyone on the planet, the logistics and political consensus are missing to distribute what is produced. Food reserves have not been replenished since the 2010 drought, which puts the world on the brink of food shortages. Disputes are raging over the role of genetically modified foods, the composition of a healthy, nutritious diet, and the role of government to enforce diet, food policies, food safety, and government’s role in funding research and food relief efforts. Building a Global Action Plan The challenge the world faces now is to frame long term solutions and innovations that have the capacity and promise to create abundant food, health, and prosperity for everyone on the planet. Solutions are simultaneously local, regional and global. In short, solutions require local cross-sector leaders to imagine, to explore– and to specify–how innovation can create abundance, and how we can efficiently and much more effectively connect and network invested leaders, research institutions and innovators to collaborate in fulfilling the promise of abundance. The Global Action Platform has been created as a mechanism to connect and align efforts to create abundance through innovation. The Platform is built around four interconnected functions: Convene, Challenge, Connect, and Communicate. Through the Platform, an integrated series of financial investments, tied to leadership summits, action plans, and global multimedia communications are being implemented over the next five years. Innovation for Abundance The future welfare of both human beings and the planet depend on a distinctly human resource– innovation. Our emerging economies demand more timely solutions, access to innovation, improved efficiencies and high impact results. On this there is broad consensus. In order for societies to be innovative, people must be able to thrive; they need food, health, and the tools and systems of innovation that produce sustainable prosperity. As we strive to achieve sustainable, shared prosperity, leaders and innovators will need to collaborate together to create a shared platform for clear, more efficient decision-making and informed actions to guide our future. With wa growing network of university-businessgovernment-NGO-media partners, the Global Action Platform aims to become a primary distribution channel and change agent for a world of abundance. ■ Nusa Dua / Bali. Indonesia 2013 ❙ 53

The APEC Publication 2013

Feature / Energy Policy Editorial by: Dr. Richard Rousseau, Diplomatic Courier Contributor

Russia’s Energy Policy Expanding Influence As the world’s leading supplier of natural gas between 2003 and 2009–the U.S. surpassed Russia as world’s leading producer in 2010–and the seventh largest supplier of oil, Russia occupies a formidable position as an energy exporter.

ISQUIET OVER EUROPE’S reliance on energy from Russia has intensified efforts to find new suppliers. The politicization of energy security in Europe has diverted parties from the threat posed by a continued reliance on hydrocarbons. In January 2009, the supply of energy to a number of European states was disrupted following a price dispute between Ukraine and Russia. Although Vladimir Putin, president at the time, claimed that Russia would not behave as an energy superpower, the Kremlin’s decision to suspend gas supplies to Ukraine increased European anxiety over Moscow’s willingness to use energy as a tool in foreign policy. As the world’s leading supplier of natural gas between 2003 and 2009–the U.S. surpassed Russia as world’s leading producer in 2010–and the seventh largest supplier of oil, Russia occupies a formidable position as an energy exporter. In contrast, many of the surrounding states of the European Union and the former Soviet Union are major importers of Russian energy. The media coverage of this ‘gas crisis’ highlighted the growing politicization of energy security within the region and on the international level. However, the focus on Europe’s access to a reliable (and relatively cheap) supply of energy, coupled with growing Russian adventurism, obscures the threat that a continued reliance on hydrocarbons has on the future of international energy security. Russia’s growing international prominence is inextricably linked to its natural energy resources. Rapid increases in oil and gas prices in the mid-2000s enabled Russia to progress from a position of near financial collapse in 1998 to successive years of economic growth. The growing demand for Russian energy has been helped by the country’s position outside the Organisation for Petroleum Exporting Countries (OPEC) and the Middle East, where ongoing conflict undermines the reliability of supply. Europe currently relies on Russia for more than 40 percent of its gas and a third of its oil supplies–figures that are expected to increase. Meanwhile China imports approximately 10 percent of its gas from its northern neighbour. Yet, there are key differences between eastern and western Europe in their dependency on Russian energy. Although the total amount of gas consumed by the Eastern European states is relatively small in comparison to that of Germany or Italy, they are much more dependent on Russia for their supply. Ukraine is particularly vulnerable to

