APEC 2012

The APEC publication 2012

inside APEC

› WELCOME: AndRey KoStin › Food: Feeding seven billion people › energy: the green growth economy › trade: trans Pacific Partnership

theapecceosummit.com

APEC ThoughT Leadership

› Vladivostok Russia ❙ September 7-9 ❙ 2012

CATCOMPANYInc Publications

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We live in a world filled with competing challenges which only grow and become more complex as the population expands and we become more interconnected. How do we feed more while protecting our environment and natural resources? Can we improve agricultural yields and at the same time use water more efficiently?

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As we look to the future, better science and more collaboration will allow us to rise to any challenge. Waters is committed to developing the most advanced technologies and continuing to establish partnerships to deliver on the promise of “The Science of What’s Possible.”

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The APEC Publication 2012

Publisher’s Note

CATCOMPANYInc Publications thecatcompanyinc.com

Distinguished Guests

Christopher Atkins Publisher and Founder Cat Company, Inc.

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CEO SUMMIT

VLADIVOSTOK • RUSSIA

The APEC publication 2012

The CAT CompAny is The only enduring publishing CompAny in The field, hAving published A g8 summiT publiCATion for 16 ConseCuTive yeArs.

2012 APEC APEC › ThoughT Leadership › Vladivostok Russia ❙ September 7-9 ❙ 2012

I would like to take this opportunity to thank all those involved for their dedication in helping produce another successful APEC CEO Summit publication.

It has been a great pleasure and distinct honor to work with Vladivistok’s business community as well as the international business and scholarly community to produce the second edition of our signature APEC CEO Summit publication. This publication is one of the three titles we produce annually on global thought leadership. The groups involved with making the APEC CEO Summit a success must be commended for their dedication in bringing together the business and policy leadership to create durable solutions to some of the region’s most intractable problems. Our company is proud to play a small but important part in this process by articulating these messages to both the leadership and the public.

The CAT Company is the only enduring publishing company in the field, having published a G8 Summit publication for 16 consecutive years, continuing the tradition and continuing to get great recognition as the Summit’s foremost publisher. This recognition has allowed our company to produce many official publications in the past. This year, we were truly honored to be chosen as the exclusive publisher of the official G20 Business Summit 2012 in Los Cabos, Mexico.

Our company continues to increase the exposure of our thought leadership publications with help from the massive growth of digital technology, using Scribd.com, Android and iPhone apps, helping our sponsors to reach an unprecedented audience of millions to share their message.

Since our first edition of the G8 Summit publication, our company has grown exponentially and we are proud of our ability to bring together important stakeholders in the global business, diplomatic, and policy leadership through the pages of the G8, G20, and APEC CEO Summit publications.

We hope you will enjoy reading the editorial we have selected for you and we look forward to seeing you at the next leadership summit.

The APEC publication 2012

inside APEC

› WELCOME: AndRey KoStin › Food: Feeding seven billion people › energy: the green growth economy › trade: trans Pacific Partnership

theapecceosummit.com

01_APEC_Cover.indd 2

The CAT Company, Inc.

APEC ThoughT Leadership

› Vladivostok Russia ❙ September 7-9 ❙ 2012

theapecceosummit.com

The CAT company is also the proud publisher of the G8 Summit publication and the official G20 Summit publication for the international Chamber of Commerce G20 Advisory Group.

CATCOMPANYInc Publications

19/08/2012 19:26

Contact: Chris Atkins on 1-801-783-5120 catkins@thecatcompanyinc.net

The APEC Publication 2012

Editor’s Note

diGital NewSStaNd read the DiplomAtic couRiER on ipad, iphone, & android Distinguished Guests

Ana C. Rold Editor-in-Chief

For those of you attending the 2012 APEC CEO Summit, welcome!

This has been 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 meetings in September are expected to draw thousands of people to Vladivostok and the Primorsky region, a welcome boost for this region’s tourism industry.

When leaders meet in September, they can again 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. One topic in particular–food security–has taken center stage not only for APEC, but also a number of highlevel leadership gatherings earlier this year, namely the G8 in Camp David, United States, the G20 in Los Cabos, Mexico, as well as the World Economic Forum regional meeting in Puerto Vallarta in April. At the latter, food security was also the main subject of discussion at a meeting convened by Bruno Le Maire, Minister of Agriculture, Food, Fisheries, Rural Affairs and Planning of France.

We are particularly pleased to have several business leaders contributing articles and editorials for this edition of APEC CEO Summit. We hope you enjoy reading them and that you will email us with any editorial comments and thoughts, which we can include in the subsequent editions of this publication.

READ DiplomA iplomAtic Atic couRi R ER Ri unDERstA stAn stA AnD thE woRl RlD Rl lD www.diplomaticourier.com

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The APEC Publication 2012

September 2012

Contents & Contributors

24

Features CovEr Story: 24 / APEC iN A NEw ECoNomiC ErA The world’s economy is at a crossroads but so far APEC has largely remained on the periphery of this economic drama

Masthead CATCOMPANYInc

By Chrisella Sagers Herzog

Food Security: 28 / Food and Energy after Vladivostok

By Ralph I. Miller

48 / Pathways to Global Abundance

48

By Kathryn H. Floyd

90 / Meeting the Challenge of Food Security

By James C. Borel

Publisher: Chris Atkins Editor-in-Chief: Ana C. Rold Managing Editor: Chrisella Sagers Herzog

Global trade: 46 / APEC and Small, Medium and Micro Enterprises

Creative Director: Christian Gilliham christian@cgcreate.co.uk T: (+44) 7951 722265

By Manuel C. Menendez III

50 / Chinese Economy: A Low “Value-Added” Production Hub in East Asia

By Dr. Richard Rousseau

54 / Chinese-Russia Economic and Political Relations

By Ralph Winnie

86

60 / Trans Pacific Partnership to Build Supply Chain Resilience

By Tony Nowell

Welcome by Andrey Kostin, President and Chairman of the Management Board, VTB Bank Chairman, APEC CEO Summit, Vladivostok, Russia 2012

By Herbert S. Hill

70 / Innovating for the Emerging Middle Class

By Deb Henretta

82 / In Defense of Public-Private Collaborations

By Paul Davies

86 / A G-Zero World

By Ian Bremmer

30 / APEC business leaders urge greater economic integration through partnering towards a Free Trade Area of the Asia-Pacific

By APEC Business Advisory Council (ABAC)

36 / Russian cruise ship promotes cultural exchange in preparation for APEC Summit

