APEC 2011 USA by The Group of Nations

Welcome by Craig Mundie & Michael L. Ducker Dear Colleagues, Welcome to the United States and to Hawaii, our quintessentially Pacific state. It seems only fitting that leaders from business and government will convene here over the next several days to chart the course of this region and our future at the APEC 2011 CEO Summit. “The Future. Redefined.” We chose this theme for the Summit because we believe that now more than ever – with economic challenges facing the region and the entire world – the need for frank dialogue and lively debate between business leaders, governments and opinion leaders and shapers is required to chart a path toward the most productive and positive path forward: • • • • • •

Which policy choices and business decisions will lead us to the future we envision? How do we chart a course that fully maximizes our potential as societies and economies? How will we deal with shifting demographics and educational challenges? Can we maximize the benefits that innovations in healthcare offer our economies and citizens? Are we taking the right steps to ensure energy security to drive future growth and prosperity? How is the region progressing towards its long-term goal of economic and trade integration?

This year’s program is based on our strong belief that the future isn’t something that simply happens to us, but is a result of proactive policy choices and business decisions. We are confident that the 2011 CEO Summit will usher in a new era of cooperation between the public and private sectors, helping us forge a more connected, innovative and dynamic Asia-Pacific region. During the Summit we look forward to welcoming APEC economic Leaders, along with distinguished participants from the public and private sectors, to discuss the key commercial and trade issues of our generation in a creative format that will inspire conversation and encourage open debate. In short, over the next few days here in Hawaii you will participate in a Summit where the environment and the interaction will be as dynamic and fluid as the region it represents. Together we can help shape our future.

Craig Mundie Chief Research & Strategy Officer, Microsoft Corporation Chairman, APEC 2011 USA Host Committee

Michael L. Ducker Chief Operating Officer, Executive Vice President and President, International, FedEx Express Vice Chairman, APEC 2011 USA Host Committee

EDITORIAL EDITOR-IN-CHIEF Ana Carcani Rold EXECUTIVE EDITORS Kirk L. Jowers Courtney H. McBeth MANAGING EDITOR Rochelle M. Parker CONTRIBUTORS Abdulwahab Alkebsi Rudi von Arnim Michelle D. Bernard Chris Bramwell Ralph Brown Ambassador James P. Cain Congressman Jason Chaffetz Kenneth S. Chang Casey Coombs Kaeleigh Forsyth Monique Perry Danziger Philip H. de Leon Ambassador Lisa Gable Michael Gillis M. Ashraf Haidari Graig Klein Sigurd Neubauer Ryan Paul Mark C. Partridge Richard Rousseau Andrew Reeve David K. Schneider Jomo Kwame Sundaram Rami Turayhi Ambassador Pierre Vimont Sheldon Wardwell Kenneth Weisbrode GRAPHICS DIRECTOR Henri de Baritault COVER DESIGN Ellesse Sorbonne LEGAL The G8 Summit Magazine is a yearly publication independent of political affiliations or agendas published by The CAT Company. The articles in the G8 Summit Magazine represent the views of their authors and do not necessarily reflect those of the editors and the publishers. While the editors assume responsibility for the selection of the articles, the authors are responsible for the facts and interpretations of their articles. Authors retain all legal and copy rights to their articles. None of the articles can be reproduced without the permission of the editors and the authors.

APEC 2011 Summit For those of you attending the 2011 APEC CEO Summit, welcome! This has been both a challenging and rewarding year for the Asia-Pacific Economic Cooperation (APEC) forum. Challenging because we are traversing testing times in our global economic stage; and, rewarding because more and more creative partnerships and alliances are being forged between the public and private sectors because of those conditions. APEC is the premier forum for facilitating growth, cooperation, trade, and investment in the Asia-Pacific region. Its annual Leaders and Ministerial meetings are attended by heads of state, cabinet ministers, business leaders, and the heads of the World Bank and World Trade Organization, among many others. The Hawai‘i meetings, November 12-20, 2011 at the Hawai‘i Convention Center, are expected to draw more than 10,000 people to Honolulu, a welcome boost for the state’s tourism industry. When leaders meet in Honolulu this November, they can take pride in what their countries have achieved. As a result of APEC members’ cooperation, more goods, services, capital, and people are moving freely around the region than ever before. Border barriers, tariffs, and customs measures have been streamlined to give way to practical procedures that save economies and businesses billions. But border procedures are no longer the issue of the day, as most traditional barriers to trade are now low or gone. These days, the issues to tackle are logistics, security, and economic regulations. As the APEC process delves deeper into solving these issues, it can learn a lot from another body of economies, the European Union (EU). The EU experience teaches us that getting rid of border barriers is not enough. The Europe of 1970 had a free trade area but when that was not enough, it created a single market initiative, which tackled a wider range of costs and risks involving European members’ trade. APEC’s focus should be the tackling of impediments to international commerce by giving attention to regulation of domestic as well as international markets and their ability to manage structural adjustment. APEC’s major strengths of building capacity through the sharing of experiences and best practices will be a plus in the next wave of trade reforms. Because APEC is voluntary and non-binding, its unique approach enables smaller groups of like-minded economies ready and willing to undertake reforms to go ahead first, allowing others to join in later when they are ready. If APEC leaders continue with this approach APEC will continue to record concrete achievements, year after year. Lastly, hosting APEC in Hawai‘i this year amplifies the experience of the meeting. President Barack Obama’s native town is one of the world’s most diverse Asian-Pacific communities and will be an ideal host for the group. We hope you will enjoy the selection of features and articles penned by established voices from the business, leadership, and academic community. They represent the stakeholders of a growing and powerful summit that is gaining momentum. Ana C. Rold Editor-in-Chief

Table of Contents G8-G20 France 2011: New World, New Ideas

A note by François Delattre, Ambassador of France to the United States

Editor’s Note

EDITORIAL 14 Publisher’s Note

What Good are Multilateral Summits?

By Kenneth Weisbrode, Contributing Editor, The Diplomatic Courier

The French G8 Summit Agenda: Does it Address the Major Challenges?

By Mark C. Partridge, Contributing Editor, The Diplomatic Courier

Nuclear Reforms in the Wake of Fukushima

By Casey Coombs, UN Correspondent, The Diplomatic Courier

Confronting Iran’s Crusade for Nuclear Power

By Michael Gillis, Hinckley Scholar, Hinckley Institute of Politics

Stuxnet, Internet System Flaws and Cyber Attacks: The Perfect Storm?

By Ryan Paul, Hinckley Scholar, Hinckley Institute of Politics

How the International Community Beefs Up Pressure on Somali Pirates

By Sigurd Neubauer, Washington, DC based International Affairs Specialist

In Defense of Afghan Refugees and Asylum Seekers

By M. Ashraf Haidari, Diplomat, Afghan Ministry of Foreign Affairs

What President Bush Got Right and Wrong in Iraq

By Rami Turayhi, Contributor, The Diplomatic Courier

Bringing Change to Developing Countries’ Modus Operandi: Optimizing Government Operations Through Capacity Building

By Philip H. de Leon, President, Trade Connections International, LLC

Getting On the Highway to IP Harmony

Ambassador James P. Cain and Kenneth S. Chang, Partners Kilpatrick & Stockton LLP

Meeting Promises: A Call for Moving Forward at the G8 Summit

Monique Perry Danziger, Communications Director, Global Financial Integrity

The Digital Divide: Reinventing Rural Community Experience through Internet Access By Tisah M. Quarnberg, Jonathan A. Muir, Brady Alex Currit and Ralph B. Brown, Brigham Young University

Publisher’s Note

Chris Atkins Publisher The CAT Company Inc G8 Summit Magazine Company Ltd

Dear Summit Readers, I would like to take this opportunity to thank all those involved for their dedication in helping make this a successful 15th issue of the G8 Summit publication. The CAT Company is the only enduring publishing company in the field, having published a G8 Summit publication for 15 consecutive years, continuing the tradition and continuing to get great recognition as the Summit’s foremost publisher. The CAT Company continues to increase the exposure of the magazine with help from the massive growth of digital technology, using Scribd.com, Android and iPhone apps. As a result of the high quality of our publications, we are truly honored to be chosen to publish the official APEC/CEO Summit magazine for the APEC 2011 USA host committee. I hope you enjoy our magazine and we look forward to seeing you in Cannes for the G20 Summit and the APEC Summit in Hawai’i this November. Yours Sincerely

Chris Atkins Publisher and Founder, CAT Company Inc.

The CAT Company Inc President Chris Atkins Advisory Board Peter Atkins Chris Atkins Jennifer Latchman Graphic Design and Art direction Henri de Baritault Founder intro60.com President of Sales Mike Nyborg Sales Executives Chris Atkins Doug Lambert Guy Furl Jessica Lane John Armeni Lloyd Murray Mike Nyborg Ray Baker Hinckley Institute of Politics - University of Utah Director Kirk Jowers Intern Manager Courtney McBeth Communication and Outreach Coordinator Rochelle McConkie Thanks To Ana Carcani Rold Diplomatic Courier Hinckley Institute of Politics intro60.com Special Thanks To Marie-Helene Glon Professeure de francais diplome de l’universite de la Sorbonne, Paris Doug Breitmayer Head of IT David Castleton K Street Media Web Master In Memorandum Mark Marshall (1961-2010) President of sales

New-generation i30 to make world debut at 2011 Frankfurt International Motor Show - New-generation i30 to build on success of Hyundai’s best-selling model - Designed, engineered and manufactured in Europe, for Europe - Upgraded diesel engine: CO2 emissions under 100 g/km

At the 2011 Frankfurt International Motor Show (IAA), Hyundai has unveiled its new-generation i30, a vehicle the company expects will build on the success of the original model thanks to enhanced design, quality, performance and efficiency. Designed and engineered at the Hyundai Motor Europe Technical Centre in Rüsselsheim, Germany, the new-generation i30 represents a further evolution of the unique Hyundai form language, ‘fluidic sculpture’ – the company’s distinctive design DNA – and offers a choice of four engines with a total of six power options and CO2 emissions below 100 g/km thanks to an upgraded, super-efficient 1,6-litre diesel unit. The new-generation i30 will go on sale in Europe early in 2012 as a five-door hatchback. The newcomer will be produced in Europe at the company’s state-of-the-art manufacturing facility in Nošovice, Czech Republic. Every new-generation i30 will be backed by the industry-best, fullytransparent Five Year Triple Care warranty from Hyundai. This awardwinning package provides five years of unlimited-mileage warranty, five years of roadside assistance, and five years of vehicle health checks. A worthy successor to Hyundai’s best-seller The original i30 has defied the industry norm by recording increased annual sales with each passing year. Since launch in 2007, the i30 has recorded over 360.000

Apec CEO Summit 2011

European sales, including more than 115.000 units during 2010 – the highest-ever sales figure for an individual Hyundai model on sale in Europe in one year, putting the i30 at six in the C-segment rankings. Hyundai expects the newgeneration i30 to maintain this growth trend, contributing to future sales success, growing brand awareness and improving perceptions of Hyundai among European consumers. The fortunes of the new-generation i30 will also be helped by a recovering market. Industry analysts forecast the mainstream C-segment will grow by 7% over the next three years, reaching sales of 2,4 million vehicles per year by 2014. Hyundai is planning to sell on average over 120.000 units of the new i30 per year during the car’s lifecycle, capturing a larger market share of around 5% and challenging established competitors. Allan Rushforth, Senior Vice President and COO of Hyundai Motor Europe, commented: “We expect the new-generation i30 to play a significant role in developing our sales and brand image in Europe, taking on the leading vehicles in the C-segment and joining the all-new i40 as a brand ambassador and quality benchmark for Hyundai.” Style inspired by nature The ‘fluidic sculpture’ ethos utilises flowing lines inspired by nature and modern architecture to give a constant three-dimensional presence to Hyundai vehicles.

Since its introduction on the Hyundai ix-onic concept at the 2009 Geneva Motor Show, fluidic sculpture has been the form language for all new Hyundai models launched in Europe. Thomas Bürkle, Chief Designer at Hyundai Motor Europe Technical Centre, commented: “When designing the new-generation i30, we used strong, fluid lines to sculpt a car which looks athletic and exudes a sense of constant motion, even when stationary. We gave the car a bold stance, transmitting a confident attitude through sporty characteristics and dynamic proportions. In this way, the car is very close to the all-new i40, and the Hyundai design DNA is easy to recognise on these models.” The new-generation i30 also bears Hyundai’s signature frontal feature – the hexagonal-shaped grille. “The hexagonal appearance is unique to Hyundai, and defines the i30 as a family member. The jewel-like front headlamps which flank the grille add a strong personality to the vehicle, as well as a sense of refinement and luxury,” Thomas Bürkle added.

Powering the new generation The new-generation i30 will be available with a choice of three gasoline and three diesel variants, with power outputs ranging from 90 to 135 ps. Both fuel types play a significant role in the European C-segment, with diesel representing 52% and gasoline 43% of total sales. Overall, Hyundai is expecting a 50:50 split between diesel- and gasoline-powered i30 sales. Hyundai believes that its highlyefficient 1,6-liter variable geometry turbo (VGT) ‘U-II’ diesel unit will be the most popular engine in the range. Generating 128 ps at 4.000 rpm, the upgraded engine will accelerate the new-generation i30 from standstill to 100 kph in 10.9 seconds, with a top speed of 197 kph. The petrol engines, too, offer a balance between performance and economy. For example, the newgeneration i30 can be specified with Hyundai’s 1,6-liter ‘Gamma’ GDI (gasoline direct injection), a 1.591 cc unit that generates 135 ps and 164 Nm of torque. Low emissions and real-world efficiency The addition of technologies developed under the company’s Blue Drive™ sub-brand optimizes efficiency and lowers emissions for the new-generation i30. These include: Integrated Stop & Go (ISG), low-rolling resistance tyres and an alternator management system. With CO2 emissions below 100 g/ km and an engine delivery of 128 ps, the 1,6-litre diesel new-generation i30 will feature a best-in-class power to efficiency ratio. Buyers will be offered a choice between manual and automatic six-speed transmissions, with both units providing a refined driving experience and enhanced fuel efficiency.