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disruptions from Russia. Not only is it a pivotal state in the transit of gas towards Europe, accounting for approximately 80 percent of supply (even though this is bound to decrease in the mid and long term, as new transit routes are put into service) it is also dependent on Russian gas for its own energy needs and the revenues generated from transit fees. Although the Kremlin always cites commercial reasons for the suspension of oil and gas to clients, there is growing concern in the West that Europe’s and Asia’s energy dependency is increasingly being used by Moscow as a tool to exert political pressure to bring commercial partners ‘to heel.’

represent the only route that does not cross Russia or Iran. However, these transit states, as well as the oil-rich Central Asian states of Kazakhstan, Azerbaijan, Turkmenistan, and Uzbekistan, fall within what Russian foreign policy has identified as a sphere of influence. Numerous U.S. and Chinese officials’ visit to these countries signal America’s and China’s “deep interest” in the energy security of the region. It reinforces the perception expressed by former Russian Minister of Defence Anatoly Serdyukov that the U.S. and China are looking to ‘muscle in’ on energy and mineral resources in the former Soviet countries of Central Asia.

A Case for Diversification The prospect of a Russian stranglehold on Europe’s energy supply has strengthened the case for diversification of the energy supply in Europe. While there are efforts to circumvent Russia, the long lead-in to viable alternative energy sources and constructing supporting infrastructure will see continued reliance on Russia for the immediate future. Securing the future of Europe’s energy supply is complicated by the tenuous nature of Moscow’s relations with transit countries. This was highlighted by the Russian invasion of Georgia in August 2008, where security of oil and gas transit pipelines came under the spotlight. Georgia’s transit pipelines are of particular importance to Europe as they

A New Energy Charter for Europe In addressing Europe’s energy needs, the EU has continued to push for the liberalization of energy markets and Russia’s ratification of the Energy Charter Treaty (ECT) and the Transit Protocol. Even though Russia signed the treaty in 1994, it officially opted out of it on October 18, 2009 and informed the depository that it did not intend to become a Contracting Party to the Energy Charter Treaty or the Protocol on Energy Efficiency and Related Environmental Aspects. It argued that ratifying it would undermine the country’s national interest, and acceding to the Transit Protocol would allow Central Asian states access to Russia’s gas and oil transit pipeline network without any agreement with

Moscow. Former Russian President Dmitry Medvedev called for the negotiation of a new energy charter for Europe, one that would focus not only on consumers of energy, but also on producers and transit countries. While Europe is dependent on Russian energy exports, Russia’s national budget is reliant on revenue raised from the sale of its oil and gas to Europe. With evidence suggesting that Russia’s resources are reaching their peak, the bilateral agreement between Moscow and China to secure a significant increase in oil trading volumes has underscored a growing concern regarding Russia’s over-extension and future energy capacity. The country also faces a growing domestic demand for energy, while the doubling of the gas price over the last 10 years has placed an additional burden on lower-income families. Internationally, the soaring cost of energy and the move towards reducing greenhouse gas emissions has resulted in increased financial support for the research and development of alternative energy sources, including renewable sources like solar, wind, and hydropower. With significant fossil fuel reserves, there has been little investor incentive to fund finance studies to develop technology and diversify energy sources within the Russian federation, leaving the economy dangerously dependent on hydrocarbons.> Nusa Dua / Bali. Indonesia 2013 ❙ 55