By Dana McKelvey

40 / Universal broadband access improves development; disaster preparedness

By APEC Telecommunications and Information Working Group

Sponsored Features 14 / 22 / 32 / 44 / 58 /

Korean Air: Act Green, Stay Green Vladivostok Air: Largest Air Carrier in Russia’s Far East Vladivostok International Airport Chile: A country that punches above its weight Sustainability: A Basic tenet at Vietnam’s Becamex

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Editor’s Note

By Ana Carcani Rold Welcome by Governor Vladimir V. Miklushevsk

66 / U.S.-China: Integrating Common Interests through Comprehensive Negotiations

News

WElCoME NotEs: Publisher’s Note

By Chris Atkins

Advertisers Index 02 04 06 09 11 13 17 19 27 31 33 34 38 41 43 51 53 55 57 64 71 73 81 88 92 94 96

Waters Corporation Heifer International BKPM CAT Company Inc. Diplomatic Courier Merck Azimut – Hotel Vladivostok Hotel Meridian Hinckley Institute of Politics Russian Standard Vodka Skyteam Inflot Worldwide Royal Caribbean International Microsoft DHL U.S. Chamber of Commerce University of Washington/Seattle Intel Becamex IDC Johnson & Johnson P&G Verso Paper Google Imirus Talisker Club RIU Hotels & Resorts Korean Air

Contributors: Ian Bremmer, James C. Borel, Ralph I. Miller, Paul Davies, Kathryn H. Floyd, Deb Henretta, Chrisella Sagers Herzog, Herbert S. Hill, Dana McKelvey, Manuel C. Menendez III, Tony Nowell, Ralph Winnie, Dr. Richard Rousseau Publishing Firm: The CAT Company, Inc. Chris Atkins, President Global Advisory Group: Chris Atkins, Peter Atkins Jennifer Latchman, Manuel C. Menendez III (Chairman & Strategic Advisor) Keith Foote Nyborg (United States Ambassador (Ret.) President of sales: Mike Nyborg sales Executives: John Armeni, Ray Baker, Guy Furl special thanks: Diplomatic Courier for their editorial direction and strategy To contact the editors please email us at: editors@diplomaticourier.org

The APEC Publication 2012

The APEC Publication 2012

Sponsored Feature / Korean Air

Act Green, Stay Green South Korea’s flagship airline and one of the top twenty global carriers, is committed to contributing to a sustainable future

ThoughT LeAdershiP KoreAn Air, South Korea’s flagship airline and one of the top twenty global carriers, is committed to contributing to a sustainable future through management of the company’s business practices, for the good of employees and all mankind.

Fully aware of its social responsibilities, Korean Air believes in protecting the environment, sharing with others and maintaining transparent and ethical management practices.

The airline joined the UN Global Compact in 2007 and pledged to abide by ten principles in the human rights, labour, environment and anti-corruption categories and as a member of the global airline alliance, SkyTeam, Korean Air adopted the ‘SkyTeam Corporate Social Responsibility Statement’.

Aid program Korean Air participates in many global humanitarian efforts, including recently assisting the UN World Food Programme to transport relief supplies in an effort to fight against hunger in Africa. Korean Air has assisted with the transport of emergency supplies following disasters such as the earthquakes in Sichuan, Qinghai, Japan and New Zealand. environment-friendly Aircraft In order to contribute to the reduction of emission of CO2, the main culprit of global warming, Korean Air embarked on an ambitious programme of fleet renewal.

Older aircraft were retired and replaced with a fleet of fuel-efficient, less noisy and environmentally friendly next-generation aircraft, including the acclaimed A380 aircraft.

The airline has also implemented more efficient operational procedures and flying techniques to reduce fuel consumption.

Global Planting Project Korean Air is also doing its best to create a happier and healthier society and gets involved in various worthwhile projects both at home in South Korea and overseas.

Since 2004 the airline has been involved in reforestation projects in regions such as Baganuur, Mongolia and Kubuqi, China where desertification due to climate change, is

Above: Thousands of trees have been planted in Korean Air Forests’ by volunteers, mostly new employees of Korea Air and Local college students.

causing polluting yellow dust to spread across Asia. Thousands of trees have been planted in ‘Korean Air Forests’ by volunteers, mostly new employees of Korea Air and Local college students.

Also, Korean Air continues its effort to make the Earth greener in the Americas. The airline continues its tree planting in LA, this time in the interests of community goodwill and to assist the city’s ‘Million Trees Los Angeles’ campaign.

Korean Air arranged for trees to be planted in public places and the airline also gave away fruit trees to local residents.

Cultural Support Korean Air is passionate in its support of cultural pursuits and this is demonstrated by its sponsorship of Korean language services at the world famous Louvre, British and Hermitage Museums.

Maternal Health With the large number of female employees, Korean Air participates in the pink ribbon breast cancer prevention campaign. Since 2003, Korean Air held ceremonies every year to increase the awareness of breast cancer to passengers all around the world. ■

Korean air has assisted with the transport of emergency supplies following disasters such as the earthquaKes in sichuan, qinghai, Japan and new Zealand.

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Vladivostok. Russia 2012 ❙ 15

The APEC Publication 2012

Welcome

Vladimir V. Miklushevsky Governor, The Primorsky Territory

Dear friends On behalf of all Primorsky Territory citizens and myself I’m pleased to welcome you in Primorye! for the first time in its 24-year history aPeC summit is held in Russia, and I am very proud that the capital of Primorsky Territory Vladivostok was chosen venue for the meeting.

It is here where the Russian land meets the Pacific Ocean, which is the natural channel of the interaction with the countries of the asia-Pacific region. Russian far east has tremendous potential, no wonder the development of these territories has become a priority for the Russian government.

Today Primorsky Territory is rapidly developing. for example, last year domestic regional product growth rate

has doubled compared with the previous period. forbes magazine regularly includes Vladivostok and Primorsky Krai in the rating of the most attractive places for business in Russia.

In recent years both economic and social environments have undergone some great changes. Geographical proximity to the dynamically developing asia-Pacific region makes Primorye one of the most attractive regions of Russia in terms of business, tourism and culture. large-scale project of the far eastern federal University, campus of which will host the Summit, creates a serious educational cluster capable of integration into the educational environment of asia-Pacific region. Over 50 thousand students, including international students, are going to attend fefU. Primorsky Krai is one of the few places on earth that is home for a population of tigers,

GeoGraphical proximity to the dynamically developinG asiapacific reGion makes primorye one of the most attractive reGions of russia in terms of business, tourism and culture.

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which became a symbol of our region.

I am sure that you will discover quite a few new things in the agenda of the Summit, including new business opportunities readily available in Primorsky Territory.