Interior quality and equipment from the class above Cabin refinement and specification on the new-generation i30 have been inspired by the high standards of the all-new i40. Behind the wheel, for example, drivers benefit from Hyundai’s new Flex Steer™ option. With three operating modes – Comfort, Normal and Sport – the system can be used to vary the level of steering assistance and feedback in order to suit driving conditions and make the journey more pleasurable. A large TFT Supervision cluster is available in the same quality found on i40 – providing a wide range of essential information to the driver in high-resolution clarity. Located in the centre console, the navigation system is displayed via a 7-inch touch-screen. The generous equipment levels on the new-generation i30 will enhance the Hyundai experience for passengers too. Dual-zone climate control will ensure a comfortable environment for all occupants during long journeys, and the addition of a panoramic sunroof provides increased natural light within the cabin. The panoramic sunroof has been designed to open fully or tilt open, offering passengers flexibility and functionality. Customers will benefit from the new-generation i30’s roomier interior compared to the previous model. The overall length (4300 mm) and width (1780 mm) have been increased, while the height has been reduced (1470 mm), generating sportier exterior proportions without compromising functionality. Cargo capacity in the new-generation i30 is 378 liters with the rear seats upright – an increase of 10% compared to the original model. Five-star safety features The new-generation i30 features the latest active and passive safety technologies to ensure maximum

protection for its occupants. Active safety features include ESP (Electronic Stability Program), ABS (anti-lock braking system), VSM (Vehicle Stability Management) and Emergency Stop Signal. In terms of passive safety, the new-generation i30 will be fitted with six airbags as standard – front, side and curtain - while a driver’s knee airbag is optional. The safety features available on the new-generation i30 reinforce Hyundai’s excellent record on safety, and the company anticipates the new car will follow the outgoing model in attaining the maximum five-star score in Euro NCAP’s impact assessment programme. Driving fleet growth Since going on sale in 2007, the original i30 has played an important role in expanding Hyundai’s sales and reputation in Europe’s fleet sector. Hyundai expects the new-generation i30 to be even more popular with fleet managers and company car drivers than its predecessor. Targeting sales of over 120.000 units in Europe during a full year for the new-generation i30, Hyundai forecasts approximately 50% of sales to come from the fleet sector. Five Year Triple Care will be a valuable point of differentiation for the new-generation i30 in a highly competitive class. The five-year warranty has no mileage limit, roadside assistance is included for five years, and vehicle health checks are performed annually, providing peace of mind for fleet buyers and operators. Compared to the original i30, total cost of ownership for the newgeneration model will be reduced, helped by improved fuel efficiency, lower CO2 emissions and a lower insurance classification.

Apec CEO Summit 2011

Technical specifications New-generation Hyundai i30 Diesel engines 1,4-litre 90 ps Type / capacity Power / torque Bore x Stroke (mm) Compression ratio

U-II, WGT, four-cylinder, DOHC 16-valve / 1396 cc 90 ps (66.0 kW) @ 4000 rpm / 220 Nm @1500~2750 rpm 75 x 79 17.0

1,6-litre 110 ps Type / capacity Power / torque Bore x Stroke (mm) Compression ratio

U-II, VGT, four-cylinder, DOHC 16-valve / 1582 cc 110 ps (81.0 kW) @ 4000 rpm / 260 Nm @ 1900~2750 rpm 77.2 x 84.5 17.3

New 1,6-litre 128 ps Type / capacity Power / torque Bore x Stroke (mm) Compression ratio

U-II, VGT, four-cylinder, DOHC 16-valve / 1582 cc 128 ps (94.0 kW) @ 4000 rpm / 260 Nm @ 1900~2750 rpm 77.2 x 84.5 17.3

Gasoline engines 1,4-litre 100 ps Type / capacity Power / torque Bore x Stroke (mm) Compression ratio

Gamma 1.4, four-cylinder, DOHC 16-valve / 1396 cc 100 ps (73.2 kW) @ 5500 rpm / 137 Nm @ 4200 rpm 77 x 74.99 10.5

1,6-litre 120 ps Type / capacity Power / torque Bore x Stroke (mm) Compression ratio

Gamma 1.6 MPI, four-cylinder, DOHC 16-valve / 1591 cc 120 ps (88 kW) @ 6300 rpm / 156Nm @ 4850 rpm 77 x 85.44 10.5

1,6-litre 135 ps Type / capacity Power / torque Bore x Stroke (mm) Compression ratio

Gamma GDI, four-cylinder, DOHC 16-valve / 1591 cc 135 ps (99 kW) @ 6300 rpm / 164 Nm @ 4850 rpm 77x85.44 11

Transmissions Manual Automatic

Diesel Petrol 1,4 / 90 1,6 / 110-128 1,4 / 100 6-speed 6-speed 6-speed ---- 6-speed ----

Suspension and damping Front

Apec CEO Summit 2011

1,6 / 120-135 6-speed 6-speed

Fully independent subframe-mounted MacPherson struts, with coil springs and gas-filled shock absorbers. Anti-roll stabiliser bar.

Rear

Fully independent subframe-mounted multi-links, coil springs and gas-filled shock absorbers.

Steering Type Steering wheel turn

Motor-driven power steering, with Flex Steer™ 2,85 Turning circle 10,6 metres

Brakes Front Rear

15 / 16 inch ventilated discs 14 inch solid discs

Wheels and tyres Standard

15 inch steel / 15 inch alloy 16 inch alloy 17 inch alloy

Dimensions (mm) Exterior Overall length Overall width Overall height Wheelbase Front overhang Rear overhang

4300 1780 (excluding door mirrors) 1470 2650 880 770

Interior Leg room Head room Shoulder room

Front Rear 1067 880 1018 963 1420 1395

Capacities (litres) Fuel tank Luggage

53 litre 378 with rear seats upright

About Hyundai Motor Company Established in 1967, Hyundai Motor Co. has grown into the Hyundai Motor Group which has ranked as the world’s fifth-largest automaker since 2007 and includes more than two dozen auto-related subsidiaries and affiliates. Hyundai Motor, which has six manufacturing bases outside of South Korea, sold approximately 3.6 million vehicles globally in 2010. Hyundai vehicles are sold in 186 countries through some 5,300 dealerships and showrooms. Further information about Hyundai Motor and its products is available at www.hyundai.com.

195 / 65 R15 tyres 205 / 55 R16 tyres 225 / 45 R17 tyres

About Hyundai Motor Europe In 2010, Hyundai achieved record sales in Europe of 362.000 units, taking a best-ever 2,6% market share. In May 2011, Hyundai achieved a landmark, passing 5.000.000 sales in Europe since imports began in 1977. The company designs, engineers and manufactures cars in Europe, specifically for European customers. This includes the i30, which performed as Hyundai’s top-selling model in 2010, with 120.000 units sold. Hyundai sells cars in 28 European countries across 2.500 outlets.

Apec CEO Summit 2011

Hyundai Motor Donates 10 Mobile Clinics to African Nations - Starting with Ethiopia, Hyundai will offer 10 mobile clinics to five African nations to provide free medical care to the underprivileged - Mobile internal medicine clinic and mobile digital X-ray clinic to provide in-depth medical examination and treatment - Donation is part of Hyundai’s worldwide CSR initiatives

(Seoul, Korea) Hyundai Motor Company will donate a total of 10 mobile clinics to African nations this year as part of the company’ s “Moving the World Together” Corporate Social Responsibility (CSR) initiative, which aims to contribute to society and be a better corporate citizen. The mobile clinics will be used to provide basic medical services to residents of impoverished and remote communities in Africa. The mobile clinics, composed of a mobile internal medicine clinic and a mobile digital X-ray clinic, are specifically tuned to run on tough road conditions in many African nations. Starting with Ethiopia, a total of 10 mobile clinics will be donated this year to five African nations (Ethiopia, Democratic Republic of the Congo, Nigeria, Ghana and Rwanda). Each

Apec CEO Summit 2011

country will receive two mobile clinics -- the internal medicine clinic and digital X-ray clinic. The clinics will be operated in close partnership with the Korea Foundation for International Healthcare, local governments, local clinics and NGOs. The Korea Foundation for International Healthcare will provide consultation and training on the operation of the mobile clinics to local personnel. To begin the initiative, Hyundai handed over two customized mobile medical clinics to the Ethiopian government at the Ethiopian Federal Ministry of Health, in Addis Ababa, the nation’s capital. The handover ceremony was attended by Korea’s Minister of Foreign Affairs & Trade, Mr. Kim Sung-Hwan; Korean Ambassador to the Federal Democratic Republic of Ethiopia,

Mr. Chung Soonsuk; Minister of Ethiopian Federal Ministry of Health, Dr. Tedros Adhanom; President of Hyundai Motor Company, Mr. Chung Jin-Haeng; and Chairman of Hyundai Marathon Motor Engineering, Mr. Haile Gebreselassie, as well as media members and other guests. To overcome challenging roads in remote regions of many African nations, the mobile clinics have been developed on Hyundai’s four-wheeldrive truck (HD120 chassis, GVW 12,520kg) to boost mobility with an engine displacement of 6,600 cubic centimeters. The truck has air suspension to protect delicate medical equipment and operates fully independently with its own power. The mobile clinics are selfsufficient hospitals. The mobile

digital X-ray clinic is equipped with a digital X-ray machine and remote diagnostic systems. The mobile internal medicine clinic features the latest medical devices, such as digital ultrasonic and portable ECG (electrocardiogram), can conduct basic medical tests, such as malaria screening; and provide medical supplies.

Starting with Ethiopia, Hyundai Motor Company will send a total of 500 Happy Move volunteers from July to August to less-developed areas in Thailand, Brazil, India and China. The volunteers will be engaged in various volunteer programs such as environment restoration and provision of medical service.

In addition to the donation of vehicles, a total of 60 university students from the Happy Move Global Youth Volunteers program are engaging in volunteer activities July 5 - 16 in Addis Ababa, Ethiopia. The services range from providing free health care, in collaboration with Open Doctors Society of Korea, to installing communal toilets to promoting a more hygienic environment in partnership with Habitat for Humanity International.

REFERENCE The Happy Move Global Youth Volunteers program is one of Hyundai Motor Companyâ&#x20AC;&#x2122;s corporate social responsibility programs. It seeks volunteers from Korean universities to travel around the world to work in areas related to the environment, local welfare, medicine and culture. Since its foundation in July 2008, Happy Move Global Youth Volunteers has sent 500 university student volunteers every summer

and winter to several countries, including India, Brazil, China, Slovakia, Turkey, Egypt and the Philippines. From July to August of this year, volunteer students will spend about two weeks in their assigned country and work jointly with various NGOs, including Open Doctors Society, Habitat for Humanity International, Food for the Hungry International, International Workcamp Organization, and Ecopeace Asia to alleviate poverty, improve the health of residents, protect the environment, and strengthen local economies. Among the projects, volunteers will build a children library and renovate a kindergarten in Thailand, work to prevent desertification of Inner Mongolia through the Hyundai Green Zone Project, build houses and provide free medical services in India, and carry out cultural exchange programs in Brazil.

Apec CEO Summit 2011

Hyundai Motor Named One of World’s Top Global Green Brands of 2011 - No. 4 among automakers, beating BMW, Ford and Mercedes

Interbrand, the global brand consultancy, ranked Hyundai as one of the world’s greenest brands, citing the automaker’s Blue Drive eco-friendly strategy and its industry leadership in zero-emissions hydrogen fuel-cell vehicle development. Interbrand ranked Hyundai 11th among the agency’s 50 Best Global Green Brands, a new global report by the agency. Hyundai placed fourth among the seven automotive brands that made the survey. “The company is so confident in its fuel efficiency that starting this year it is reporting monthly fleet fuel efficiency figures in the U.S.,” Interbrand wrote in the survey. “Hyundai has recently seen strong improvements in energy, GHG emissions, water, waste, and toxic emissions.”

Apec CEO Summit 2011

The survey, which questioned more than 10,000 respondents in 10 countries, examined each company’s environmental record and how the company is perceived by consumers. Companies were judged based on their performance, their environmental impact, their sustainable growth strategy and their corporate social responsibility programs. Hyundai’s Blue Drive sub-brand, launched in 2008, encompasses all of the company’s eco-friendly technologies and products that contribute to higher fuel efficiency and lower emissions, including gasoline, diesel, electric, hybrid and hydrogen fuel-cell engines. Hyundai rolled out the Avante LPi hybrid in 2009 and the Sonata hybrid in 2011. Hyundai plans to bring plug-in hybrid vehicles to market soon, while the company is currently operating

test fleets of its hydrogen fuel-cell electric vehicles and pure-electric vehicles, called BlueOn.

Hyundai Motor Signs MOU with Intel, C&S Technology To Develop In-Vehicle Infotainment Solutions - Hyundai and Intel to develop In-vehicle Infotainment (IVI) systems based on the Intel® Atom™ processor

Hyundai Motor Company signed a Memorandum of Understanding (MOU) with Intel Korea and C&S Technology, Ltd. to jointly develop solutions that provide both drivers and passengers with enhanced in-vehicle experiences such as location-based and social network services. The signing ceremony was held at the JW Marriott Hotel in Seoul, attended by Mr. Woong-Chul Yang, Vice Chairman at Hyundai Motor, Mr. Ton Steenman, Vice President and General Manager at Intel’s Embedded and Communications Group (ECG), and Mr. Dong-Jin Kim, Chairman and CEO of Seoul-based C&S Technology. “The demand for smart cars is on the rise in Korea—a powerful IT country,” said Hyundai Vice Chairman Mr. Yang. “Hyundai will develop in-vehicle infotainment systems that incorporate changes in digital lifestyles and maximize customer convenience in cooperation with Intel and C&S Technology.”

As part of the agreement, the three companies will determine product, technical and experiential requirements for next generation IVI platforms to be built in Hyundai Motor vehicles. They will jointly develop solutions based on the Intel® Atom™ processor and the C&S Automotive IO Hub that enable new, innovative services and content to be offered to both drivers and passengers in next-generation IVI systems. “Intel is working with automakers and their suppliers around the world to develop intelligent and connected in-vehicle infotainment systems that provide safer, more interactive and personal experiences to drivers and passengers,” said Hee-Sung Lee, Country Manager of Intel Korea. “Through our ongoing work with Hyundai Motor Company and the new collaboration with C&S Technology, we can develop solutions that deliver this type of experience.” About Hyundai Motor Established in 1967, Hyundai Motor Co. has grown into the

Hyundai Motor Group which has ranked as the world’s fifth-largest automaker since 2007 and includes more than two dozen auto-related subsidiaries and affiliates. Hyundai Motor, which has six manufacturing bases outside of South Korea, sold approximately 3.6 million vehicles globally in 2010. Hyundai vehicles are sold in 186 countries through some 5,300 dealerships and showrooms. Further information about Hyundai Motor and its products is available at www.hyundai.com. About Intel Santa Clara-based Intel (NASDAQ: INTC) is a world leader in computing innovation. The company designs and builds the essential technologies that serve as the foundation for the world’s computing devices. Additional information about Intel is available at www.intel.com/pressroom and blogs.intel.com. About C&S Technology, Ltd. C&S Technology specializes in automotive non-memory semiconductors. Please go to www.cnstec. com for more information.