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Feature / Energy Policy >The global financial crisis has taken a toll on revenue from energy exports. In a presentation to the 2009 UN Conference on Trade and Development (UNCTAD), Ivan Korolev, Deputy Director of the Institute of World Economy and International Relations, Academy of Science of the Russian Federation, indicated that Russia’s growth rate for 2009 was flat. During the next three years growth in Russia also lower than expected. This is linked to a dependence on the export price of hydrocarbons, which account for 70 to 80 percent of all export earnings. In addition to its impact on the state budget, Tatiana Mitrova, Head of Global Energy at Skolovovo Energy Centre, told at the Russia Forum in early 2012 that the financial crisis, and the rapid depreciation in oil prices, has reduced the resources available for investment in energy infrastructure modernization projects and the development of new oil and gas fields. In response to oil prices falling from a high above $140 a barrel in July 2008, and in an effort to ensure its own energy security, Moscow has indicated a willingness to work closely with OPEC in an effort to stabilise the market. The Kremlin has also been at the forefront of plans to form a gas cartel modelled after OPEC, but so far to no avail. To this end, Moscow has been in talks with Iran and Qatar—and if the three joined forces they would control more than half of the world’s natural gas resources. Through Gazprom, the Russian energy giant, Russia is expanding its energy network internationally. Indeed, there are indications that the state-run monopoly has set out to acquire a share of Africa’s energy assets (including nuclear), with the opening of its first African office in Algeria in June 2008. Following this was a flurry of meetings with a number of countries, including Angola, Egypt, Namibia, Nigeria, and South Africa. Before the Libyan civil war and Western military intervention, Gazprom had offered to buy all of Libya’s spare oil and gas exports. It equally expressed an interest in buying exploration licences in Nigeria, as well as the building of gas pipelines between Nigeria and Algeria and Europe and Libya. Internationally, oil and gas have been the fundamental drivers of economic growth and development. As these hydrocarbons become increasingly scarce, competition for energy resources in Russia and the Central Asian region will result in rising tension between both the energy exporting and energy importing states. This is reflected in the new “Foreign Policy Concept of the Russian Federation” signed by Putin on February 12, 56 ❙ theapecceosummit.com

BY PLACING ACCESS TO HYDROCARBONS AT THE CENTRE OF THE FEDERATION’S ENERGY SECURITY, RUSSIA WILL CONTINUE TO REMAIN DEPENDENT ON FOSSIL FUEL, NOT ONLY FOR ITS ENERGY BUT AS A SOURCE OF REVENUE.

2013. The document establishes the basis of Russia’s external action at least until 2018, with a focus on the importance of access to energy resources globally and the potential for military conflict. It replaces the one endorsed by Dmitry Medvedev in July 2008. By placing access to hydrocarbons at the centre of the federation’s energy security, Russia will continue to remain dependent on fossil fuel, not only for its energy but as a source of revenue. The sustainability of this approach needs further consideration, especially in light of the decreasing price of energy resources and its subsequent impact on the national budget, modernization projects, and the exploration and development of future gas and oil fields. Although diplomatic efforts saw the supply of gas restored to Ukraine and other Eastern European countries, the European Commission has prioritized the connection

of the vulnerable Eastern European states of Lithuania, Latvia, and Estonia to European power grids, as well as the development of the southern Gas Corridor. Turning to alternative oil and gas exporting countries may provide a short to mediumterm solution; however, Europe’s focus on reducing its dependence on Russia diverts attention from the region’s continued reliance on hydrocarbons. The southern Gas Corridor may bypass Russia and Iran, but by all indications Europe would remain overly dependent on hydrocarbon energy exports from a region that remains within Russia’s sphere of influence, although less of a firm hold than previously. Rather than the continuing prioritization of energy security linked to the export and import of oil and gas, the future of energy security for both Europe and Russia lies in the diversification of energy resources and in moving away from a dependence on fossil fuels. ■

Biography Richard Rousseau is Associate Professor and Chairman of the Department of Political Science and International Relations at Khazar University in Baku, Azerbaijan. His research, teaching and advisory interests include Russian politics, Eurasian geopolitics, international political economy and globalization.

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The APEC Publication 2013

Feature / Global Trade By: Manuel C. Menendez III

APEC and Small, Medium and Micro Enterprises APEC’s 21 member economies, themselves powerhouse economic players constituting the majority of the world’s GDP, have created a unique opportunity for Small, Medium and Micro Enterprises.