The aPeC summit provides a great opportunity to get acquainted with our region, and I’ll be happy if you come back here after some time as our business partners or just to enjoy the unique nature and tourism opportunities.

Primorye is the land of great opportunities!

Welcome to VladiVostok!

Vladimir V. Miklushevsky The Primorsky Territory Governor

The APEC Publication 2012

Welcome

Andrey Kostin President and Chairman of the Management Board, VTB Bank Chairman, APEC CEO Summit, Vladivostok, Russia 2012

Dear Colleagues It is my privilege and pleasure to welcome you to the 2012 APEC CEO Summit being held on 7-8 September in the city of Vladivostok in the Russian Far East.

The theme of the summit this year is “Addressing Challenges, Expanding Possibilities.”

The recent economic turbulence has clearly exposed inefficient business models and the limits of growth. The world is at a crossroads, while the “economic centre of gravity” is shifting eastwards. However, the challenges only better highlight the immense potential of the Asia-Pacific region and the leading role our 21 economies are to play in the XXI century.

To create a prosperous and innovative future, integration is essential. Therefore, we have set an agenda for the 2012 APEC CEO Summit that addresses a vast range

of issues related to trade liberalisation, safe food and water supply, infrastructure development, the fostering of innovation and new transportation routes.

Our gathering takes place on Russky Island, off the coast of Vladivostok, at the newly built campus of the Far Eastern Federal University. We hope “the campus spirit” we all once experienced will reunite us, while also highlighting the crucial role of education.

From the Russian perspective, the APEC chair is an honourable and important mission. In the coming years, Russia is to undertake large-scale transformation. To achieve this, it is absolutely necessary to involve the untapped natural resources of Siberia and the Russian Far East. We are looking forward to cooperating with our partners from the Asia-Pacific region.

The APEC CEO Summits have proven to be unique high-profile forums for state and

In the comIng years, russIa Is to undertake large-scale transformatIon. to achIeve thIs, It Is absolutely necessary to Involve the untapped natural resources of sIberIa and the russIan far east.

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business leaders to exchange views and find solutions through open multilateral dialogue and dynamic interaction. We firmly believe the 2012 CEO Summit will help us keep the Asia-Pacific region vibrant, innovative and closely connected.

The Vladivostok Summit will show a Russia that many of you have not seen yet.

You will definitely be fascinated by the beauty of the region and by the open hearts and attitudes of people who live there.

We thank you and cordially welcome you to Vladivostok this September.

Andrey Kostin President and Chairman of the Management Board, VTB Bank Chairman, APEC CEO Summit, Vladivostok, Russia 2012

The APEC Publication 2012

The APEC Publication 2012

Sponsored Feature / Primorsky

ThoughT LeadershiP

Primorsky Territory: Host of APEC in 2012

The economic growTh raTe is comparable To The leading counTries in The asia-pacific region - china, souTh Korea and Japan.

THE dEvEloPmEnT of the Primorsky Territory began in the mid-19th century, after the signing of Treaty of Aygun and Treaty of Peking with China. vladivostok was founded as a military post on June 20 (July 2, new style) 1860. The Treaty of Peking signed november 14 of the same year transferred the southern lands of the Far East under the full jurisdiction of Russia.

For a long time strengthening of Russian presence in the Far East was hindered by inadequate population and remoteness from populated parts of the empire. In May 1891 the construction of the Trans-Siberian Railway the railway between Vladivostok, Chelyabinsk stretching for some 7000 kilometers began.

Regular rail service between the capital of the empire, St. Petersburg, and the Pacific ports of Russia - Vladivostok and Dalny - was launched July 1 (14), 1903 after the Chinese Eastern Railway passing through Manchuria started operation. Trans-Siberian Railway in its entirety was completed in 1916.

In the 1930s after the Revolution and Civil War the forced industrialization and collectivization 20 ❙ theapecceosummit.com

of agriculture began.This lead to the mass migration of people from western and Siberian parts of USSR to the Far East. October 20, 1938 by the decree of the Supreme Council of the USSR Prymorsky Territory was comprised of the Primorye and Ussury oblast of the Far Eastern Krai, Vladivostok was appointed a regional capital.

After the Second World War Primorsky Territory has continued to develop as a major industrial and agricultural region of the Far East, but retained the raw material specialization.

Railways and marine transport had played a significant role in the region’s development.

Mid-1960s were characterized by the establishing of new industries previously

nonexistent in the region, i.e. chemical, electrical, instrument engineering, porcelain, furniture and others.

Being a major Pacific fleet navy base the capital of Primorye – Vladivostok – for a long time remained a city closed for visitation.

Vladivostok was open for foreign visitation in 1992 after a presidential decree by Boris Eltsin.

Primorye today Primorsky territory has one of the highest economic growth indicators in Russia. Over the past six years (2006 - 2011) Primorye GRP increased 1.4 times (in comparable prices), industrial production - 1.6 times, foreign trade turnover doubled, the volume of investment in fixed assets - 4 7 times. The economic growth rate is comparable to the leading countries in the Asia-Pacific region - China, South Korea and Japan.

Several of the major ports of the Russian Far East are in Primorye, including Vladivostok, Nakhodka, Vostochny, Posyet, Zarubino. Oil harbor of Kozmino near Nakhodka started operation in 2009, currently used for exporting oil delivered by the main pipe line “Eastern Siberia – Pacific”.

Today, Primorsky Territory is one of the most exciting and promising parts of Russia for business development. APEC summit preparations provided a great base for further economic development and integration into APR. Total value of investment projects being implemented in Primorye is 2 trillion rubles. In the coming years Primorsky Territory intends to actively develop automotive, shipbuilding, small aircraft manufacturing, petrochemical and gas chemical industries, innovative economy projects. These projects are proposed for inclusion in 2013-2017 socio-economic

development program of the Primorye Territory, which is currently being developed in conjunction with expert community. Its main objective is finding a complex solution of the key socio-economic issues, improving the quality of life of people of Primorye, providing employment opportunities, developing region’s industrial, labor, and intellectual potential.

The presence of such serious investors as “Rosneft”, “Transneft”, “Gazprom”, and “Sollers” only confirms Primorsky Teritory’s investment attractiveness. There are 2000 foreign companies and companies with foreign capital in the region.

Moreover, Primorsky territory has a vast tourism potential. During the summer season beaches along the coast of Primorye accommodate locals and people from other parts of the Russian Far East and Siberia alike.

There are dozens of resorts and recreation centers at the southern coast of Primorye. In terms of inbound tourism Primorsky Territory relies on the creation of an integrated resort with a gambling area in the Muravyinaya Bay (Artyom city district). The goal is to reach a tourist flow of 10-12 million tourists by 2025.