Apec CEO Summit 2011

An Inside Look at the APEC Summit By Ira Kasoff, Former Undersecretary of Commerce International Trade Administration

While discussions about debt have consumed Wa s h i n g t o n , t h e A s i a - P a c i f i c E c o n o m i c Cooperation (APEC) forum has received little attention. But U.S. businesses and trade officials alike should pay close attention to this important gathering hosted by the United States in Honolulu this November. APEC is the premier economic organization in the Asia-Pacific region, consisting of 21 economies— economies because it includes non-countries like Hong Kong and Taiwan (for a full list of APEC members, see http://statistics.apec.org/). APEC members account for roughly half of world trade and two-thirds of the world’s GDP. With a market of 2.7 billion consumers, APEC economies absorb some 58% of U.S. exports. Since its inception in November 1989, APEC has been the primary vehicle for advancing economic cooperation and trade and investment liberalization in Asia. APEC is also important to the U.S. as it has been the only regional forum that meets at the leaders level that includes the U.S. And for the first time since 1993, the United States is hosting APEC.

Apec CEO Summit 2011

APEC 2011. Over the years, APEC has evolved into a year-long series of government discussions and public-private meetings on a range of trade and investment-related subjects. This year the U.S. is hosting the most important of these events, which are grouped into four clusters. The first two have already taken place, in Washington, DC February 27 – March 12, and in Big Sky, Montana, May 7-21. Big Sky included a joint Meeting of APEC trade ministers and ministers responsible for small and medium enterprises (SMEs), at which the ministers identified the most significant barriers faced by SMEs, and pledged to “undertake specific and concrete actions to address each of these barriers by the APEC Economic Leaders’ Meeting in November 2011.” The next cluster of meetings will be in San Francisco, September 12 – 26. Among the many activities that will take place there, U.S. Secretary of State Hilary Clinton will chair an “APEC Women and the Economy” summit. There will also be a Transportation and Energy Ministerial Conference (on transport sustainability and efficiency), an Intellectual Property Rights Experts’ Group Meeting, and a number of other conferences and panel discussions.

??? The final cluster of events for the year will take place in Honolulu, November 7-13, including a CEO Summit, Finance and Trade Ministers Meetings, and will culminate in the Leaders Meeting hosted by President Obama. APECPRIORITIES. APEC’s core objective is trade and investment liberalization and facilitation. Towards that end, APEC has set three priority objectives for 2011: Strengthening Regional Economic Integration and Expanding Trade. Achieving a “Free Trade Area of the Asia-Pacific” (FTAAP) has long been a core goal of APEC. Long considered a long-term, aspirational goal, the FTAAP has been given new life by the Trans-Pacific Partnership (TPP) discussions that are underway. The TPP is a regional free trade agreement currently being negotiated among the United States and eight other partners, including Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam. Although there is no formal linkage between the TPP and APEC, all nine countries participating in TPP negotiations are APEC members, and the TPP is widely seen as the first step towards achieving APEC’s long-term goal of achieving the FTAAP. President Obama and the leaders of the other eight TPP countries hope to announce a framework agreement for the TPP in November at the APEC Leaders Meeting in Honolulu. Promoting Green Growth. Senior officials have been discussing how APEC can facilitate trade and investment in environmental goods, technology and services. APEC is also trying to tackle illegal logging and associated trade. And APEC senior officials are developing a work plan on fossil fuel subsidy reform, focusing on technical assistance and capacity building, including how to phase out subsidies while providing essential energy services to vulnerable populations. Advancing Regulatory Cooperation and Convergence. The aim here is to reduce the negative effects of differing standards and conformance arrangements from country to country. APEC also works to encourage greater alignment of APEC member economies’ standards with international ones. SIGNIFICANCE FOR U.S. BUSINESS. It’s easy to find fault with APEC – complaints range from the “soft and squishy” voluntary nature of the organization (commitments and agreements are non-binding), to the excessive use of technical jargon by the army of officials who make it very hard for outsiders to penetrate. Nevertheless, APEC’s work is important. Member countries devote considerable time and money because they

Apec CEO Summit 2011

recognize that tackling trade and investment barriers is in their interest, and because of the opportunities that APEC presents to connect with the movers and shakers from the world’s most dynamic economies. And there is a real attempt to work with businesses to identify practical, real-world issues that affect bottom lines. APEC has played an important role in reducing tariffs, most notably in environmental goods and services. And in recent years, its focus has turned to non-tariff barriers and “behind the border” issues (regulatory cooperation, increased transparency, etc). To cite a specific example, one head of a small business identified the need for information on tariffs and regulations for trading across borders that is transparent, consistent and easy to understand. “I’m talking about very simple mechanisms, tools, and information that can really help all small businesses,” he said. To address that need, APEC has developed a Web site on tariffs and rules of origin (ROOs) that aims to serve as a portal to the region for such information. Continuing this pragmatic approach to tackle issues of immediate concern to businesses, this year APEC officials have identified three “next generation trade and investment issues” for focus: facilitating global supply chains; enhancing SMEs participation in global production chains; and, promoting effective, non-discriminatory, and market-driven innovation policy. For those who have followed the controversy over China’s “Indigenous Innovation” policies, this one should have particular resonance. The bottom line is that APEC represents the best opportunity for companies to raise issues that have a direct impact on their business in this hugely important region; and to discuss these issues with economic and trade leaders who are interested in tackling these problems, because they recognize that is in their own interest to do so.

APEC - The Next 10 Years By Trudo

The Asia Pacific Economic Cooperation (APEC), the leading trans Pacific forum that helped clean up the Asian Currency Crisis, among other trade and economic cooperation initiatives, must reinforce economic integration in the next 10 years in order to reach its trade target for developing countries by 2020. The goal for 2020 was set in November 1994 in Bogor, Indonesia, when political leaders from all 18 APEC countries including Australia, Canada, Chile, Malaysia and the U.S., among others, agreed on the common principles of free and trade investment in the Asia-Pacific region. The APEC Declaration of Common Resolve, commonly called the Bogor Declaration, outlines a long-term goal for developing economies to be reached by 2020, and a shorter timetable of 2010 by industrialized economies. The annual APEC Leaders Meeting, which was hosted in Indonesia and Singapore in recent years, and regularly features heads of state and foreign ministers, will be held this November in Honolulu, President Obama’s hometown, and will be the first time in 18 years that the U.S. has hosted the Summit. Last year, at the Leaders Summit in Bogor, the vision for 2020 was aligned with reasonable economic goals for the region: APEC leaders sought to remove all barriers to trade and investment in developing economies by the target date. The goal was to liberalize trade -- in policy and practice -- in the Asian-Pacific region to the fullest extent. Accelerating regional economic integration (REI) and instituting a Free Trade Area of the Asia Pacific (FTAAP), according to APEC, has been one of the organization’s main priorities since 2007, and remains a key hinge of economic integration in next decade. In November 2010, The White House released a statement that addressed the need to move FTAAP from an “aspirational to a more concrete vision.” The go-ahead from Washington to turn FTAAP ideology into actionable steps stemmed from a call for further scrutiny. At the 14th APEC Economic Leaders’ Meeting in Lima in 2008, officials asked APEC to weigh FTAAP’s benefits against the challenges of promoting regional integration.

Apec CEO Summit 2011

The following year, researchers from Australia, China, Korea and New Zealand conducted a study to comb through possible FTAAP roadblocks.

The 2009 findings, titled, Further Analytical Study on the Likely Economic Impact of an FTAAP, backed by APEC in Singapore, concluded FTAAP possesses “great potential to boost further economic growth in the region.” That is, if liberalization and “trade facilitation schemes and rules of origin standardization are embedded within.” During the last two years, as countries continue to waver in the shadows of the economic crisis’ overcast, it imperative that APEC sets up a series of confidence building measures to keep all players onboard. In past summit meetings, APEC has over promised and under delivered on its liberalization commitments. This time around, the 2020 trade vision cannot afford to be clouded by a series of lackadaisical missteps. At the Mexico Summit in 2002, for example, when the aftermath of September 11 dispirited international actors across the spectrum, Leaders said the WTO meeting for the following year “had to be successful,” according to Alan Oxley, chairman of the Australian APEC Study Centre, in a 2005 report titled, Reform of APEC. But Oxley said the Cancun Summit meeting was hardly a success, and was brushed off in light of more positive gains -- something he said is normal in international affairs, but “reveals the weakness of the claims by trade officials that commitments at APEC Summits are influential in shaping developments in the WTO.” The report also points out an “ill fated” attempt by APEC to adopt a program of voluntary trade liberalization – supported by Australia and the US and New Zealand, among others -- that was addressed at the Kuala Lumpur Summit in 1998. The APEC region, albeit red-penned with marks of past lapses, has a series of role-model examples of successful plurilateral agreements to look towards, such as the North American Free Trade Agreement (NAFTA), China-ASEAN Free Trade Agreement and Australia – New Zealand Free Trade Agreement, that serve to liberalize and facilitate trade. But APEC playing copycat with already established agreements won’t work alone. As the Hawaiian summit in November approaches, the organization must acknowledge past promises that have gone unfulfilled, and strive to be consistent and transparent with the WTO in order to remain relevant and on track to achieving its comprehensive 2020 plan for trade liberalization.

Asia Pacific Tourism Industry Defined by Rapid Changes PATA, the leading voice and authority on travel and tourism in Asia Pacific, says the relentless rise of social media, mobile apps, low cost carriers and travelers from China and India are reshaping the face of tourism across the APEC region, writes Ken Scott

On a recent Korean Air flight from Honolulu to Seoul the cabin was almost full. I assumed they were Korean. “Oh, no,” said the flight attendant, smiling. “They are Chinese.” The same story is increasingly replicated across Asia Pacific and the world. According to the Pacific Asia Travel Association (PATA) China’s outbound travelers have been increasing at an average rate of 11.2% over the last five years, India by 12.7%. PATA’s forecasts predict continued growth of 11.7% for China and 10.2% for India over the next two years. In fact, China has been a savior for many destinations in the region formerly dependent on the US market. As the US, European and Japanese economies continue to stutter, new generations of financially empowered Chinese, Indians, Russians and Indonesians have stepped in to fill the gap. The result: the future of Asia Pacific tourism industry is increas-

Apec CEO Summit 2011

ingly looking to Asia for its new growth. Not only has the US and Europe lost market share, PATA believes they are unlikely to win it back. As in geo-politics and many economic sectors, the future of tourism is increasingly Asian, with a strong Sino-Indian twist. “They may fly with low cost airlines but once they arrive at their destination they show a preference for luxury resorts, brand name shopping and exclusive tours,” notes Sabine Widmann, Chief Sales Officer, Indochina Services, a regional tour operator based in Bangkok. Dr Matthew McDougall, CEO of China-based Digital Jungle, puts it more starkly: “All destinations need to radically adapt their entire tourism ecosystem to accommodate the Chinese.” PATA’s strategic intelligence centre says low cost carriers, evolving technology, especially social media, mobile travel apps for researching, booking and paying

for travel, shorter more frequent holidays booked late, ageing demographics in rich countries, a younger demographic of newly affluent urban middle class in emerging markets, and a desire for ‘authentic’ travel experiences all now define the Asia Pacific travel scene. Rapidly growing and evolving demand is good for business, but tourism remains a sensitive sector. Excessive dependency on it is dangerous. Economic downturns in source markets, terrorist strikes, civil unrest, riots, disease outbreaks, SARS, earthquakes, tsunamis and floods in holiday destinations can -and do wipe out -- years of gains. Even in good times, without crisis, destinations are often inconsistent on where they position themselves on the niche-mass continuum. Is more tourism better tourism? There is a kaleidoscope of concerns, especially on the supply side. Mass tourism concerns Klaus Lengefeld, Sector Project Director at GIZ, the German-government funded NGO

for sustainable growth. “I am concerned about the enormous growth of outbound tourism to Asia Pacific from China and India,” says Lengefeld, “and the fact that hardly any country has a consistent strategy to organize this tourism in a way that balances the expected huge economic benefits with the enormous risks and threats to their natural, cultural and social environment.” Lengefeld argues that destinations need to develop and implement “Carrying Capacity” and “Limits of Acceptable Change” models and procedures for attractions. “We need to protect them from destructive overuse,” says Lengefeld, “from Angkor Wat and Borobudur to the coral reefs of the Pacific and the Hawaiian volcanoes….” Economically and administratively developed destinations such as the US, Canada, Japan, Singapore, Hong Kong and Australia are better placed to put such safeguards in place. Poorer destinations such as Cambodia, Laos, Nepal and Myanmar, to name a few, often don’t have the regulatory infrastructure, training or financial resources to enforce carrying capacity rules. Best practice needs to be implemented at the small and medium-sized business level as well as the government policy level,

says longstanding PATA member, Scott Supernaw of Tauck Inc, a Connecticut based travel agent. He argues that there should be the development of forums, educational seminars, best practice examples and assistance for smaller travel entities to participate in the unprecedented growth of China outbound travel. “The explosive growth of this market should be an opportunity for multiple levels of travel related organizations in many countries. To date, very little seems to have been done -- or is known -- as to how to reasonably enter this apparently lucrative market.”