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ThOUGhT LEADERShIP

INCE 1989, the Asia-Pacific Economic Cooperation forum has become a key venue for the global dialogue on international trade. Its 21 member economies, themselves powerhouse economic players constituting the majority of the world’s GDP, have created in APEC a unique opportunity for Small, Medium and Micro Enterprises (SMMEs) to have input in the shaping of an interdependent Pacific economic structure. More than 50% of all private sector employees earn their living in SMMEs, which have generated an astounding of all new private sector jobs in the United States since 1981. Therefore, the leaders of the APEC member economies are in a powerful position to utilize the strength of SMEs by allocating sufficient resources and attention to this extremely productive area and therefore encouraging economic growth. The Power of SMME’s SMMEs, as a major driver of significant economic progress and growth, are a prime target for partnership by the unique combination of leaders and experts at APEC. The challenge, then, for APEC member economies, is to better integrate SMMEs into the global economic dialogue. APEC members, as some of the strongest players in the world economy today, have the economic wherewithal, global influence, and wealth of expertise needed to best make use of the power of SMMEs while helping them to develop into the economic dynamos they have proven to be during both stable economic conditions, as well as, having great resiliency in times of economic crisis. It behooves the leaders of the APEC member economies to deeply consider the potential benefits of stronger ties with SMMEs. APEC is one of the most uniquely successful communication forums in existence. In its own words, it exists in part “to develop and strengthen the multilateral trading system between members” and “to increase the interdependence and prosperity of member economies”. Communication has proven to be a great force for

achieving these goals, particularly between member economies and business leaders, who often benefit greatly from wide-open channels of communication with one another. The leaders of the APEC member economies would do well to reflect on how strong ties and open communication between member economies and SMMEs could benefit both parties. The diversity of interests present in the Asia Pacific region can present a challenge for those who wish to create interdependence between nations. SMMEs, being smaller and more adaptable than larger firms, are in a unique position to address the myriad needs and interests of APEC member economies by adapting to the specific situation. Only the immense influence of APEC member economies and their leaders can open the gates for SMMEs to efficiently address such unique interests by making it easier for SMMEs leaders to get involved at APEC, interfacing with member economy leaders and large business leaders alike. The formation of the Small, Medium and Micro Enterprises (SMMEs) & Entrepreneurship Working Group of APEC’s Business Advisory Council (ABAC) is a step in the right direction but much more can be done and should be done to enhance, expand and make meaningful the SMMEs partnership with APEC…one immediate idea would be to devote ample time and provide a platform to SMME’s to play a larger role at the APEC CEO Summit meetings. As the Asia Pacific region endeavors to secure the future, it would be mistaken in ignoring the obvious economic potential of SMMEs. As US Secretary of State Hillary Clinton said at APEC in 2011, “this Summit ‘just might’ make the history books. But it will do so only if we make history by empowering our rhetoric with concrete action.” The

Biography Manuel ‘Manny’ Menendez III is former Director of Economic & Business Development and International Protocol Oicer for the City and County of Honolulu and Founder & CEO of MCM Group Holdings Ltd. – 8M8 LLC an international advisory service organization specializing in business development, government relations, trade and investment focused on the Asia Paciic region with special emphasis on the People’s Republic of China since 1978.

leaders of APEC member economies and industry experts alike can take further concrete actions to benefit immensely and mutually from a closer and more robust partnership with Small, Medium and Micro Enterprises (SMMEs) & Entrepreneurs. ■

APEC IS ONE OF THE MOST UNIQUELY SUCCESSFUL COMMUNICATION FORUMS IN EXISTENCE. Nusa Dua / Bali. Indonesia 2013 ❙ 61

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Feature / Trans Paciic Partnership Editorial by: Akela Lacy, Diplomatic Courier Contributor

Rushing Backwards: Why Hastening the Trans Paciic Partnership Agreement Will Hurt Us The proposed decreases in barriers to trade and foreign investment have a historically exhibited tendency to lood domestic markets with cheap foreign goods. 62 ❙ theapecceosummit.com

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THoUgHT LEADERSHIP

ORMAL NEGOTIATIONS on the Trans Pacific Partnership Agreement began in 2010 and as of 2013 officially include Australia, Brunei Darussalam, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, the U.S. and Vietnam. There has been a growing global opposition to the agreement as leaked versions of the document reach the public sphere, suggesting extreme overhauls to corporate-domestic relationships abroad and diminished power of democratic publics to exercise their rights to provide input for domestic policy. As other nations like Japan and Malaysia begin the process of entering these negotiations, their publics have also expressed extreme concern at the requirements facing their governments. President Obama has expressed a desire to finalize negotiations by 2013, but there are provisions of the agreement