Besides we are currently working on a concept of creating a recreational tourist zone on Russky Island.

APEC summit preparations For the first time the idea of Vladivostok hosting APEC Leaders Week was suggested by the President of the Russian Federation Vladimir Putin in January 2010. Later that year during the APEC Summit in Sydney, Australia it was officially

confirmed that APEC 2012 is going to take place in Vladivostok, Russia. In preparations for the APEC-2012 summit a subprogram “Development of Vladivostok as a center for international cooperation in the Asia-Pacific region.” was developed and approved under the federal target program “Development of the Far East and Baikal Region”. Preparations for the summit required a major upgrade of the existing utilities and transport infrastructure. In the efforts to prepare for the summit Vladivostok got new roads and bridges, water lines, sewage treatment systems, and power generation facilities.

Major APEC summit infrastructure objects are – suspension bridges across the Golden Horn Bay and Bosfor Vostochny Strait, new highway connected the new airport terminal with the APEC site on Russky Island, including a low water bridge across Amur Bay, and last but not the least the Far Eastern Federal University campus on Russky Island. It is FEFU campus that is going to host the APEC Leaders Week and most powerful people of most prominent APR economies in September 2012. After the summit, students will move in to the campus on Russky Island, and all the facilities built for the summit will continue to work for the benefit of the people of Primorye.

The main issues to be discussed at the upcoming meeting of APEC leaders in Vladivostok will include: trade and investment liberalization, regional economic integration, food security, establishing reliable transport and logistics channels, active cooperation to provide innovative growth. ■

Vladivostok. Russia 2012 ❙ 21

The APEC Publication 2012

The APEC Publication 2012

Sponsored Feature / Vladivostok Air

ThoughT LeAdershiP

Vladivostok Air: Largest Air Carrier in Russia’s Far East In 2004, VladIVostok aIr became a ValId member of the InternatIonal aIr transport assocIatIon. TodAy, Vladivostok Air is the largest air carrier in Russia’s Far East, carrying about 1,100,000 passengers annually on its own fleet of planes. our airline conducts flights to 24 domestic and 13 international locations. To effectively meet the demands of its wide network of destinations, Vladivostok Air maintains a fleet of aircrafts comprised of a wide array of it`s types such as: Tu-204-300, Airbus A320, Airbus A330-300, yak-40, Mi-8.

In 2004, Vladivostok Air became a valid member of the International Air Transport Association. The company is also a member of the Transport Clearing House organization.

Twice, the company has received the “Wings of Russia” laureate award from the Russian aviation industry. Vladivostok Air continually seeks to serve its passengers with onboard comfort and style consistent with international standards that show our desire and flexibility to meet the needs and decisions of you and your business.

The tasks set and performed by Vladivostok Air include passenger service at international standard level, coziness and comfort on board, maximum mutual understanding and flexibility in business decision making.

The 30`s saw active airport development and construction for domestic and Soviet republics throughout the country. The first airfield and airspace development of the Primorye region began in 1931.

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1958

The Tu-114D completed the first trial nonstop flight from Moscow to Vladivostok

In the summer of 1932, the first solo flights with commercial purposes were conducted.

Construction also began on a hydro-airport at Vladivostok`s Second River region, and another airport named Key Lakes outside of Vladivostok in Artyom. On August 27th, 1932, ahydroplane completed the first technical flight; and on September 2nd of the same year, the plane delivered four passengers from Khabarovsk to Second River. That day now marks the official beginning of Vladivostok`s aviation enterprise.

From that day on, passenger flights between Khabarovsk and Vladivostok became a regular

occurrence. In 1934, the Second River airport was moved to a dry location and became the basis for the U-2 planes and from where regular flights were made. There were also new airports opened in Iman and Ozernye Klyuchi; a sanitary aviation created; and new planes and services tested.

During the war, the Po-2 plane carried supplies of lead-tin concentrates needed on the war’s fronts, and towards the end of the war, ammunition to the front lines. In July of 1941 a fleet of U-2, P-5, and Sh-2 planes were transferred to Ozernye Klyuchi, opening a new era of development in the history of Primorye civil aviation.

In the ten year period following the war, Po-2 and Sh-2 planes were used for a wide range of chemical, nautical, geological, and forest applications. Airfields in Primorye continued to develop rapidly, serving as the basis for the construction of airports in the 60`s and 80`s.

Passenger flights from Vladivostok to Moscow began in 1948 on Il-12 planes.

In 1953, the An-2 plane became known as a kind of educational plane for Vladivostok aviators that allowed pilots to amass experience in a number of different flight-related activities and carry several thousand passengers during

this period. Taking over the workload of the Po-2, the “Annushka” became a nearly irreplaceable craft for communal farm`s aviation-related agricultural needs. During these years, Primorye aviators also began mastering helicopter flight.

This began with the Mi-4 model which dutifully toiled away for 30 some odd-years and was succeeded later by the Mi-1, KA-15, Mi-8, Ka-26, Ka-32, and Mi-171.

1956, the beginning of Primorye`s passenger jet engine era was symbolized by the introduction of the Tu-104 plane. In May of 1958, the Tu-114D completed the first trial nonstop flight from Moscow to Vladivostok while In August of the same year the Vladivostok aviation industry began basic use of the Li-2 plane which continued to operate regular passenger flights from Ozernye Klyuchi to Khabarovsk for the next 15 years.

By that time the Ozernye Klyuchi airport had exhausted its limits for expansion as required by the larger jet engine planes. From 1959 to 1964 a complex of ground facilities were erected to allow regular flights for Tu104`s (1958), Il-18`s (1963) and AN-10`s (1964) thereby sharply increasing passenger volumes.

In February of 1961, the first brick terminal was built facilitating the processing of up to 200

passengers. This marked the beginning of the big airport known as “Vladivostok”.

In the 60`s and 80`s, pilots from Vladivostok`s aviation trade became pioneers in servicing the region`s whaling and fishing fleets. On August 30th, 1961, Primorye pilots were first in the Far East to begin fishing industry operations with Mi-1 helicopters.

Helicopters of the Vladivostok enterprise served both as cranes and ambulatories.

The emergence of small jet Yak-40 planes and Mi-8 helicopters helped facilitate transport as well as meet the economic demands of industries. In 1973, the aviation enterprise started construction of a new terminal, which began operating at the end of 1976. The Vladivostok airport began regular service of Tu-154`s. This period also witnessed a more dynamic development of the industry`s fleet as new squadrons of Yak-40’s and Mi-8’s were created. The completion of a second runway in June of 1985 opened up the airport for all modern aircraft and provided for the nonstop air service between Moscow and Vladivostok onboard Il-62 planes.