Asia Pacific destinations are only now slowly realizing that to do well, hotel, airlines and tour operators will have to better understand what Chinese, Indian, Russian and Indonesian travelers really want while on holiday. Signage, menus, tour options, entertainment choices, room design, color schemes – even the layout and design of whole resorts – all need to be reviewed in order for tourism companies to attract and retain new emerging market business. This comes at a time where the travel industry is facing the challenge of trying to reduce carbon emissions and conduct tourism in a sustainable way that respects host cultures and the environment. Supernaw believes that while eco-tourism and green policies are important, basic travel and tourism needs such as airport development, security and customs efficiencies, the building of three- and four-star hotels, and urban traffic controls all have to be provided too. Tourism is expected to strike a balance between modern efficiency, profitability and local cultural and environmental preservation. Basic human resource training and educating host communities what to expect from tourism is often lacking, notably in less economi-

Apec CEO Summit 2011

way companies brand, market and sell themselves and the way they organize themselves around the new customer. “Travel professionals, as individuals, need to ask themselves some hard questions. Am I stuck in the old groove? What’s a new groove I can jump to? What’s my groove? We need to hold our customers’ hands through this change, help them make smarter and better choices. We will need to hold our people’s hands through this transition, creating new types of companies and nurturing new talent…” After 60 years’ of engagement in Asia Pacific travel and tourism, PATA’s advice to companies is two-fold. First, be ready to handle ever-increasing demand from new Asian (and eventually Latin American) markets. As that demand rises, travelers will continue to hungrily embrace new technology that enhances their purchasing power, choices and the quality of the vacation on site. Second, cally developed destinations where tourism is often used as a crude bulwark against poverty. “Governments, along with industry, should prioritize measures focused on education and training in order to prepare the local workforce and the population-at-large for the good and bad elements of tourism,” says Peter Semone, Chief Technical Advisor for the Lao National Institute of Tourism and Hospitality in Vientiane, Laos. “Only with this knowledge and human capacity can destinations ward off the intrinsic environmental and cultural risks association with tourism and fully reap the economic benefits,” says Semone. While sustainability and carrying capacity issues are being debated, technology changes are transforming tourism. The marketing of tourism is now being reshaped by social media,

Apec CEO Summit 2011

tablets, apps for smart phones, user preference trending and new media distribution. International Data Corp reported that the sales of smart phones exceeded those of PCs for the first time in history in Q4 2010. By 2014, industry watchers predict that there will be more smart phones than PCs in the world. The switch to online and mobile already has profound implications for travel. “The web is splintering into grooves, some of it is disappearing into the cloud, most of it is ending up in the hand of the individual,” says Yeoh Siew Hoon, founder of Web in Travel, a Singapore-based event and discussion platform dedicated to online marketing and distribution in the travel industry. Siew Hoon says there’s a radical shift in the way travelers plan, shop around, buy and experience travel. It has a profound impact on the

as demand rises, stakeholders in tourism need to take more responsibility to respect environmental carrying capacities and the cultures of host communities. PATA believes the rapid pace of change in Asia Pacific travel and tourism will continue for the foreseeable future.

Since its foundation in 1951 in Hawaii, PATA has led from the front as the leading voice and authority on travel and tourism in the Asia Pacific region

• In partnership with private and public sector members, PATA enhances the sustainable growth, value and quality of travel and tourism to-from-and-within, the region. • The Association provides leadership and counsel on an individual and collective basis to over 80 government, state and city tourism bodies; nearly 50 international airlines, airports and cruise lines and many hundreds of travel industry companies across the Asia Pacific region and beyond. • PATA’s Strategic Intelligence Centre (SIC) offers unrivalled data and insights including Asia Pacific inbound and outbound statistics, analyses and forecasts as well as in-depth reports on strategic tourism markets. • PATA’s events are create millions of dollars of new business each year for its members. • Thousands of travel professionals belong to over 40 active PATA chapters worldwide and participate in a wide range of PATA and industry events. • The PATA Foundation contributes to the sustainable and responsible development of travel and tourism in Asia Pacific through the protection of the environment, the conservation of heritage and support for education. PATA’s 2011 Priorities On behalf of its members, PATA’s current strategic direction is to: • Build the Business for members. • Provide valuable insights, forecasts and analysis to help members make better business decisions. • To take a lead position on travel industry issues that need to be addressed. PATA moved its HQ from California to Bangkok, Thailand in 1998.

Apec CEO Summit 2011

Further information and membership benefits: www.PATA.org.

Asia Rising – The View from Hawaii By Mike McCartney, President & CEO, Hawai’i Tourism Authority

China has become an important market to Hawai‘i’s visitor industry. Since the signing of the 2007 Memorandum of Understanding between the United States and China, opening the door for Chinese tourists to visit the U.S. for group and leisure travel, Hawai‘i has seen significant increases from the China market. The Hawai‘i Tourism Authority (HTA) projects that more than 91,000 visitors from China will arrive in 2011, an increase of 37 percent compared to last year. The HTA has been aggressively working to secure direct air service from China to Hawai‘i. As an island state, airlift to and from the Hawaiian Islands is critical to the success of Hawai‘i’s visitor industry and helps to support economic development and the overall growth in commerce. In August 2011, Hawai‘i was pleased to welcome the first regularly-scheduled direct flight from China making it easier for the Chinese to visit our islands. With the average Chinese visitor having the highest per person per day spending, the China market is a growing and important market for our tourism economy. Korea and Japan continue to be important major markets for us as well. There were significant increases in travel from Korea to Hawai‘i following the Visa Waiver Program in 2008 and this year, the HTA projects a total of 127, 000 Korean visitor arrivals, up 36 percent from 2010. In addition, following the devastating earthquake and tsunami in March, we are continuing to see signs that Japan is recovering. As expected, arrivals continue to be down from last year; however, visitor spending is up 3.9 percent to $172.3 million through July 2011. We are also actively working with tour operators and other travel partners who are increasing their efforts to promote travel for the Japanese as way to heal and to recover as a country. From the Asia-Pacific region, the HTA sees tremendous potential for growth in the meetings, incentives, conventions and exhibitions (MICE) market. Hawai‘i is the ultimate location for global meetings, and our strategic mid-Pacific location enables people to conduct business with Shanghai and New York in the same business day. The HTA will take advantage of the growing interest in our islands as a premier location to conduct business following the 2011 APEC Leaders Week. The MICE market in Hawai‘i has shown significant growth in 2011, up 31.2 percent so far this year compared to last, and we anticipate this growth to continue through the end of the year. Many countries within the Asia-Pacific region are expanding nations in the world economy. Hawai‘i’s emphasis in these markets will strategically position our destination to attract increased leisure and business travelers and help bolster a vibrant

Apec CEO Summit 2011

and sustainable tourism economy well into the future.

Apec CEO Summit 2011

The Women’s Century By Chrisella Sagers, Diplomatic Courier Correspondent

The twenty-one member countries of the Asia-Pacific Economic Conference produce 55 percent of the global gross domestic product. And yet, the APEC countries are missing out on billions of dollars in potential productivity. APEC economies are missing out on $47 billion in potential growth each year due to barriers or restrictions on women’s participation. A lack of education opportunities creates more loss in annual GDP growth, totaling another $16 to $30 billion. A reduction of these barriers to women’s economic participation would increase the annual gross domestic product of the United States by 9 percent; of the Eurozone by 12 percent; and of Japan by 16 percent. Women entrepreneurs represent a powerful, yet largely untapped market. Today, less than 10 percent of venture capital goes to companies with female founders, despite studies that show women-owned businesses offer a better return on investments and do more to lift families and communities out of poverty and cycles of violence. Technology markets are especially suffering from a lack of women’s participation. The heavily maledominated field is seen as difficult to nearly impossible for women to break into, due to degree programs and corporate environments that do not offer women-friendly environments or female mentors to guide young women through. And this drastically affects the competitiveness of the world’s most innovative field. “It’s a business imperative to increase diversity,” said Marilyn Nagel, chief executive officer of Watermark, a California-based, 4,000-member organization for professional women, in an interview with Bloomberg. “A homogeneous team is not going to be as innovative and

Apec CEO Summit 2011

is not going to produce the same level of well-thoughtout results as a diverse team.” Leveraging the natural attributes and talents of women worldwide begins with expanding opportunities for women entrepreneurs. Women have historically worked on the ground floor of industries such as textiles and agriculture throughout the APEC region. When these women have access to capital to start their own businesses or reach management levels in a company, they use their experiences to bring about industrychanging innovations. The growth of a female-owned business spreads through the community. Women entrepreneurs are more likely to use their incomes to buy food and educations for their children, raising community health standards and productivity. They encourage and support other women, sharing their wealth of knowledge; they understand what a community’s living wage actually is, and provide that living wage to their employees, spreading their success throughout the community. This not only encourages increased community education efforts, but also brings new perspectives from previously marginalized voices into the economic discourse, opens new markets, and encourages economic vitality. When leaders talk of encouraging entrepreneurial activity, women should be the first place they look. Because so little attention has been given to this group historically, eliminating barriers to women’s economic activity could bring about a flurry of productivity. Barriers to women’s economic involvement include lack of education, lack of treatment for curable diseases, and lack of access to capital. Leaders can address all of these issues, and if they are looking for the path to economic recovery, they must.

APEC and U.S. Small Businesses: Let’s Strengthen this Prosperous Partnership By Francisco J. Sánchez, U.S. Under Secretary of Commerce for International Trade

The APEC 2011 CEO Summit is about one thing: opportunity. This forum provides officials — representing a diversity of interests and regions of the world — with a unique opportunity to exchange ideas, expand our economic imagination, and, ultimately, strengthen the ties that now bind us in this increasingly global business climate. The 21st century economy is rapidly changing the way we work and live. Accordingly, we must all change with it because now, more than ever, we have shared interests and a shared future. That’s why the Obama Administration is so pleased that the United States is hosting APEC 2011. Our viewpoint is simple: We recognize that the future of American commerce is closely linked with the future of the Asia Pacific Economic region, the fastest growing economy in the world. The APEC region’s economy is dynamic and diverse. That’s why it’s no surprise that it represents approximately 60 percent of all U.S. exports, an extraordinary number. Even more remarkable is that there are incredible opportunities to do more in region, particularly for small and medium-sized enterprises (SMEs).

Apec CEO Summit 2011

??? Small and medium enterprises are, in many ways, the heart of the U.S. economy; they represent more than 99 percent of all employer firms. They are home to more than half of all private sector employees, and they have generated 65 percent of net new private sector jobs during the past 17 years. In addition, those who run these businesses are among the most talented and innovative entrepreneurs in the world. They often drive the latest, cutting-edge products and services. That’s why the Obama Administration is so determined to give them an opportunity to succeed, in large part by increasing their access to a wide-range of international markets. The Asia Pacific Economic region is at the top of that list. Since the beginning of this year, a series of public-private “road shows” have taken places across the country, helping to “spread the word” about APEC and what it does for business. We’ve talked about how APEC has helped slash tariff and non-tariff barriers between APEC economies. We’ve highlighted the administration’s three priorities for APEC 2011: strengthening regional economic integration and expanding trade, promoting green growth and expanding regulatory cooperation and advancing regulatory convergence. We’ve talked about our work with our APEC partners towards these goals, whether it’s initiating APEC-wide green building standards, agreeing to common medical device industry ethics or helping SMEs benefit from cloud computing.

common problem. That’s why it’s critical that federal government gets involved and helps SMEs realize their full export potential. The NEI works to improve trade advocacy and export promotion efforts, while increasing SME access to credit, removing trade barriers and pursuing policies to promote strong, sustainable, and balanced growth. It also sends a powerful signal to the public about the benefits of trade, and the value of keeping all markets open to new goods, services and ideas. Right now, there isn’t a better counterweight to protectionist interests and pressures than demonstrating how exports benefit business and the economy. APEC has been at the forefront of international efforts to promote trade and open economies. Our stewardship of APEC this year fostered that agenda, providing all interests with exciting, new opportunities. Now, it’s time to seize them.

During these road shows, we’ve also highlighted the tremendous opportunities the region offers SME exporters, right now and in the future. That ties in well with the administration’s groundbreaking initiative to generate healthy, robust economic activity. Last year, in his State of the Union Address, President Obama announced the National Export Initiative (NEI), which has the ambitious goal of doubling U.S. exports by the end of 2014. Helping U.S. companies become more competitive internationally is a critical step to “winning the future.” Of course, there have been previous efforts by the federal government to promote exports. What sets the NEI apart is that it is the first time the United States has a Presidential-led, government-wide export promotion strategy.

Apec CEO Summit 2011

Since NEI was launched, we’ve tried to limit the red tape and barriers that often make trade too difficult. U.S. companies, particularly SMEs, often face hurdles when trying to close an export sale. This includes the lack of readily available information about exporting and market research. Another challenge is obtaining export financing. Tariff and non-tariff obstacles are also a very

Francisco J. Sánchez is the Under Secretary of Commerce for International Trade. He leads the International Trade Administration, a federal agency that promotes U.S. businesses and competiveness with commercial offices across the United States and the globe.

Universities: Crucial Partners in Meeting the Challenges of the 21st Century By Michael K. Young, President, University of Washington

The last fifty years brought tremendous changes in the global economy, including shifts from the industrial age to the information age, and from the Atlantic to the Pacific. Dynamic economic growth also led to the emergence of new global concerns such as energy deficiency and food and health security. Meeting these and other challenges requires new knowledge and expertise that universities can provide, making them crucial anchors for sustaining and increasing regional economic development. Taking into account the emerging challenges of the 21st century, universities are evolving to meet these demands and expectations. The American university model of fostering basic science research has been a successful framework that some economies have sought to adapt in addressing national social-economic needs. Two areas in particular have contributed to the critical role American research universities play in the US economy: the role of government in advancing world-class research and university-industry partnerships that lead to economic development. Thirty Years After Bayh-Dole In the last six decades, American higher education and federal research funding agencies have created a

Apec CEO Summit 2011

successful collaboration in advancing basic science research in their broader mission to generate and disseminate new knowledge effectively as a public good. It became the obligation of the federal government to sustain vital funding for basic science research while resources for applied research and development were mainly provided through the private sector. American federal funding for research and development since the 1930â&#x20AC;&#x2122;s has grown almost tenfold â&#x20AC;&#x201C; to nearly $150 billion in 2010. In addition, the Bayh-Dole Act, federal legislation passed in 1980, enabled universities to have broader scope and exclusive patent rights of their inventions and intellectual property resulting from federally funded research. At the core of this policy was to stimulate US competitiveness and to revitalize a sagging industrial sector. It also paved the way for academic research and innovation to integrate with private sector industry in the development of new products and processes. This has led to other countries adopting versions of the Bayh-Dole Act for their own government funded research. Today, there are over two hundred offices for commercialization and technology transfer located at US universities, and a comparable increasing number of offices abroad. This will provide more opportunities for university to university research cooperation, as well as university to industry collaboration across borders.