that deserve close reconsideration before then. As the only non-governmental official overseer of the APEC CEO Summit’s operating process, Pacific Economic Cooperation Council co-chair Jusuf Wanandi is forewarning of a “dilemma” at this year’s meeting in Bali stemming from debates over competing regional trade agreements, mainly those surrounding the Trans-Pacific Partnership (TPP). Over the past few years the proposed agreement has attracted international criticism concerning lack of transparency surrounding its negotiation and drafting, especially in Japan’s agricultural and food safety sectors and most recently in the U.S. Congress; earlier in June Senator Elizabeth Warren (D-Mass.) sent a letter to the newly-elected U.S. Trade Representative Michael Frohman asking if in his term he would disclose a copy of the sweeping regulatory agreement to the public. Senator Warren is one on a long list of actors in the U.S. including public health organizations, public interest lawyers, state leaders and representatives alike who are vocalizing concern about the potentially negative effects that the TPP could have on domestic industries and regulatory policies in participant nations. Those critiquing the agreement are doing so from allegedly leaked documents and therefore unconfirmed sources, but abridged versions of the agreement that have been confirmed and released to global businesses and state leaders as well as certain members of Congress deserve a thoughtful and critical assessment in terms of their stipulations which extend far beyond the traditionally simplified definition of trade. Nations participating in TPP negotiations are expected upon its finalization to conform to domestic policy standards governed by those members leading the discussions. This requirement, though aimed at economic reinvigoration, instead effectively circumvents the people of countries in negotiation from exercising their democratic rights to have a say in domestic policy. The TPP’s projected structuring would give transnational corporations the power to sue national governments in countries where they operate for non-compliance with regulatory provisions mandated by the country from which the company operates. A foreign company operating overseas would have the legal option and the power to overturn domestically agreed-upon policies in order to operate in a more efficient and lucrative manner. These corporate-nation suits would be tried in international tribunals with the power to override domestic environmental, health, and intellectual property regulations to further the interests of foreign corporations.

Beyond these somewhat morally-founded concerns, there are also those more basically grounded in economics. In theory the Trans Pacific Partnership Agreement has the potential to cement the emerging and mutually beneficial trade bloc between Australia, Brunei Darussalam, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, the U.S., and Vietnam. However the proposed decreases in barriers to trade and foreign investment have a historically exhibited tendency to flood domestic markets with cheap foreign goods, decreasing demand for domestically produced goods and threatening jobs at home. These consequences may not necessarily be expressly intended by the powers in negotiation, but they cannot be ignored. Although the TPP’s publicized aims are to eliminatie barriers to trade in order to further integrate economies in the largest proposed trade bloc in the world, its provisions for conformity to a certain standard of policies amount to a somewhat misguided one-size-fits-all approach to economic integration. Although similar free trade agreements in the past have increased participant nations’ GDPs with foreign investment, there is also evidence of job displacement, decrease in national investment, and socioeconomic inequality perpetuated by a shift of demand from labor-intensive goods to capital-intensive goods – decreasing wages for laborers and increasing profit for those already gaining it. And then there are the copyright issues. Given recent public dismay with online privacy breaches and federal disposition towards the issue in the U.S., the TTP provisions for intellectual property are surprisingly and a bit disproportionately strict. Many critics of the TPP agreement contend that pharmaceutical,>

There has BeeN a GrOWING GLOBaL OPPOsITION TO The aGreeMeNT as LeaKeD VersIONs OF The DOCUMeNT reaCh The PUBLIC sPhere. Nusa Dua / Bali. Indonesia 2013 ❙ 63

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Feature / Trans Paciic Partnership

>computer and entertainment companies will benefit more from the pact than the publics of participating nations. The TPP’s intellectual property provisions would require member nations to adopt many strict copyright laws and effectively criminalize minor infractions with jail time rather than liability to the copyright owner. It would also give internet service providers (ISPs) the ability to track even blurred instances of user copyright infringement with a “three-strike” test, allowing the ISP to bar the customer from service after three recorded “violations”. Given the modernly lowered barriers to content sharing and a general public desensitization to exactly what behavior counts as infringement and what is considered legal for one-time use versus repeated illegal reproduction, these provisions allow for extremely disproportionate responses to minor violations of inextricably complicated laws imposed by foreign governments. These intellectual property laws also extend beyond the sphere of internet usage and privacy into the pharmaceutical world, producing relevant concerns for public health. If member nations are required to conform to a standard set of copyright laws based on the domestic protectionist policies of leading negotiators, they 64 ❙ theapecceosummit.com