In 1990, having signed an agreement in Papua New Guinea for the use of Ka32 helicopters, the aviation enterprise entered

the international arena. In 1992, Vladivostok became an international airport. That same year, the company bought two Il-76 planes and began basic service on Il-76 Tu-154 aircrafts.

Since 1994, we have been an openly traded stock company, “Vladivostok Air”, whose holdings include an airline and airport. In 1995, the first modern long-distance Tu-154M airplane was purchased. On March 4th, 1999, the renovated international terminal was put into operation.

In 2005 Vladivostok Air was the first in the world to start operation of new long haul aircrafts Tu-204-300.

In December 2006 large scale reconstruction of domestic terminal was completedin Vladivostok Airport.

On February 5, 2007 Vladivostok Air air fleet obtained the first foreign made aircraft in the Far East AirbusA-320.

On January 25, 2008 Vladivostok Air met two more Airbus A-320 aircrafts painted with company colors. Now company’s fleet possesses three Airbus A-320 aircrafts.

On February 15, 2008 JSC Vladivostok Air completed a reorganization, and JSC Vladivostok International Airport was separated.

Vladivostok International Airport included into Russian register of open joint stock companies. ■ Vladivostok. Russia 2012 ❙ 23

The APEC Publication 2012

The APEC Publication 2012

Cover Story / New Era for APEC

ThoughT LEAdErshiP

Cover Story by: Chrisella Sagers Herzog

APEC T New Economic Era

he world’s economy is at a crossroads. On one path, the problems plaguing our planet– food insecurity, population growth, climate change, resource limitations, security issues–threaten to overwhelm our increasingly beleaguered institutions. On the other path, thought leaders from all walks of life innovate solutions and models to address the global shift brought about by the Technology Revolution, and in the process, find new opportunities in previously intractable problems.

Global leaders, from both the public and private sectors, are acutely aware of the fine line we tread, but opportunities to address such issues at the international level are not always forthcoming. Too often, the

iN A

summits designed to make progress on these issues are interrupted—the Euro crisis has been quite the distraction at the last few G8 and G20 meetings—or caught up in other concerns. The Asia-Pacific region, with the exception of a few major economies, has largely remained on the periphery of this economic drama, the 54 percent of the global GDP represented affected somewhat more lightly by the downturn. >

RussiA’s lEAdERs ARE noT AlonE in ThE AsiA-PACifiC in bEliEving ThAT modERn-dAy CAPiTAlism is noT ThE wholE AnswER foR dEvEloPing EConomiEs.

The world’s economy is at a crossroads but so far APEC has largely remained on the periphery of this economic drama.

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Vladivostok. Russia 2012 ❙ 25

The APEC Publication 2012

Cover Story / New Era for APEC

Biography Chrisella Sagers Herzog is the Managing Editor of the Diplomatic Courier magazine. She is also a freelance writer addressing issues from Occupy Wall Street to travel to technology developments

Addressing Challenges, expanding Possibilities >Russia’s focus at this year’s APEC Summit of “Addressing Challenges, Expanding Possibilities” is not only a reflection of its own vision for its future, but also a vision of a grander, region-wide effort towards integration and cooperation. As one of the largest economies in the world and the fastest-growing consumption levels per capita among BRICS nations, Russia brings a unique perspective to this APEC Summit as a developing economy working through the challenges and opportunities such a position brings. How does a country with a long history of state-controlled industry adjust to an era of trade liberalization, economic integration, and pervasive interconnectedness?

Russia’s leaders are not alone in the Asia-Pacific in believing that modern-day capitalism is not the whole answer for developing economies. Several panels at the

CEO Summit will discuss the future of capitalism, globalization, and the global financial system in a new generation of international political economy. Upheaval and uncertainty triggered by the 2008 financial crisis, and spurred by a continued slowdown in international trade (that is beginning to cut into the Asia-Pacific economies), capitalism is facing a legitimacy crisis, and APEC leaders will have to find innovative new models for a polished, reformed capitalism if it is to be considered the system of choice for the billions of new middle class workers in growing economies.

Who makes up this new middle class?

Emerging economies globally are increasingly being targeted as the new wave of consumers.

This middle class is well educated, and works with governments to improve education in their communities to ensure that their children are given even better opportunities.

They are extremely tech-savvy, and it is

who mAkEs uP This nEw middlE ClAss? EmERging EConomiEs globAlly ARE inCREAsingly bEing TARgETEd As ThE nEw wAvE of ConsumERs. 26 ❙ theapecceosummit.com

highly likely that the biggest technology developments yet to come—the “next Facebook,” if you will—will be thought up in an emerging economy. Perhaps most importantly, this new middle class will see a role for women as the decision-makers unmatched at any point in history, and how women chose to care for their families and communities will have a ripple effect on international trade.

In the end, however, these momentous opportunities will come full circle, as APEC’s Russian hosts have pointed out, and return to the challenges of the modern age. Fresh water supplies are threatened by industry, climate change, and population growth; meanwhile, some of the most extreme weather on the books threatens our food supply. As cities become centralized hubs of economic innovation, the challenges of prophetic yet functional urban planning runs up against increasingly complicated issues of supply chains and waste disposal, not to mention the scores of public health issues and non-communicable diseases that seem to be the mark of modern living. Opportunity must be balanced with challenges; innovation with caution will be the motto of a new model of global trade. This year’s APEC Summit sits at a critical juncture, and the delegates must rise to the challenges of the new era. ■

The APEC Publication 2012

The APEC Publication 2012

Feature / Food Security

ThouGhT LeaderShiP

Global Food Security A

Editorial by: Ralph I. Miller

Pathways to global abundance Sustainable Food Pavilion at Milano Expo 2015 will uniquely develop educational outreach to the public at large through visitor exhibitions, virtual experiences and media outreach. The Sustainable Food Pavilion is also a global platform about food abundance, with productive collaborations among nations, leaders, stakeholders and the public, showcasing best practices, emerging technologies and breakthrough innovations. In the years leading up to 2015, the Sustainable Food Pavilion provides a global hub for high-level interdisciplinary food-related discussions, as well as access to global networks.

griculture caN be a positive driver of food security, environmental sustainability and economic opportunity. The developing world is greatly impacted by food security issues. Food security is achieved when nutritional demands are met while providing affordable choices across the food value chain. The task is to foster a program of sustainable abundance that also conserves or enhances the quality and quantity of natural resources and meets the challenges of a rapidly changing climate. Effecting necessary changes requires leadership and global cooperation.