??? University-Industry Cooperation The urgency to find solutions to human health, advance information technologies and materials science research has helped develop thriving university-industry research programs. National priorities in biomedical research have influenced the translation of research between universities and major pharmaceutical entities. Industries have also helped universities focus on the areas of technology and applications needed, enhancing the capacity for researchers to move discoveries from the laboratory to the marketplace with greater efficiency. University-industry cooperation has also evolved into new collaborative arenas creating corridors of industry, with small to medium enterprises and non-profit organizations adjacent to university communities. Since the success of Silicon Valley, many localities around the world are trying to replicate it by providing venture capital or infrastructure, from roads to universities. However, what is harder to replicate is the culture that defined Silicon Valley: the room to experiment and fail, the informal networks, the feeling that anything is possible. The University of Washington, which ranks first among public universities in federally-funded research, much of it in the bio-medical sciences, is an economic engine that generates $9 billion in annual economic impact for the state. This has translated to an array of companies in the area doing related research, with more than 250 companies created from universitybased research. The presence of Microsoft and other technology companies in the area has also produced a dynamic interface between the fields of medicine and computer science technology. While some corporations locate their labs in close proximity to university campuses, the expense of maintaining independent labs is costly for many small to medium sized businesses. Perhaps the greatest outcome of venture clusters has been the spawning of small start-ups that were borne from dorm rooms and garages, not from corporations. The benefits from this fusion of activities are highly networked and diverse communities of skilled and loyal participants. Today, research universities are global institutions that help to disseminate knowledge and drive economic capacity. New multidisciplinary fields and innovations in global health and environmental sustainability are bringing a critical mass of researchers, social scientists, and practitioners together.

Apec CEO Summit 2011

To address these issues, universities are becoming

more entrepreneurial and responsive to the demands of their communities and serve as vital incubators of knowledge and innovation, but need consistent and reliable funding support. Diverse partnerships must be collectively formed and clusters of economic interests and strengths need to be strategically identified and developed in cooperation with university-community infrastructure. As economies in East Asia continue to expand, American higher education faces the prospect of losing its competitive leadership in research and development. We are not producing nearly enough scientists and engineers compared to our counterparts. But our educational system has encouraged a culture of inquiry and curiosity that has produced a unique mass of critical thinkers and entrepreneurs, a tremendous advantage for the US in generating knowledge and innovation. Our decentralized educational system facilitates mobility, diversity, and increased access to higher education. At the heart of our mission, though, are our students, who are being educated to be well equipped to understand multiple perspectives and how to link sectors and pursue ideas. All countries benefit from the increasing number and diversity of talented individuals that education and industry bring to our communities. Competition among universities and communities are healthy opportunities to raise standards of living, education and growth. Universities are critical to economic competitiveness, and we must link our sectors and bring communities together to invest in our future. Perhaps the greatest contribution that universities provide to society is the benefit of a global infrastructure of knowledge that continues to advance a greater common good. Michael K. Young became president of the University of Washington on July 1, 2011. Also a tenured Professor of Law, President Young has a distinguished record as an academic leader with broad experience in public service and diplomacy. Prior to that, President Young served as Deputy Under Secretary for Economic and Agricultural Affairs and Ambassador for Trade and Environmental Affairs in the Department of State under the presidency of the first President Bush.

Yoshihiko Noda’s Vision for Japan By Hanna Trudo, Diplomatic Courier Correspondent

national debt that swells two times larger than the size of the economy, or the dispersed Northeastern region that suffered the worst damages since World War II. But it’s up to the Democratic Party of Japan (DPJ) prime minister to choose adversity-triumph over low barometer expectations.

Newly sworn in Prime Minister Yoshihiko Noda, the former finance minister of Japan, might take solace in the old Japanese proverb, Money grows on the tree of persistence. But persistence, as the proverb fails to point out, does not trump inadequacy in the face of natural, political and economic disasters. A new maxim, Fresh leadership grows from the broken branches of catastrophe, might be more applicable to Japan today. The past five leaders to cyclone through the country since 2006 have added to the already quaked national morale by making promises they could not keep, and scalding leader after leader with burdens of past mistakes. Yoshihiko Noda, the 54-year-old Prime Minister number six, stepped in with a cup-half-full -- though chipped, and filled with luke warm expectations -approach to mitigate the aftermath of the 9.0 magnitude earthquake, tsunami and nuclear meltdown in March. But Japan, an essential arm of the APEC community, might need something stronger – an unbreakable prime minister who exudes mirror-speech confidence, not selfdeprecatory quips of mediocrity. The fiscally conservative leader must work against the grain of his in-and-out predecessors, and leverage his economic capabilities and past successes, to secure the longevity needed to promote political, economic and environmental reconstructive efforts. The odds are stacked against him, but someone who under promises – a change from the tactics of past politicians – might be what Japan needs to overcome the inherited economic and nuclear challenges to come.

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The leadership opportunities are there, despite a

Prime Minister Noda’s predecessor, Naoto Kan, the DPJ leader who was in office for just 15 months, eventually ran out of get-out-of-March 11-disaster-free cards. Some media reported he made unprecedented, intensive relief efforts – he was broadcast on television wearing the same work clothes as Japanese engineers – but others reported widespread dissatisfaction, and said his low approval ratings were directly linked to his even lower responsiveness to disaster’s calamitous call. In May, just a few months before former Prime Minster Kan stepped down, Japan donated $640,000 to help stimulate the Asian-Pacific economy – a contribution to the APEC Support Fund (ASF), started in 2004, that demonstrated lasting commitment to the region, despite devastating national circumstances. During a meeting at the UN General Assembly on Sept. 21 in New York, Prime Minister Noda picked up the conversation as the new leader six months after the disasters – with the economy and relief efforts in the forefront. At the General Assembly, the prime minister said the Fukushima Daiichi nuclear plant’s reactors would be shutdown within a year, according to a White House press release. The prime minister also said he will hold a conference in 2012 with the International Atomic Energy Agency (IAEA) to analyze and discuss key takeaways from the meltdown. If the Fukushima disaster is any indication of policies and preventative measures to come, Prime Minister Noda’s tenure will inevitably include nuclear safety reform as a top agenda item. He committed to working alongside the U.S. and other allies, and with the IAEA, to assume a leadership role in meltdown responsiveness and prevention, and on nonproliferation and national security efforts. The former finance minister has a lot to do with little support or self-confidence. His commitment to Japan, and to the international community, will be tested by his willingness to stimulate the APEC Support Fund, among other regional initiatives, as he navigates into his first months as the post-disaster prime minister.

The City of the Future By Chrisella Sagers, Diplomatic Courier Correspondent

It is a human pastime to dream up conceptual cities of the future. From homes that fly above the city to escape smog to gigantic ships that serve as extraterrestrial cities, our popular culture is full of ideas for the future. However, we face today an interesting opportunity. Our economy is experiencing an upheaval on the scale of the Industrial Revolution, and we are witnessing the complete reshaping of economic and social structures into something new. As during all such restructurings of society, the transition phase is marked by widespread business failures, unemployment for those trained in obsolete professions, and a movement out of the cities too closely defined by the old economic structure. Increasing globalization has meant that those who do not innovate or diversify, die. Take, for example, Detroit. The city tied itself to the automobile and the assembly line, failing to plan for the day when manufacturing would no longer be done in the United States and the assembly line would be made obsolete by the Technology Revolution, thereby failing to give itself a backup plan. What will it take for the cities of the future to avoid Detroit’s fate? Globalization means that not only countries, but provinces and cities themselves must be able to compete in a cutthroat business world. Cities have to be able to attract educated workers and companies to employ them, through a combination of public spaces and infrastructure; laws favoring business and ordinances promoting entertainment; networks for family support and dating scenes; networking and logistics. A high-ranking employee – in a company coerced to move to a city with low taxes and good infrastructure – must be able to get to the airport easily and efficiently to seal deals with clients face-to-face, but then have access to high-speed internet once back home in order to manage those deals. She must be able to have access to child care services while she works, just as much as her young entry-level employee must be able to take his new girlfriend out somewhere interesting after work if their new family is to be convinced to stay in the city. Businesses themselves must be able to connect with local resources and labor as much as global markets and opportunities; these require strong business associations and civil society groups at home, as well as bleeding-edge telecommunications infrastructure and modern airports capable of heavy traffic.

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Approaching all these challenges will require a massive urban planning effort that re-conceptualizes the public-private partnership. The city of Raleigh, North Carolina is on the forefront of this effort. As one of the three corners of the region’s Tech Triangle, one would expect that industry-shaping ideas would emerge from here; however, one of the more remarkable innovations from the city has been the use of open-source information and crowdsourcing feedback to gain insights into the redesign of downtown Raleigh. In an interview with OpenSource.com, David Diaz, president and CEO of the Downtown Raleigh Alliance, explains why this approach was so valuable to the downtown revitalization effort: “The people that were the most passionate had the hardest time stepping away from it and couldn’t give us the insights that we eventually uncovered. The person with a loose association [to downtown] gave us better insight. This was an ah-ha moment. If you only involve the advocates, you don’t get the broader view. Participation from all made the information better.” This is a public-private partnership in a completely new sense, with ideas passing from city planners to the general public and businesses and back again, creating a more informative feedback loop that, should governments choose to listen, will bring about better solutions to problems that affect everyone and better cities. And what fortuitous timing. In the next decade, it is expected that nearly 70 percent of the world’s population will live in urban areas. The city of the future will be one that will harness all of its resources, including the collective knowledge of its population, successfully in order to compete at the global level. For in today’s globalized world, the only mantra is, “Think global, act local… or else.”

HTC

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Building an Innovation Ecosystem By Deb Henretta, Group President – Asia, Procter & Gamble

P&G has a long history of innovation. Be it our iconic brands like Pampers, Tide, Olay, and SK-II or our processes and systems, like the introduction of brand management and data based market research, P&G has a deep track-record of innovation leadership that has guided and sustained our Company’s success since its establishment in 1837. For P&G, innovation is our lifeblood.

deliberate and choiceful, in building a robust innovation ecosystem that does just that. In fact, we invest more in innovation than any other company in our industry - nearly US$2 billion in 2010. We invest at least $400 million in foundational consumer research to discover opportunities for innovation, conducting some 20,000 studies involving more than 5 million consumers in nearly 100 countries.

In general, whenever one talks about innovation there is an esoteric and mysterious air about it. People imagine scientists in lab coats closeted away for years behind their test tubes and microscopes, before emerging triumphantly in an eureka moment. Yes, innovation is about discoveries and breakthroughs, but when you are committed to touching and improving lives – over 4 billion of them – everyday, you need to go beyond inventions and create an infrastructure that delivers reliable, repeatable innovation that can make a meaningful difference to the lives of our consumers. The first step in this process is to define innovation holistically; we strive to foster an innovation culture that leads not just to product or technological innovation but also to innovation in people practices for example.

But while financial investment in R&D is important, they are only one, albeit important, aspect of the innovation process. There are 5 other considerations that I think organizations should keep in mind as they design to innovate:

At P&G we firmly believe that you can design to innovate. We have made sustained investments, each

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I. COLLABORATE Like in the natural ecosystem, no single actor creates an innovation in isolation. We deliver successful innovations through creating a robust network with extensive internal and external partnerships. Our Connect+Develop open innovation model was specifically created for this purpose. We collaborate with nearly 2 million potential innovators externally, spanning SMEs, individual inventors, and academic institutions. Successes such as Olay Regenerist, Dawn Hand Renewal and Tide Totalcare are just a few examples of this collaborative process

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II. BUILD THE BASE We believe that innovative new growth efforts depend on a healthy core business. First, a healthy core business produces cash flow that can be invested in new growth. Second, a core business is rich with capabilities that can support new growth efforts. Breakthrough innovation needs time and patience; a robust innovation architecture must therefore build off a strong base business. III. INNOVATE ACROSS THE PORTFOLIO Not all innovations are alike. At P&G we plan for balanced innovation portfolio that includes what we call “disruptive market innovations” - these are the big bang breakthroughs that create new categories and new market segments. But as we all know, these innovations come along once in several years, sometimes as much as a decade or more. To ensure that the innovation portfolio doesn’t dry up, companies need to make sure that they also invest in innovations that improve upon existing innovations. Even within this type of innovation, some will be more transformational than others. Another type of innovation that we focus on and is a key source of growth are what we call “commercial innovations”. These are innovations that reframe or redefine existing propositions with new ideas. For example, P&G’s sponsorship of the Olympic games, takes the core benefit of several of our brands – of serving women, many of whom are mothers, by making their lives a little easier, a little better - and ties it to a larger idea of “thanking mums”. Our Vancouver Winter Games experience, where we first rolled out our Thank You Mum campaign was a great success and we are now looking forward to thanking mums across the world through a ten year partnership with the Olympics. IV. THINK BIG, START SMALL, ACT NOW It is important to keep in mind that an innovation ecosystem doesn’t build itself overnight. Innovation efforts typically start out small – as pilots where you spend little and learn a lot. I have seen many big ideas coming out of 2 day workshops that have subsequently been expanded to larger pilots in several business units and then into a company-wide initiative. Such staged investment allows for early rapid revision, targeted experimentation and provides a built in reminder that innovation is not a quick fix.

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V.GET THE RIGHT TEAM Innovation needs fresh eyes and free minds. It is important to staff innovation projects with teams that are small and unencumbered by the usual processes, as it may kill off nascent ideas. It is also important to ensure

that there is a mix of young and more senior people on the team, so that decisions can be taken swiftly and barriers busted. Such teams are better able to focus on the most promising initiatives and make sound judgment calls when data is inconclusive or absent. As a company committed to touching and improving lives, P&G needs to constantly – and consistently – create innovations that serve unmet and under-met needs. These 5 considerations go a long way in helping us build an innovation ecosystem that improves lives of more consumers in more parts of the world more completely.