UPON TheIr eLeCTION OUr LeaDers aCCePTeD resPONsIBILITY TO DO WhaT Is BesT FOr The PeOPLe; rUshING TPP Is NOT The aNsWer.

are effectively barring their own domestic pharmaceutical companies from reproducing drugs at appropriate prices for their consumer bases and relegating the public’s only choice to expensive and therefore out of reach drugs produced by foreign companies. Both the UN Development Program and UNAIDS have issued reports urging global powers not to joing the TTP under these terms, specifying “financing policies and intellectual property standards that inflate the price of medications… granting pharmaceutical companies long-term monopolies on livesaving medications” which leave “poor citizens…denied [of] lifesaving treatments” (Zach Carter, Huffington Post). Those invovled in TPP negotiations are calling for a finalized agreement by the end of this year. Given the ever-growing public concern over the pact’s implications for democratic practices, individual internet use and global access to medicine, there seems to be an evident need for further deliberation. The last thing our global community needs is a rushed agreement that will set the educated and affluent further and further apart from those struggling to survive. Upon their election our leaders accepted responsibility to do what is best for the people; rushing TPP is not the answer. ■

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The APEC Publication 2013

News / Regulatory Practices Story by: Irvina Falah

Support for Good Regulatory Practices in APEC will Foster Growth

PEC ECONOMIES are taking steps towards reducing technical barriers to trade by monitoring and improving the implementation of good regulatory practices, according to a number of public and private sector experts. Regulatory officials and business representatives shared experiences and explored ways to enhance internal policy

coordination, regulatory impact assessment and public consultation during an APEC conference that concluded on Thursday in Medan. “Regulatory cooperation has become an important area of focus for APEC economies,” said Professor Bambang Prasetya, the Chairman of Indonesia’s National Standardization Agency.

PRIVATE SECTOR REPRESENTATIVES DESCRIBED THE IMPORTANCE OF EFFORTS TO FACILITATE AN IMPROVED APPROACH TO REGULATION AND THE SCOPE OF ITS POTENTIAL BENEFITS. 68 ❙ theapecceosummit.com

“It is a self-fulfilling paradigm that better regulation and the improved alignment of regulatory practices will bring economies closer together and foster increased growth.” Professor Prasetya noted that this approach can help to ensure effective regulation while minimizing the burden on manufacturers and industries across the Asia-Pacific region. “It is important to reduce duplicative testing and certification which can add time and other costs to the export of goods,” said Tony Sinambela, the Director of Standardisation at Indonesia’s Ministry of Industry. He cited an APEC mutual recognition arrangement on conformity assessment of electrical and electronic equipment as an example of APEC’s work to drive sectoral growth through measures that support increased regulatory convergence. Private sector representatives described the importance of efforts to facilitate an improved approach to regulation and the scope of its potential benefits. “Good regulatory practice is the primary route to safer products without adding unnecessary costs or creating barriers to trade,” said Al Kaufman, Senior Vice President of Technical Affairs at the USbased Toy Industry Association. “Ultimately, consumers are the ones who benefit from a wider variety of safe products at cheaper prices.” Delegates updated one another on the baseline survey of actions taken by APEC economies to implement and advance regulatory convergence and cooperation. “The vision of a seamless regional economy has been taking shape over the last few years through the specific initiatives underway within APEC to implement good regulatory practices,” said T.A.R. Hanafiah, Chair of APEC Subcommittee on Standards and Conformance. “APEC economies’ work to address good regulatory practices is vital to advancing our broader agenda to lift trade and investment barriers, and move us towards a more integrated and prosperous region,” he concluded. The conclusion of the 7th APEC Conference on Good Regulatory Practices sets the stage for aseries of meetings of APEC standards officials in Medan that will continue through Saturday. ■