Truly inclusive and sustainable economic development requires an ethical balancing of a great many issues in both the social foundation as well as the environmental

ceiling of human coexistence. Policies must be examined, including land use, climate change, abatement, oceans, freshwater use and reclamation, carbon use discharge and ozone depletion.

Building a Global Food Security policy on the lessons of past successes and addressing shortcomings or earlier failures, requires consideration of approaches that are socially inclusive, forward-looking and market oriented. These policies must address the lack of multi-stakeholder coordination that has historically prevented many agriculture interventions from realizing lasting impact or commercial viability.

Given the capacity constraints of many governments, large-scale programs are increasingly using short-term benchmarks

to coordinate investments and ensure timely implementation of commitments.

The success of any development initiative ultimately relies on delivering local results within a robust global market. This implies a shift in the mindset and policy for developed and developing countries.

Every stakeholder has a critical role to play and the scale of the challenge requires an intensification of efforts around the world to create risk mitigation tools and build market confidence. In particular, governments must set the direction while businesses stretch to innovate and invest and global companies leverage their formidable resources, all engaging and strengthening local enterprises and partnering with diverse stakeholders to deliver results at scale. ■

Sustainable Food Pavilion With an expected 9 billion people on our planet by 2050, no challenge looms larger and no need is more urgent than achieving a sustainable, abundant supply of nutritious food for everyone on earth. For the first time, there is an emerging consensus that solutions are possible. We have an historic opportunity to align the world’s top thinkers, academics, businesses, and policy makers around a cohesive course of action. Experts agree that the next 3-5 years are critical.

The Global Summits on Sustainable Food Abundance and the Sustainable Food Pavilion at Expo Milano 2015 are being developed to strengthen and advance this growing global consensus during the decisive period in the next three years. The Summits in particular are being constructed as the neutral global convener for a cohesive global dialogue. Working with global partners, our goal is to integrate diverse, critical perspectives into sensible, economically viable solutions for an abundant future.

The findings and recommended action plans from the Global Summits will achieve global impact through the Sustainable Food Pavilion during the six months of programs at Expo 2015 in Milan, Italy the largest and most in-depth global event ever organized on the issues of food. For more information visit: http://sfp2015.org

The success of any developmenT iniTiaTive ulTimaTely relies on delivering local resulTs wiThin a robusT global markeT. 28 ❙ theapecceosummit.com

Vladivostok. Russia 2012 ❙ 29

The APEC Publication 2012

News / ABAC Media Advisory Issued by: APEC Business Advisory Council (ABAC)

APEC business leaders urge greater economic integration through partnering towards a Free Trade Area of the Asia-Pacific

A

PEC EConomiEs should promote greater economic integration by taking resolute actions to guard against financial and sovereign risks while pursuing trade and investment liberalization and maintaining a robust growth trajectory toward achieving the Bogor goals.

Business leaders of the APEC Business Advisory Council (ABAC) met in Ho Chi Minh City this week to finalize their recommendations to be presented to APEC Economic Leaders in Vladivostok in September.

The business leaders noted that the global economy remains fragile, exposing economies in the Asia Pacific region to serious downside risks. Re-escalation of the Euro-zone crisis looms as the primary threat to global growth, and protectionism is on the rise.

“Regional economic integration and achieving the Bogor Goals remain ABAC’s top priority” said the 2012 ABAC Chair Ziyavudin Magomedov. “ABAC calls for substantive progress to be made towards the Free Trade Area of the Asia Pacific (FTAAP), and urges that all pathways to FTAAP should reflect the key principles of inclusiveness, transparency and comprehensiveness.”

Against this background, ABAC adopted the theme “From Aspirations to Reality” which is focused on regional economic integration and financial markets stability, supply chains and infrastructure

development, food and energy security, as well as innovative development including skills development and SMME growth.

ABAC urges further improvement of regional supply chains, addressing the chokepoints and greater use of global data standards and supply chain infrastructure technologies. From 2010 to 2020, Asia-Pacific economies will require roughly US$8 trillion in infrastructure investment, a level of demand that cannot be met without substantial involvement of the private sector. ABAC recommends that APEC work to improve the investment environment through the adoption of strong investment principles and protections.

The issue of food security remained high on the agenda of the APEC Business Advisory Council. The Council welcomed the inaugural meeting of the APEC Policy Partnership on Food Security (PPFS) held in Kazan, Russia, in May this year, and supported its working plan. The long-term goal of the PPFS with the guidance of ABAC is to shape a food system structure by 2020 that would provide lasting food security to APEC economies.

Fostering innovative growth continues to be an important priority for ABAC. Effective technology dissemination, eco/living city approach in urban development, and energy efficient practices are key innovation drivers.

ABAC views small, medium and microenterprises (SMMEs) as the backbone of the modern economy based on innovative growth

The business leaders noTed ThaT The global economy remains fragile, exposing economies in The asia pacific region To serious downside risks.

30 ❙ theapecceosummit.com

and recommends capacity building initiatives to raise SME awareness of the cross-border business development opportunities, including the use of various information and communication technology tools.

In pursuing its diverse agenda, ABAC applies every effort to support APEC economies’ leaders in identifying the ways and means of enhancing regional economic integration, economic growth and prosperity in the Asia-Pacific.

About ABAC The APEC Business Advisory Council is the official voice of business in APEC. ABAC brings together business leaders from each of the APEC’s 21 economies to identify policy priorities and key concerns of the business sector. ■

The APEC Publication 2012

Sponsored Feature / Vladivostok Airport

Vladivostok International Airport

The STrATegIc gOAl of the international airport of Vladivostok is to become a major transport way point for russian passengers to Southeast Asia and airport flights hub between Northeast Asia and North America. Vladivostok is located not far away from the countries of the Asia-Pacific region, which in recent years hade demonstrated high rates of economic growth.

Vladivostok International Airport is also located among several major long-haul routes, including the route from the North-east Asia to North America. In due to its convenient geographical location is of strategic importance to the air transport system in the region and country.

The date of formation of Vladivostok enterprise is considered to be the 2-nd of September 1932 - the day when first aircraft were delivered to the first passengers from Khabarovsk to Vladivostok.

Vladivostok Airport route network of over 30 Russian and international destinations. JSC “MAV” cooperates with the leading airlines of Russia and the countries of South-East Asia.

Among them are “Aeroflot”, “Vladivostok Avia», S7 Airlines, «Transaero», Korean Airlines, China Southen, etc.

Vladivostok Airfield (Knevichi) - airfield Class “A” Mountain. Does ICAO category II and admission to the reception of all types of aircraft (except A-380). It has two civilian apron (46 parking places the aircraft).