Building a Sustainable Environment for Growth and Prosperity in APEC By Richard P. Lavin, Caterpillar Inc. Group President

or more than 85 years, Caterpillar has been making sustainable progress possible and driving positive change on every continent. We are the world’s leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel electric locomotives. The company is also a leading services provider through Caterpillar Financial Services, Caterpillar Remanufacturing Services, Caterpillar Logistics Services and Progress Rail Services. Our vision is a world in which all people’s basic requirements, such as shelter, clean water, sanitation and reliable power, are fulfilled in a way that sustains the environment. Our mission is to enable economic growth through infrastructure and energy development, and to provide solutions that protect people and preserve the planet. Our strategy is depicted as follows: Our definition of sustainable development is to leverage technology and innovation to increase efficiency and productivity with less impact on the environment and to help customers do the same.

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Focusing on sustainable development is good

business. And done right it’s a formidable competitive advantage. In the next decade, the most successful companies will be those that integrate sustainability into their core businesses while enabling their customers to work more safely and efficiently. We’re already doing that at Caterpillar and helping our customers do the same — looking out for the environment and the bottom line. Caterpillar customers are in industries at the heart of many of the world’s sustainable development challenges, including infrastructure development, mining, oil and gas, power generation, forestry and transportation. That’s why a focus on sustainability is so important to us. In fact, some of Caterpillar’s fastest-growing businesses are those focused on the sustainability of materials and resources. On the energy side, Caterpillar supplies highly efficient power systems and energy solutions. We provide engines that support alternative energy sources, converting biogas such as landfill gas, coal seam methane and digester gas into useful and clean energy. To help customers with energy efficiency and productivity, we lower the environment impact, while reducing

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Leaders to set a definitive target to achieve this vision and work together with the private sector to make it a reality.

On the materials side, our greatest contribution to materials conservation comes through our remanufacturing business. This advanced form of recycling takes end-of-life products and restores them to original engineering specifications. The process reduces waste and consumption of raw materials to produce new parts. And the end result is a high-quality, cost-effective repair option for customers. In 2010, Cat Reman and Progress Rail together recycled approximately 3 billion pounds of material. Caterpillar feels a responsibility to contribute to public debate on energy and environmental policies that affect our industries. Sustainability is a bit of a balancing act. We need clean, secure, and competitively priced sources of energy, and ever increasing amounts of natural resources. Thus, we have to address environmental concerns. At the same time, we cannot undermine our economic well-being. Instead of placing heavy regulations and expenses on businesses, governments need to drive private sector investment in energy solutions with more incentives and support. Accordingly, we strongly endorse the APEC Business Advisory Council’s (ABAC) recommendation in this year’s Letter to Leaders to reduce or eliminate tariff and non-tariff barriers on environmental goods and services. Climate and energy concerns are global issues. Each country has its own unique role to play, but we have to keep a level playing field. As air knows no boundaries, coordinated global actions are the only effective ways to meet the world’s environmental challenges. Drastic variations in rules and regulations can bring huge disadvantages for businesses, industries and even nations. As a result, we are pleased that ABAC has identified Regulatory Coherence as a next generation trade issue in the Letter to Leaders, and recommended a focused effort to harmonize diesel engine emissions regulations.

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The greatest opportunity to create a sustainable environment for growth and trade lies in promoting free trade. Caterpillar has long believed that the pursuit of business excellence in a climate of free enterprise free trade and unencumbered competition is the best means for efficient development and distribution of goods and services. The enormous rise in post-World War II gross national product and living standards in countries participating significantly in international commerce has demonstrated such benefits. Accordingly, we support initiatives aimed at increasing economic development. APEC Leaders have a shared vision to achieve a Free Trade Area for Asia Pacific. We encourage APEC

World’s First Electric

Non-tariff barriers in APEC hinder trade in remanufactured products and services

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Creating a Common Commercial Environment in Asia and the Pacific By Grant Aldonas

As APEC’s leaders prepare to meet in Hawaii, there would seem little cause for optimism. The world economy is slowing. Trade talks in the World Trade Organization have ground to a halt. Trade frictions are once again on the rise. All of which suggests dim prospects for deepening economic integration in Asia and the Pacific. Yet, deeper integration is essential both to the region and to the contribution it makes to economic recovery globally. Two trends have driven the region’s success over the past three decades. One is the increasing reliance on institutions like private property, contract rights, and markets as the organizing principles of the region’s economies, which accounts for much of the progress in reducing poverty and raising living standards. The other is integration, both regionally and as part of the global economy, which has expanded the opportunities for specialization, raised the region’s productivity, and allowed firms to position themselves at different stages in a powerful regional value chain serving global markets.

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The rhetorical support for further liberalization at recent APEC leaders’ meetings acknowledges the role integration has played in the region’s progress. But,

that rhetoric belies a number of trends that threaten its success. They include a disregard for intellectual property rights, conditions on investment that force firms to relinquish their intellectual property as a condition of market access, and a suite of industrial policies intended to foster local production at the expense of deeper regional economic integration. Those trends threaten the region’s prosperity in two ways. By adopting policies that segment the region and isolate it from the global economy, governments are moving away from the path that led to Asia and the Pacific’s current prosperity. By weakening property and contract rights, they diminish the profits earned through technological innovation in the region, which is key to its future growth and diversification. There is, fortunately, an alternative that would reinforce, rather than weaken, Asia and the Pacific’s upward trajectory. That alternative involves a commitment by APEC leaders to deeper economic integration – not simply trade and investment liberalization as conventionally defined, but the creation of a common commercial environment that solidifies the legal and institutional underpinning of a regional market economy.

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??? The reason for moving powerfully in that direction is globalization’s impact on how businesses are organized and how they compete. By sharply reducing transaction costs, globalization has reduced the need for vertical integration, allowing the shift toward global supply chains and, at the same time, making them a competitive necessity. By expanding opportunities for specialization and trade, globalization has increased the return to those factors of production that allow firms to exploit those opportunities, which has made access to capital, talent and ideas the new basis of commercial competition.

The role for APEC’s business leaders in that process is critical, both in educating political leaders on the reasons for creating a common commercial environment and in identifying the rules and economic institutions that will lead to that goal and foster investment and innovation in the process. With that goal in mind, APEC’s business leaders should press APEC leaders for the following in Hawaii:

What that suggests in terms of deeper integration is a need to focus on making the region as attractive as possible to investment by firms that mobilize the capital, talent and ideas and organize the value chains that serve global consumer markets. That will require lowering transaction costs, reducing uncertainty and risk in the business environment, and rewarding innovation and entrepreneurial investment. In concrete terms, that calls for strengthening property rights (particularly intellectual property rights), ensuring the enforceability of contracts, improving the efficiency of capital markets, and guaranteeing the contestability of markets for goods, services and ideas across the region. In short, policymakers should aim to create a frictionless legal environment throughout Asia and the Pacific that encourages commerce and, hence, investment. That approach holds promise for three reasons. First, it takes the world economy as it is – one in which the majority of trade now takes place between affiliates of globally engaged firms or within the broader reach of their supply chains – and creates an environment in which such firms can flourish, stimulating local innovation and entrepreneurial activity through their investments. Second, the approach outlined is a natural extension of the policies that have driven the region’s rapid economic progress to date and of what APEC does best, which involves the practical work of improving the business environment and reducing transaction costs that might otherwise inhibit commerce. Third, the effort to create a common commercial environment creates a process in which every nation in the region has a stake, yielding a positive sum outcome that often eludes conventional trade negotiations.

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1) A strategic vision for economic integration in Asia and the Pacific that focuses on innovation, entrepreneurial investment, and economic growth; 2) A practical work program to establish the intellectual foundation for creating a common commercial environment in Asia and the Pacific and a process for getting there; and 3) A counterpart proposal on trade and investment liberalization that would put APEC on a concrete path to free trade by 2020, as the Bogor goals require, which would parallel and reinforce the effort to create a frictionless legal environment throughout the region. The future of the region and the global economy will be measurably brighter if they do.

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The Path to the FTAAP By Chrisella Sagers, Diplomatic Courier Editor

Last November in Yokohama, APEC leaders laid down a commitment to take concrete steps toward the creation of the Free Trade Area of the Asia-Pacific. In Big Sky, Montana earlier this year, the commitment to concrete action was again made, and leaders discussed steps that can be taken in order to achieve APEC’s core mission of strengthening and deepening regional economic integration. As the one-year anniversary of the “Pathways to APEC” commitment approaches, APEC leaders must remember that it is vitally important to reach a solid agreement on this issue sooner rather than later. The Asia-Pacific region, as it currently stands, is a “spaghetti bowl” of free trade agreements. These individual FTAs feature a hodgepodge of conflicting agreements on agriculture and other politically sensitive sectors, as well as inconsistent standards governing intellectual property, competition policy, and rules of origin. Many do not meet the standards set by the World Trade Organization (WTO) in the Doha Development Rounds, and the inconsistencies are resulting in many of the difficulties the technology and service sectors are finding are part of doing business in the Pacific Rim. The American business community has a strong interest in bringing some sort of a level playing field for outside competition to the table through the FTAAP. As David Chavern of the U.S. Chamber of Commerce said, “We don’t want any guaranteed business for anybody, but on the other side of the coin, it is important to look at a whole host of non-tariff barriers and subsidies that make some markets in the Pacific Rim not a level playing field for U.S. businesses. Obviously, one example that is talked about is China, where there are a range of policies like indigenous innovation and subsidies to local companies that make it not a level playing field at the moment.” The economic benefits of the FTAAP could be enormous. A 2009 APEC-produced report on the economic impact of the proposed FTAAP estimated that 16 of the 21 APEC member states would see an “economic welfare” benefit of at least $48 billion, and possibly up to $500 billion. “Across the board, people are struggling to figure out how to sell to emerging middle classes in all sorts of developing countries,” said Mr. Chavern, speaking to the trade-stimulating effect the agreement would have. “Clearly when looking at the 21st Century and where

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the key business and government relationships will be, the Asia-Pacific Rim will be central to world economic growth.” The implementation of the FTAAP would not only stimulate small- and medium-sized businesses throughout the region by opening avenues to international trade, but it would also spur on the restart of negotiations at the Doha Development Rounds. The FTAAP would conceivably create the largest trade liberalization agreement in history, and it would encompass the region of the globe that is responsible for the production of 55 percent of global GDP and nearly half of global trade. APEC member countries are home to nearly 3 billion consumers in some of the most economically vibrant countries in the world. Fearing being left behind, this agreement could spur non-APEC nations to restart the Doha Rounds, and encourage other regions to enter into FTAs, bringing down trade barriers and boosting trade in a time when the global economy desperately needs a kick-start. There are, of course, challenges to the implementation of such an agreement. In the United States, growing protectionism and perceived hostility towards China will make it difficult for the Republican-held Congress to agree to enter into any such agreement, despite the party’s insistence on laissez-faire economics. The example of NAFTA’s effect in the United States will also make it difficult to sell such an agreement with the American people, many of whom still blame NAFTA for the loss of manufacturing jobs that excoriated the blue-collar middle class, leaving them vulnerable in the current economic downturn. But the FTAAP is an idea that could help businesses throughout the Asia-Pacific region, not only by opening up new markets, but also by bringing about reforms and standards to trade and manufacturing that are badly hampering growth in sectors such as technology and manufacturing. If the FTAAP is to be implemented, it should be sooner rather than later.

21st Century Workforce and Societal Shifts By Lindsey L. Larsen, Diplomatic Courier Correspondent

Life is a process. A series of milestones set up in a sequential kind of order, ensuring that from start to finish, every person completes the ‘process’ that is life. For example, going to college and getting degree has become a more consistent milestone across both the nation and the globe. Higher education, formerly viewed as a luxury, is now viewed as a necessity. We seek the degree because without it, we are not afforded the same job opportunities. Finding a job and beginning a career in order to earn a living is also one of those major milestones. It symbolizes independence and self-sufficiency, traits that also signify success. The problem is that there are not enough jobs to go around. It poses the global question, what is causing the job shortage? In theory, the professional working world is like an escalator. Every worker starts at the bottom step; they slowly but surely work their way up, and exit once they arrive at the top. Workers today are reaching the top of the escalator and stopping, they are choosing not to retire because of the nation’s current economic state. That leaves the younger generation with fewer job options and more qualifications, increasing the competition in the working world today. About 50 percent of the global population falls into the age bracket of being 27 years old or younger, and every year thousands of college graduates enter the workforce. Each of them is facing the reality of how simply having a degree does not guarantee anyone a job, only more competition. However, young people are fighting back. While they may not have the work experience in comparison to their older-generation counterparts, they have developed a brand-new set of skills surrounding technology. Dubbed the “Technology Generation,” young people are claiming their authority on something that matters to the world’s economy: the social media. Through the use of the Internet, this generation dominates their technological skills by using the social media resources to change not only the way people live and work, but also the way in which the world communicates with one another. This generation has empowered themselves with a new way to make an impact, by using the technological tools they are equipped with to maximizing their impact. Their technological tools will also enable them to solve the global problems they are inheriting, and they currently face more problems than any other generation before them.

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The two most effective technological problem-solving tools are Twitter and Facebook. Twitter has rapidly achieved worldwide popularity, and as of 2011 has over 200 million users, generating over 200 million tweets per day, and is sometimes referred to as the ‘SMS of the Internet.’ It is only one of the ways to network online, but it has demonstrated strong influence among the younger generation and has a significant impact on how things get done. While Facebook currently has over 750 million active members, it is proving to be one of the pillars of change behind the Digital Enlightenment. Online communication is evolving into one of the most effective ways to send out information because of Twitter and Facebook. Leadership relies on effective communication, and that is what social networking is all about. The tools that the Technology Generation needs in order to combat the abundance of global problems they will inherit extend beyond just the social media. Leadership style and frugal innovations combined with the social media will be necessary for all young global leaders. China believes a way to innovate future global leaders is to reward scientific advancements at a young age; they predict that by using this method, it will leverage global brainpower and can be localized to stimulate local growth across the globe. The societal changes in the workforce surround the number of jobs and the necessary skills to perform said jobs. Young people are combating the lack of jobs in the economy by using technology to create their own jobs. In turn, they are creating their own workforce, one that rivals the older generation of workers who are choosing not to retire. They are creating solutions to the problems. New skills are required for these new types of jobs, and young people have the advantage. The hallmark of any good entrepreneurship is the ability to innovate and keep coming up with solutions. The Technology Generation is highly capable of overcoming what is lacking, which is suitable platform that can act as a launching pad for our ideas. The young people of today use the social networking mediums to express their creativity in ways that were not possible for the generations before. Assuming each new generation in the workforce brings new skills and change to the table the younger generation is bringing technological innovation, creativity, online networking skills, and the way to use their skills effectively. Technology has become an integral part of the workforce, and the Technology Generation are the workers who are setting the bar.