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The APEC Publication 2013

News / Border Entry Story by: Irvina Falah

APEC Economies are Improving Border Entry for Air Travelers

PEC MEMBER ECONOMIES are making air travel easier for the increasing number of passengers in the region. Further improvements to a scheme that expedites travel and border entry for businesspeople across the 21 APEC economies was the focal point of discussions by immigration and security officials who met on Monday in Medan. “The APEC Business Travel Card is a globally unique initiative designed to encourage business growth within the APEC region,” said Agnieszka Holland, Convenor of the APEC Business Mobility Group. “The Business Mobility Group is committed to

expanding and improving the scheme.” “Our goal is to simplify things as much as possible for those who conduct business between Asia-Pacific economies,” Holland explained. “This means seeking out opportunities to improve efficiency and service for businesspeople.” Through a single application, the APEC Business Travel Card, or ABTC, scheme offers businesspeople a three-year, multiple, short-stay entry and express lane access at key immigration checkpoints in Asia Pacific economies. The development of the scheme is a component of APEC’s broader efforts to

Our gOal is tO simplify things as much as pOssible fOr thOse whO cOnduct business between asia-pacific ecOnOmies. 70 ❙ theapecceosummit.com

build greater connectivity in the region to drive growth. “Strong regional growth of the scheme and commitment of participating economies make this initiative a scheme of choice for regional business,” Holland said. “This is evidenced by the ascension of Russia to full membership on 1 June 2013 and the continued work of Canada and the United States towards full membership.” Collectively, APEC officials continue to engage in a dialogue on emergency response travel facilitation for personnel and equipment in the Asia-Pacific Region in times of disaster. “We need to consider working in partnership with the aviation industry to optimize emerging technologies such as advanced passenger information or automated border control systems,” Holland noted. “Partnerships in enhancing our collective capabilities will ultimately help us to achieve faster, smoother travel and allow us to continue to expand benefits to increasing numbers of businesspeople,” she concluded. ■

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The APEC publication 2013

News / service sectors

ThoughT Leadership

Story by: Irvina Falah

opening the services sector ofers Big gains, say apeC oicials

HE PROJECTED GAINS of opening services sectors are almost twice as big as the gains from the liberalization of merchandise trade. The potential benefits for the Asia-Pacific region were examined by APEC Senior Officials, business representatives and academics during an APEC a services dialogue this week in Surabaya. Liberalizing services could stimulate growth, create jobs, make small and medium enterprises more competitive and lower prices for consumers, speakers explained. By lowering business costs, it was noted that freer services sectors could also enhance companies’ ability to export and compete in international markets. Discussion of these issues helped to set the tone for the opening of the APEC Senior Officials’ meeting here on Thursday and Friday.

“More open services sectors are critical to enhancing economic growth,” said Ambassador Yuri Thamrin, Chair of the APEC Senior Officials’ Meeting, which is tasked with pushing forward member economies’ agenda for ensuring a resilient Asia-Pacific. “A better understanding of the challenges and opportunities in further expanding trade in services through public-private dialogue can help to identify practical ways forward.” Trade in commercial services increases around seven percent annually among APEC economies, noted Ambassador Thamrin. But unlike manufacturing in the region, restrictions remain in some sectors such as energy, transportation and telecommunications. Structural reforms in these sectors alone could generate about US$175 billion in savings a year, according to research by the

STRUCTURAL REFORMS IN THESE SECTORS ALONE COULD GENERATE ABOUT US$175 BILLION IN SAVINGS A YEAR, ACCORDING TO RESEARCH BY THE APEC POLICY SUPPORT UNIT.

APEC Policy Support Unit. “Services are critical to achieving the Bogor Goals to achieve accelerated, balanced and equitable economic growth not only in the Asia-Pacific region, but throughout the world,” said Dr Djisman Simandjuntak, of the Pacific Economic Cooperation Council, which is an official APEC observer. “There is now substantial evidence that regulatory clarity and a competitive environment will lead to big benefits for consumers. For example, the reduction of freight rates by 20 percent and the reduction of electricity prices by 23 percent,” he noted. APEC economies’ engagement with the private sector is playing a role in their work to promote structural reform. “Regulatory reform and the opening up of services brings huge benefits to economies and more importantly, to consumers,” said Anthony Nightingale of the APEC Business Advisory Council. “We are very pleased that APEC is devoting increased attention to this vital sector of economic activity,” he added. “By putting our heads together with leaders in government, we can come up with ideas and initiatives that can help to address such issues constructively.” ■ Nusa Dua / Bali. Indonesia 2013 ❙ 75

The APEC Publication 2013