The 15-th of April 2011 was put into operation after upgrading the runway-1. The band is qualified to receive all types of aircraft without limits. During the reconstruction of the runway used materials and technologies that meet international standards, including lighting, meteorological equipment and navigation.

In terms of passenger traffic airport 32 ❙ theapecceosummit.com

47,500 m2

The total area of the airport complex

Vladivostok takes a leading position in the Far East of Russia. In 2011, the Vladivostok airport handled 1,000,000 passengers 456 thousand, which exceeded the 2010 figure of 14%. Airport secured the implementation of more than 6 thousand sorties, which is 16% higher than in 2010. It is planned that up to 2012 passenger traffic will reach 1.8 million passengers.

Reconstruction of the Vladivostok airport has become one of the most important stages of preparation on the Far Eastern region for the APEC summit in 2012. Modernization of the airport in accordance with the Federal target program “Economic and social development of the Far East and Transbaikalia until 2013.”

The reconstruction of airfield pavements, replacement of lighting and radio equipment,

the development of external transport links the airport from the federal budget allocated more than 10 billion rubles.

Presidential Decree in 2008, 52.2% shares of OJSC “Vladivostok International Airport” referred to the management of JSC “Sheremetyevo International Airport” JSC (“MASH”).

The main investor in construction of the terminal by JSC “MASH” (which owns 52.16% shares of OJSC “Vladivostok International Airport” (MAV) and 74.99% shares of JSC “Vladivostok Terminal”), a co-investor Vnesheconombank. The project cost 6.3 billion rubles.

Construction of a new international terminal started in August 2009. The test flight was made June 1, 2012. The total area of the airport complex is 47.5 thousand square meters, the station area of 40 thousand sq.m. The terminal building is connected to the railway station “Aeroexpress”.

Open Skies The new terminal has a capacity of 1360 persons per hour or 3.5 million per year and is designed for simultaneous servicing international and domestic passenger traffic at a ratio of 30% and 70% respectively.

To support the development of the airport as an international hub, the Ministry of Transport November 3, 2011, it was decided to lift restrictions on foreign airlines flying to Vladivostok International Airport, including flights on the fifth “freedom of the air” between Vladivostok and points in third countries.

The “Open Skies” is the interest of foreign air carriers. There are currently actively developing direction of the Korean - Seoul, South Korea today is the second largest passenger airport area. In connection with the removal of restrictions on freedom of 3 and 4 air flights between Russia and South Korea are working with foreign air carriers to open routes to Jeju and Yangyang. Expected development in the Japanese way: increasing the frequency of flights to Tokyo and the opening of routes to other areas of the country. Work on the opening of flights to Shanghai, Guangzhou, the Yangtze.

In the future - expanding the geography of flights in the Asia-Pacific countries and the CIS. The possibility of opening operations in the U.S. and Canada.

Development of Vladivostok airport will have a significant socio-economic impact, which is expressed in increasing competition in international air travel and reduce the tariffs on international flights from Vladivostok. This, in turn, will promote the growth of both the direct and transfer passengers, increase the intensity of the route network and stimulates the growth of air transportation access. ■

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The APEC Publication 2012

The APEC Publication 2012

News / Cultural Diplomacy

ThoughT LEADERShiP

Editorial by: Dana McKelvey

Russian cruise ship promotes cultural exchange in preparation for APEC Summit

I

n preparation for the 2012 APEC summit in Vladivostok, Russia dispatched the STS Nadezhda cruise ship to ports around the world. In September 2011, the ship set out on a year-long journey to, among other countries, America, Canada, the Republic of Korea, New Zealand, Australia, Indonesia, Singapore, Malaysia, Thailand, Vietnam, China, and Japan. It will end its journey this September on the eve of the

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APEC summit, after completing a Pacific circumnavigation and, according to the project’s website, “demonstrating[ing] Russia’s aspiration for active interaction within the Pacific economic space through representation…scientific research…and public awareness.”

Alongside representatives from Admiral Nevelskoy Maritime State University, Dmitry Medvedev announced the cruise at the World

EXPO-2010 in Shanghai, China. The government and university jointly agreed that the Ministry of Transport of the Russian Federation, the Federal Agency of Marine and River Transport, and the Ministry of Foreign Affairs would implement the lofty project.

According to the STS Nadezhda’s website, the project’s mission is two-fold: to represent Russian culture and interests in the ports of eighteen APEC nations, and to meet specific

research and training goals for Russian scientists and members of the Russian Navy.

In pursuit of the former, the crew of STS Nadezhda has strived to demonstrate Russia’s economic and technological capacity for conducting business with other APEC nations; to exhibit the culture of smaller, Far East Russian nations; and to promote Russian culture and language. In pursuit of the latter, the crew has collaborated with other maritime research institutions; presented Russian maritime education via ANMS University; and granted ANMS cadets and members of the Russian Navy training opportunities at institutions worldwide.

As a member of the Asia-Pacific Economic Cooperation since 1998, Russian officials have regularly taken part in APEC events involving trade, energy, transportation, and science.

Russia also prides itself on its contributions to APEC’s security and environmental initiatives, including counter-terrorism, disaster preparedness, and the Mining Task Force, a collaboration that has inspired Russian representatives to draft the Report on Mining Sustainable Development in Asia-Pacific for the U.N. Commission on Sustainable Development. Considering Russia’s accomplishments within APEC, not to mention its experience hosting APEC events on transportation, energy, and industrial science and technology over the last decade, the country looks forward to hosting this year’s summit.

This September, Russia’ chairmanship at APEC counts liberalized trade and regional economic integration among its principal goals. By promoting the integration of Russia’ domestic economy into the Asia Pacific Region (APR) economy at large, the country believes it can modernize key areas such as Siberia and the Far East. Food security ranks high among the country’s modernization initiatives. In order to increase access to food, increase food production, and establish quality and safety standards, the country aims to bolster the “logical chains” of food production that link producer to consumer.

Creating efficient, secure supply chains – for both food and other commodities – can facilitate international trade. By coordinating transportation, providing transportation hubs with modern information technology systems, and standardizing transportation security standards, Russia can enter a freer exchange of food, commodities, and information with fellow APEC member states.

region.” Moreover, Medvedev and ANMS University expanded this “project” beyond the set time and place of the APEC summit, allowing for cultural exchange, research, and face-to-face diplomacy among APEC representatives for the entire year leading up to the summit. If Russia leads the summit with the creativity, innovation, and spirit of open exchange with which they launched the STS Nadezhda, smooth sailing could lie ahead. ■

face-to-face Diplomacy Russia has expressed that these modernization initiatives will benefit the APEC community at large. By exchanging scientific and technological developments, trade systems already set up among APEC states will flourish, fulfilling their intended purpose as a space for free exchange. Russia also hopes to work with other member states to protect and research the usage of APEC’s largest shared resource: the Pacific Ocean.