OP-Ed: You Cannot Cut the Seamless Web of History By Robert F. Bennett, Former U.S. Senator and Resident Scholar at the University of Utah’s Hinckley Institute of Politics

I don’t know who said that first, but I heard it from my high school history teacher, and it has stuck with me over the years. Through a career that has taken me throughout the world on business and then into the U.S. Senate, I have learned that the concept of a “seamless web” is correct. To illustrate: You cannot make an accurate analysis of American-Japanese relations if you start in 1945, with the dropping of the atomic bomb on Hiroshima. To understand why that was done, you must know about the fanatic fight-to-the-last-man dedication of Japanese troops during the island hopping campaign in the Pacific in 1943 and ’44, which convinced American planners that an invasion of the Home Islands would cost up to a million American lives and probably more Japanese. You cannot understand the island campaign unless you study the Japanese attack on Pearl Harbor, in 1941, and the Japanese defeat at the Battle of Midway in 1942. You cannot understand the Pearl Harbor attack unless you understand Japanese fears for their economic survival that arose in 1940 from the embargo placed on shipments to Japan by the United States. You cannot understand the reasons for the embargo unless you go back to Japanese actions in China in the 1930s. And so on. History matters because it shapes our perception of what we need to do now. It is important not only to get the facts right but also to place them correctly in the seamless web. The most dangerous thing a nation’s leaders can do is to pick and choose only those historical tidbits that confirm their bias, and then, if that does not work, make something up. The President of Iran embraces the fiction that the Holocaust never happened because he wants a “historical basis” from which to demonize the State of Israel and weave conspiracy theories for his followers around the foreign policy decisions of the British and the Americans with respect to it. Far too much foreign policy is built on this cultural practice of using history to exploit ancient grievances, embroidering them with lists of fresh insults and slights. Racial hatred tied to ancient tribal feuds causes wars. But it need not be so. There is no “hatred gene” in anyone. It is something that must be taught to us rather

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than something that is born in us. The Germans and the French hated and killed each other, just for being French of German, for centuries, until a new generation in both countries, after the Second World War, realized just how stupid that was. They still have their differences, to be sure—all countries do, to one degree or another—but their cooperation in creating the European Union and working together on many issues relating to it has made war between them a distant memory. All national leaders should have a deep and accurate sense of the history of their adversaries. Gandhi’s campaign of non-violence could not have won India’s independence if had not been built on his understanding of how well it appealed to British values. If he had tried it in the Soviet Union during Stalin’s reign, he would have been shot on the spot. America’s misadventures in Vietnam were rooted in Robert McNamara’s (and the Kennedy brothers’) lack of knowledge of the history of Ho Chi Min, particularly of the role he played as an American ally in World War II. After 9/11, I did my best to gain such an understanding of the history of the attackers. I began to study the history of Islam and the Arab world for the first time—such history receives little or no attention in American schools—and learned a lot about a major civilization which has made many contributions to modern society. I do not condone the acts of the terrorists in any way, but I have begun to understand them better now that I know more about them and their background. I wish they would make a similar effort to understand Americans and our background. On the 60th anniversary of D-Day, a young woman who was born years after the event, who worked as a tourist guide on the beaches and in the cemeteries, pledged to the assembled dignitaries, “We shall never let anyone forget what they did on that day.” The German Chancellor was there, next to the President of France, an honored guest. That was appropriate, because those who prevailed at Normandy eventually liberated the Germans as well as other Europeans from the clutches of Nazism. This was history at its best—a past accurately remembered and heroic deeds properly honored by those who had made history of their own by forging a new bond of peace out of the ashes of war. Former Senator Robert F. Bennett (UT) is the

??? Hinckley Institute of Politicsâ&#x20AC;&#x2122; Resident Scholar. Mr. Bennett was elected to the U.S. Senate in 1992, where he served for 18 years, carrying his businessman-like approach with him to the Hill. He served as a senior member of the Senate Banking Committee and a member of the distinguished Joint Economic Committee, where he was at the center of national economic policy discussions. He also served as the ranking Republican on the Senate Rules Committee. Mr. Bennett is a graduate of the University of Utah.

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Rethinking Healthcare: China’s Aging Population By Jordan Fischer, Hinckley Institute of Politics

China’s Family Planning Policy, commonly known in the West as the “One-Child Policy” is wrapped up tightly in China’s desire to modernize. When the Chinese government installed the One-Child Policy, it instigated unusually rapid fertility and demographic transitions, causing exaggerated social changes in many sectors. One of the most pressing problems stemming from this world without siblings is known as the “4-2-1 problem.” Chinese culture places great importance on filial piety, meaning that parents traditionally had no reason to worry for their retirement or health care costs, because their children would indubitably provide for them. In the new singleton generation, however, one child is now responsible for the care of both parents, a responsibility that is often too great to bear alone. Thanks to China’s lightning transition from a traditional society to a relatively modern one, the population is rapidly aging, but there is currently no established governmental or even widespread private retirement security in place, anywhere in the country. This means that many working citizens might soon be unable to support their elderly family members, and with no governmental safety net, the fate of China’s seniors— and those who must support them—is insecure. “When Mao’s enormous baby boom generation reaches retirement age in a few years, Chinese officials fear that their families will be unable to provide financial and social support,” explained Jane Macartney in 2008. China’s massive population is aging faster than nearly any other on the planet. A government report estimated that in 2009, there were approximately 167 million Chinese citizens over the age of 60, making up 12.5 percent of the total population, and growing by approximately 3 million a year, relays Jaime FlorCruz in a 2011 report. At the same time, the population of working adults is shrinking, as a rapidly declining birth-rate over the last two generations is compounded by the fact that young workers are putting off entering the workforce in favor of continuing education. As a result, more elderly must be supported by fewer working young people. Population Reference Bureau’s analyst Toshiko Kaneda explains, “While the number of elderly in the population who require care is growing, the size of the w o r k i n g - a g e population (who pay much of the healthcare costs) is shrinking. The elderly support ratio—the working-age adult (ages 15 to 64) per number of elderly (age 65 and above)—is projected to decline drastically, from 9 persons to 2.5 persons by 2050.”

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In fact, actual ratios are probably even slimmer, because as Vanessa Fong writes in her book, “Only Hope: Coming of Age under China’s One-Child Policy,” mandatory retirement ages are often under age 65, and many factory shut-downs have forced early retirement on people as young as their forties, reports Don Lee. As China modernizes and becomes increasingly involved in the global market, the older generations’ skills are becoming inapplicable. According to UNICEF and the World Bank, however, life expectancy in China was 73 years in 2009, meaning that the average retiree must live off of savings or his/her family’s charity for at least 13 years, usually more. Whether laid off or simply forced to retire at 50 years of age, older people in China are losing their income and becoming dependent on their families early on, constituting a significant burden for an extended period of time.

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While other countries (such as Japan, the U.S., and many in Europe) are facing similar problems resulting from a rapidly aging population, these countries, having passed through the fertility transition much more slowly, have more developed infrastructures, including established social security systems that are designed to take care of the elderly. Unlike these countries, China’s only retirement security system currently in place is the traditional model of filial duty. This system is based on individuals and is often dysfunctional; at best, it is unregulated and insecure. In January 2011, however, a proposal was submitted to amend a Chinese law, requiring citizens to visit their elderly parents, reports FlorCruz. Such a law is already in place in Singapore, where under the “Maintenance of Parents Act” the elderly have been able to sue their adult children for money and/or care-taking since 1995. Unfortunately, whether or not this proposal becomes law in China does little to solve the real problem: many families, no matter how hard they try, will be unable to support their elderly parents by themselves. Kaneda explains that in spite of national chronic disease prevention programs, set up by health officials to address the growing population of seniors, the health care system has become increasingly inaccessible for the common Chinese people in the past two decades, as it becomes more market-oriented and prices soar. Retirees are hit especially hard by the rising healthcare prices against their non-existent income.

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While some efforts are being made to establish care centers, professional elderly care is a relatively new concept in Chinese society, and as such the field lacks trained and experienced workers. Some local governments are hastily training laid-off factory workers to fill this need, but many—including Kaneda—wonder

if it will be enough to properly care for the many elderly whose families are unable to do so. While many hope that this sort of program will develop in the coming years to help alleviate some of the child’s heavy filial responsibility, others argue that this effort is far too small, and because it is not financially supported by the central government, the care these programs provide comes at too high a personal cost for most families to afford, preventing it from reaching the necessary levels of effectiveness to solve China’s “4-2-1 problem.” Peng Xizhe, a professor of Population and Development at China’s FuDan University, explains, “The [family planning] programme requires couples to reduce the number of children they produce, but is unable by itself to provide adequate social support for people to adjust their family planning strategy.” Many critics argue that to fully support its mandated policy, the Chinese government must find and actively maintain a way to support its mushrooming population of aged citizens. With China’s elderly now making up a solid eighth of its population and no social security system in place, the country faces an increasingly urgent situation as the population ages at an unprecedented rate. Although the central government has yet to enact or support any kind of social security program, some local governments have supported grassroots efforts to provide elderly care, which have been established in recent years. Private nursing homes have begun to provide for those whose families are unable to do so, but they are still too few in number to be widely effective, and too expensive for most families to afford. Communitybased care services are also available in some areas, some supported by the local government and others by private enterprise, providing the elderly with daily care and their families with information on other services and how to care for their elderly relatives. As the problem grows more urgent and these local care facilities become more established, it is possible that the government, having already publicly recognized the issue, will contribute funding and/ or official status to these care-giving establishments, helping them to develop and increasing the availability of elderly care in China. A social security system may soon be on its way. Jordan Fischer is a senior at the University of Utah studying International Economics, Mandarin and Spanish Languages. After studying abroad in Tianjin in 2009, she returned to China in 2011 to work in an internship position with the Hinckley Institute of Politics.

Global Financial Regulation in a Coordinated Fashion By Mark Pittman, Hinckley Institute of Politics

The recent 2007 recession, as described by the U.S. National Bureau for Economic Research, has brought about global calls for strengthening the financial regulatory structure around the world. These calls have come from the developing BRICS nations of Brazil, Russia, India, China and South Africa, as well as from developed nations such as the United States and the countries of Europe. With resonating support emanating from the populace of the world’s nations, as reported by groups as diverse as the ParisTech Review, following the recession the question now becomes how financial regulations can be strengthened at a global level without hampering economic growth. Growth is the single largest determining factor in politics today; the growth of the economy correlates positively, and directly, with the growth of political parties and the success of individual politicians. One thing is clear: economies have to grow and people must be able to work in the 21st century. Warding off the next financial or economic apocalypse is essential for growth but ensuring that those regulations are not detrimental to growth is another thing entirely.

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In October 2007, Frederic S. Mishkin wrote: “Among the institutions that are most crucial to economic growth are those that enable a country to allocate capital to its most productive uses. Such institutions establish and maintain strong property rights, an effective legal system,

and a sound and efficient financial system.” These principles not only still hold true despite the recession and financial crisis experienced in late 2007, but are the cornerstone of a vibrant and growing economy. The Associated Press announced China’s accession into the World Trade Organization in 2000 and its subsequent rise to become the world’s second largest economy in 2010, thereby changing the status quo for the developed nations of the world. The need for comprehensive and global financial regulatory structures and cohesive agreement among nations has arrived. In the era of globalization and wide-spread web connectivity, the terms of engagement have changed to include more

??? loopholes in Japan and exploit the system to the brink of collapse. The coordination of financial regulation does one thing better than a fractured system: it provides businesses and individuals across the world with a set of universal standards that make commerce and trade cheaper, more efficient and more effective and bring stability to the global financial markets and economy. This produces results for politicians who want and need less volatility in their economy to stay in office—it benefits businesses and individuals who have common and coordinated standards to work with, and, most importantly, it brings together the leaders of the world to discuss policy in a comprehensive manner rather than in a fractured and divergent way.

people in more places at more times than ever before, as reported by TIME magazine. Connectivity through the Internet has spread from the personal computer to mobile data phones, tablet computers and beyond. The most important implication that this brings to the table is that governments can no longer control the flow of money, information and ideas that way they used to within their own borders. The new digital world is always evolving and continuously growing which means the regulatory scheme must follow.

Starting on the path to a more stable global economy can be as simple as arranging a group conference to discuss these pressing issues. During the Asia-Pacific Economic Cooperation Summit, the world’s strongest leaders can make both progress and headlines while ensuring the vitality and success of the global economies. Growth is necessary to ensure the success of businesses, individuals and governments around the world, and making this growth easier, stronger and more efficient should be APEC’s goal, while staying true to its mission of uniting to build a dynamic and harmonious community supporting sustainable economic growth and prosperity.

It has already become clear that the only way to ensure greater stability for the entire system is for financial reform and strengthened legislation to occur globally. This presents not only a challenge but also an opportunity. Members of the G20 have assigned a Financial Stability Board; the European Union announced the coordination and creation of the Basel III banking regulations; and the United States’ government, through confirmation by the White House, signed the Dodd-Frank Act into law. All three are valiant attempts to strengthen financial oversight and remove volatility from a fragile and recovering economy, but these measures still fall short of what is necessary. A single set of ideas and principles must be drafted into a treaty upon which all members of APEC and perhaps even the G20 can agree. What globalization has shown us is that there is no place in the world untouched. If the United States enacts legislation that protects its markets and economy from the effects of a crisis, and another nation, such as Japan, does not follow with very similar measures, then the United States will sit at a competitive disadvantage which will only cause more individuals around the world to take advantage of the

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Mark Pittman is a student at the University of Utah completing a Masters’ in International Affairs and Global Enterprise. His educational background includes three undergraduate degrees in Political Science, Economics and International Studies at the University of Utah. Mark has spent a great deal of his life all across the world, having lived in Germany for 11 years, the United States for nine and having traveled extensively to Australia, China and various other parts of the world.

Pressured to Study, Unable to Perform By Shawn Quigley, Hinckley Institute of Politics

prepare students for the exam of a lifetime, The Higher Education Entrance Examination or the Gao Kao. This emphasis on education performance came from the Chinese government, which saw a need for more educated citizens. Higher education was seen to be the key to solving many of China’s economic problems. Giving more people opportunity for higher education would then satisfy the demand for more professionals that could allow China to compete in the global market. The world is growing fast and to meet the demands of globalization, more skilled workers are needed. This government priority makes it much easier for all to attend college and graduate, but now China has the problem of actually placing all those new graduates with jobs. This process has been more difficult than anticipated, leaving the whole country with a high volume of unemployed but highly educated citizens. Unemployment among the graduates is at a high 11.9%. The high unemployment could be blamed on China’s vast population and the subsequent large flow of students graduating. Most of the issues are found within China’s enormous cities where students go to study; the cities are too crowded and there is no room for the graduates. China’s younger generation is called the generation of the “Ant Tribe,” getting this title because of the high volume of students who do travel to the big city for higher education, then stay there after graduating in anticipation of finding a job to fit their new-found degree. This plan not working out as smoothly as one would hope. Instead of finding a job that would fit the degree, many are asked to return home to a factory job, forced to accept a job that has little to do with the degree earned, or can’t find a job at all. The supply does not fit the high demand for jobs. China pressures students to learn, but cannot produce jobs equal to their skill level. From primary school to the university level, students in China are pushed to study hard and receive good marks on their exams, all in preparation for the exam that is said can change one’s life. The marks that these students receive will determine the path of education they take, inevitably determining their future. Testing decides what middle school, high school and university the students will attend, and these high-stake exams even influence what line of study the students go into. Driven to get good marks on their exams, students are often sent to cram schools by their parents in order to receive extra instruction. Studying is very important to the Chinese people—all those exams and extra hours at school

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It would be easy to rationalize that too much demand and with too little supply would be the simplest way to understand the gaping unemployment rate among Chinas college graduates, but this doesn’t quite compute. The problem isn’t lack a lack of jobs for graduates; it’s a lack of ‘qualified graduates’ to fit the jobs. China sends more students abroad in the world than any other country. From 1972 to 2009, China had 1.39 million people go over seas to study. More than 400,000 of these students sent abroad have returned home. These students are known as sea turtles, traveling abroad to study and returning home, often finding work

??? an overall solution to the high unemployment among graduates would be to reform China’s education system as a whole. While test scores are valuable and studying is very important, more emphasis needs to be put actual working experience and fostering a form of learning that sparks creativity and would give domestic students the edge needed to compete with students who study abroad. This type of education needs to begin at grade one. While reforming the education system is a more long-term solution for the high unemployment, offering more educational opportunities through trade or vocational schools could be a short-term solution, providing people an opportunity to gain a skill and find a vocation to match that skill more easily. very quickly. Their newly obtained education and skills found outside of their native land allow for these students to be very competitive, more so than any who graduate from even the top universities in China. Domestic colleges are being placed lower and lower on the college totem poll. The return of an oversea graduate is seen as a valuable asset. The skills obtained from an education while abroad, as well as their experiences and talents that either earned them their opportunity to study abroad or that they gained while studying in another country are just too appealing to leave alone. These graduates are returning and taking all the jobs that otherwise would be awarded to domestic graduates simply because these students are seen to be more qualified for the positions offered. YaSheng Huang, Professor of political economy and international management at the Massachusetts Institute of Technology says specifically that “there is a skills mismatch.” Referring to conversations with managers and entrepreneurs who always complain about; “a shortage of people with the right set of skills, capabilities and inclinations,” he argues that “China is so short of the right human capital.” There is not a shortage of jobs; there is a shortage of students with the right skill sets. Beijing Bureau Chief Jaime FlorCruz said, “If China is to evolve from a mere manufacturing capital of the world into a global hub of innovation, it will have to realize that developing human capital is more important in the long run than technology and money. Talented people will bring both.”

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China is working hard to solve this issue: packages are being offered to help small business owners, incentives are being given for students to return to rural areas and work and students are being given opportunities for even more schooling after graduation. However,

In reforming the education system, China would reach its goal of producing more educated citizens who would be more qualified and able to help compete in the global market; it would be a long-term investment on human capital. Adding more trade and vocational education systems would also decrease the overall unemployment rate by giving those who cannot attend a four-year university an opportunity to obtain a valuable skill set for themselves and China while giving graduates who now are jobless a second chance to gain a useful skill set that would provide an opportunity for work. China needs to invest more time and money on human capital.

Shawn Louis Quigley is a senior at the University of Utah. In 2009 he had the unique privilege to be an intern for the Hinckley Institute of Politics in Tianjin, China, where he worked for Wizard English. Shawn will graduate in May 2012 and plans to pursue an MBA or receiving a degree in law.

Making Sense of Fukushima By Henry Sokolski, Hinckley Institute of Politics

Ask a nuclear expert about the reactor accident at Fukushima and you are likely to get overwhelmed with a tidal wave of technical points—everything from how poorly the reactors’ hydrogen vents and emergency generator systems worked to what permissible exposures to radiation should be. It can be mind numbing. None of these explanations, though, hit what matters most: how Fukushima has dramatically increased nuclear power’s relative costs and risks. Here the story is relatively simple. Many of the world’s richer economies—including Germany, Switzerland, Italy, Austria, Sweden, Spain, Norway, Denmark, Belgium, Taiwan, Japan, Kuwait and the U.S.—have slowed or shuttered planned reactor construction and are focusing instead on alternative ways to generate, distribute and store electricity. The last time anything like this happened was nearly a quarter century ago in reaction to the nuclear accident at Chernobyl. Then, the U.S. and much of Europe put their nuclear power plans on hold. Since 2000, though, growing concerns about carbon emissions and global warming garnered more support for new nuclear power construction, that is, until Fukushima. Earlier this year the International Energy Agency (IEA) optimistically forecast a near doubling of reactors on line by 2035. After the Japanese meltdown, IEA slashed its forecast dramatically.

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Industry insists that all of this is just a temporary setback. This, though, is mostly bravado. Existing nuclear power plants will continue to operate and several more will be built in Eastern Europe, China and Korea, but any massive nuclear revival similar to that presumed before Fukushima is unlikely on several counts. First, even before Fukushima, construction costs were making new nuclear power plants uncompetitive against modern natural gas systems. A large power reactor was projected to cost anywhere from $6 billion to $10 billion and take five to 10 years to bring on line. Now, with the nuclear safety reviews Fukushima has prompted, these costs and build times will only increase. Meanwhile, large, advanced gas-fired generators, which emit roughly one-half the carbon of an equivalent sized coal-fired generator, cost as little as $700 million to build and take as little as 18 to 36 months to complete. As a result, almost all U.S. electrical utilities are substituting their old coal-fired plants not with nuclear, but with natural gas-fired generators. Natural gas also is becoming more affordable and plentiful, not just in the U.S., but in the Middle East, Mediterranean, China, Australia, Latin America and Europe. The reason why is the development of unconventional techniques for extracting gas. These new methods, including deep fracturing and tight gas extraction, have turned the U.S. from a natural gas importer to a natural gas exporter. They also have ignited hopes of reversing Polish dependence on gas imports, and turned Israel

??? and Lebanon into future natural gas gold mines. Meanwhile, advances in pipe and liquefaction transport technologies are moving the world away from local to larger, regional natural gas markets. All of this will buy time as the costs of more sustainable forms of clean electrical generation—e.g., wind, solar, small hydro, biomass—continue to decline. Integrated, smarter electrical grids will also help deal with these intermittent energy sources, as will cheaper electrical storage systems. Germany and others are banking heavily on these developments as they wind down nuclear power plant operations over the next two decades. For them, the risks of increasing their reliance on nuclear power seem higher than the economic uncertainties of weaning themselves off it. This, then, brings us to the second nuclear problem Fukushima dramatically compounded—how liability for nuclear accidents is now viewed. Fukushima, which involved an advanced safety conscious country and U.S.-designed light water reactors, was not supposed to happen. That it did happen dramatically increased all nuclear liability calculations. In the case of the l979 nuclear accident at Three Mile Island, the clean up cost less than $1 billion over 12 years. Indirect damages caused by the 1986 Chernobyl accident have been estimated at several hundred billion dollars but the actual amount paid out by governments over the last two decades was no more than $10 to 15 billion. In contrast, the Japanese government already has pegged direct Fukushima damages at more than $50 billion and Merrill Lynch reported they could conceivably run as high as $130 billion. These numbers are five to 10 times greater than the maximum amount of insurance coverage the U.S. government currently requires the U.S. nuclear industry to provide. Under current law, U.S. nuclear operators have put roughly $300 million aside to cover off-site damages. Industry can be required to pay out roughly another $12 billion over seven years for any specific accident. But that is all. Anything more must be covered by the U.S. government. Before Fukushima, $12 billion seemed sufficient, but not any more.

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Now, the worry is that U.S. nuclear safety regulations are too relaxed. Industry knows that tighter safety rules will drive construction costs to record highs; it is already resisting such rule making. This may cheapen operation of existing plants but it is sure to delay agreement to new safety regulations, which will only put off new reactor construction further.

Meanwhile, potential nuclear customers in developing states are becoming far more wary of American nuclear vendors who continue to insist, as they did with Japan, that U.S. firms be absolved of any liability in the case of a nuclear accident. In India, America’s insistence on this point has become a major political issue. This, then, brings us to the final reason Fukushima has dimmed nuclear power’s prospects. Having spooked the world’s established economies from pursuing major nuclear expansion, Fukushima’s negative nuclear market fallout is goading the world’s nuclear vendors to shore up sales by pitching their wares to potentially dangerous customers in the Middle and Far East and in Africa. Saudi Arabia, whose leadership has announced that it must get nuclear weapons if Iran does and that it is willing to pay up to $300 billion to build 16 large nuclear power plants by 2030, is one such market. Turkey, which once toyed with using civilian power plants as building blocks for a possible bomb program and now faces a nuclear weapons-ready Iran, is another; it has plans to build 20 nuclear power plants. Syria, which was caught building a covert nuclear plant in 2007, still wants to build power plants, as do Egypt, Algeria, Iran, Nigeria, Vietnam, Bangladesh and Burma. None of these states has anything approaching an independent nuclear regulatory authority. Many have harbored aspirations to acquire a nuclear weapons option and refused to forswear making nuclear fuel—a process that can bring them within weeks of acquiring a bomb. Why does this matter? The answer is simple: one more Iraq, North Korea or Iran diverting a declared “peaceful” nuclear program to develop a bomb option, and nuclear power’s further expansion to developing states will be rightly viewed with the kind of suspicion that could jeopardize nuclear power’s development more generally. So far, the world’s nuclear vendors have effectively opposed proposals to tighten nuclear export rules significantly, but this is a short game. In the long run it is yet another key reason why banking on a massive expansion of nuclear power in the advanced world is now a bet against the house. Henry Sokolski is executive director of The Nonproliferation Policy Education Center in Arlington, Virginia, and editor of “Nuclear Power’s Global Expansion: Weighing Its Costs and Risks” (2010). He served on the U.S. Commission on the Prevention of WMD Proliferation and Terrorism.

A Participatory Approach to Democratic Reform in the Philippines John D. Sullivan, Ph.D, Executive Director, Center for International Private Enterprise (CIPE)

Elections are not the sole ingredient for democracy. In a genuinely democratic state, the policymaking process must reflect the desires and priorities of the citizenry, and the mechanisms of the state must be capable of responding to citizens’ needs. Considered to be among the world’s worst performers in several areas of public governance, the Philippines continues to struggle in consolidating democracy. Recognizing the need to strengthen governance on the local level, the Center for International Private Enterprise has worked with the Institute for Solidarity in Asia (ISA) since 2004 to reform and build the capacities of local governments across the Philippines. ISA is led by Dr. Jess Estanislao, former Secretary of Finance under the government of President Corazon Aquino. The principle mechanism used to achieve reform in the Philippines is the performance governance system (PGS); adapted from the Balanced Scorecard approach. The process translates organizational strategy into concrete and quantifiable outcomes by measuring whether the operational activities of an organization are aligned with its larger-scale and longer-term objectives and strategies. Utilizing the PGS as a management tool, the Philippines has seen dramatic results in recent years. To keep up the momentum for change, ISA gathered citizen groups early on in the project to chart out a broad vision and direction for the Philippines. Collectively, the coalition created a National Governance Roadmap to instill shared values, a sense of community, and the hope for prosperity and progress. The roadmap was the first step in the Philippines 2030 Project, which addresses public governance at the national level. In the city of San Fernando, financial management training enabled the city to dramatically increase local tax collection rates and decrease the length of time required to register a business from two weeks to two days. Furthermore, the volume of resources mobilized through public-private partnerships has more than quintupled. This growth in the city’s own-source revenue contributed to the doubling of city spending on elementary education.

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The city of Iloilo also increased locally-generated revenue and reduced the time required to process business licenses by 86 percent. This healthier economic environment contributed to a quadrupling of

the city’s manufacturing output by 2010. Additionally, the average score of Iloilo public schools on the National Achievement Test increased by over 20 percent. Improved bureaucratic performance in the City of Marikina is permitting more aggressive environmental stewardship policies, including a new policy to plant 1,000 new trees every year and the renovation and construction of five water treatment facilities. Such improvements in public governance are, in large part, made possible by the enhanced capacity of local institutions brought about by ISA training. ISA is also broadening its public governance program to include more low income local governments and national agencies with similar success. Largely a result of automation systems introduced in 2006, Calbayog, a small rural city in one of the least developed regions of the Philippines, has experienced an increase in property tax collection rates from 10 percent to nearly 70 percent. Strengthening public governance is crucial to strengthening participatory democracy in the Philippines and beyond. The PGS process requires citizens and the private sector to take part in forming public policy, increasing transparency, and holding local leaders accountable. Technical and professional education facilitates organizational and budgetary reforms that orient public institutions towards results, strategic plans, and real impacts. Scorecards make clear where progress is being made and toward what purpose, and where purpose is lacking. The success of this initiative is evidenced by the accomplishments of participating cities and by the growing interest among Philippines cities and national public and private institutions. Tellingly, in the May 2010 national elections, 83 percent of the mayors that enrolled their cities in the ISA program were either re-elected or their chosen candidates won in their place. This project’s success gives reason to hope that democracy can work in the Philippines. John D. Sullivan, Ph.D is executive director of the Center for International Private Enterprise, one of the four core institutes of the National Endowment for Democracy and a non-profit affiliate of the U.S. Chamber of Commerce