In this sense, Russia’s launching of the STS Nadezhda across the Pacific may prove a valuable move. There is arguably no better way to set the stage for the host country’s stated goals of increased informational and commodity exchange, increased business ventures across the APEC states, and a more efficient utilization of the Pacific Ocean. The efforts of the STS Nadezhda crew constitute a true APEC “project,” which the APEC website defines as helping to “translate APEC Ministers’ and Economic Leaders’ policy directions into actions and create tangible benefits for people living in the Asia-Pacific

As A member of the AsiAPAcific economic cooPerAtion since 1998, russiAn officiAls hAve regulArly tAken PArt in APec events involving trAde, energy, trAnsPortAtion, And science.

Vladivostok. Russia 2012 ❙ 37

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The APEC Publication 2012

News / Disaster Preparedness Media Advisory Issued by: APEC Telecommunications and Information Working Group

Universal broadband access improves development; disaster preparedness

I

ncreasing broadband access to rural customers will improve the region’s economy, create jobs and stem urban migration, agreed industry experts and APEC telecommunications officials on Thursday. Bringing broadband to rural customers and providing technology options were the main topics of concern at the industry roundtable in Da Nang, located along the central coast of Viet Nam. Committed to achieving the goal of universal access to broadband in the APEC region by 2015, member economies have made progress to further develop ICT infrastructure.

But advances have been quicker than imagined. Therefore, APEC economies are already working toward achieving the ambitious goal of access to next generation high speed broadband by 2020 in the APEC region.

Universal Service for Rural Areas Viet Nam recognizes that broadband has economic as well as social benefits. Its public policy goal is to deploy broadband widely to harness these benefits. Increasing access to high-speed internet connections by 10% will bring about 1.3 percent economic growth, according to a report from the World Bank.

“Increasing broadband internet access to rural areas will attract hundreds of jobs for citizens,” says Pham Van Anh of Viet Nam’s Ministry of Information and Communications.

“At the end of 2010, over 26 percent of Viet Nam’s population in 4,300 communes had universal access to telephone and Internet services. Ninety-seven percent of communes had public telephone access points,” she added.

“Viet Nam will continue to expand the provision of universal telecom and Internet services to all citizens and households,” said Anh. “The goal is to develop broadband infrastructure to meet the requirement of universal service by 2015.”

To increase rural access, The Viet Nam Public Utility Telecommunications Service Fund (VTF), a state-funded institution, mobilizes financial resources from teleenterprises and provides financial support for programs and projects. Its tasks include the selection and appraisal of universal services projects and monitoring the implementation.

“The VTF supports telecommunications infrastructure development projects and carries out the government’s method for bidding on projects or placing orders,” Anh explained.

Since over two-thirds of the global population do not have access to the Internet it was suggested that access to the Internet should be offered at a more affordable price because it is likely those non-subscribers are more economically disadvantaged than the two billion that are already online.

Describing the Internet Society’s community-empowered approach (by the

Despite longer waiting perioDs for the approval of cell phone towers in urban areas, it only takes a few weeks to get approveD to builD a tower in rural areas.

40 ❙ theapecceosummit.com

people, for the people) to connecting rural communities to the Internet, Duangthip Chomprang, Program Advisor for the Regional Asia Bureau, said that sustainable and reliable solutions should be economically viable for the service provider and not cost prohibitive.

Promoting a wireless Internet in developing economies enhances socioeconomic-community development benefits and stimulates the creation of content, products and services originating from rural areas, healthcare and access to government and corporate services.

“Building a wireless network is easy,” said Chomprang. “The more important thing is what happens after that.” >

The APEC Publication 2012

News / Disaster Preparedness > “People’s live change,” she added.

“As a result of a wireless network solution we built, more than 80 schools are connected; healthcare providers in 6 hospitals offer e-medicine and local economies have been revived by reducing urban migration and attracting local investment and encouraging the entrepreneurial spirit.”

In the South Pacific, New Zealand has rolled out the Ultrafast Broadband Project to bring fiber optic technology to 70% of the population, including homes, schools, hospitals, marae and businesses.

A second initiative, the Rural Broadband Initiative, will deliver broadband Internet to rural communities at a cost and service level comparable with urban areas. Food and agribusiness contribute to over 60 percent of New Zealand’s exports so the benefits of improving rural broadband are expected to be significant.

“The government’s’ goal is to connect 97% of the schools at 100 Mbps,” said Paul Brislen, Chief Executive of Telecommunications Users Association of New Zealand “They’re planning to roll out an open access network to schools and will connect those to cell phone towers.”

“This 3G network will be built on a fiber connection giving better connectivity,” he added. “Part of the rollout includes ADSL run from improved copper connections.”

Despite longer waiting periods for the approval of cell phone towers in urban areas, it only takes a few weeks to get approved to build a tower in rural areas.

“Rural New Zealand is crying out for connectivity,” Brislen explained. “We’re encouraging ways to get rural New Zealand up to speed with urban New Zealand as soon as possible.”

But compared to other economies, New Zealand’s connectivity is faster (approx 100 Mbps) than that found in most internet cafes elsewhere in the region.

In Southeast Asia, broadband access is wide but speed is a challenge. Wallace Koh says that the costs are passed down to customers because of upstream charges.

“Local area networks in Southeast Asia are quite sufficient,” asserted Koh who is with the Brunei’s Authority for Infocommunications Technology Industry.

“It’s not the technology know-how, it’s the cost constraints of the economy’s outgoing pipe that limits delivery of high speed internet access for consumers.”

Disaster Recovery Lessons can be learned from economies in the APEC region that have been required 42 ❙ theapecceosummit.com

lessons can be learneD from economies in the apec region that have been requireD to responD quickly to natural Disasters. to respond quickly to natural disasters.

Frequent natural disasters have caused severe damage to APEC economies and it has been recognized that ICT plays a vital role in early warning, rescue and relief operations, as well as recovery efforts.

Delegates heard from NTT DOCOMO how Japan dealt with service interruptions caused by the Great East Japan Earthquake on March 11, 2011, which caused extensive damage to the mobile network.

Communication equipment was either

destroyed or disrupted due to the earthquake and subsequent tsunami, optical fibers and other transmission lines were disconnected, and emergency battery power was depleted due to long blackouts.

Restoring access to communications networks proved to be a challenge but industry devised new disaster preparedness measures in the month following the event, all of which have been fully or almost fully implemented, said Gorou Furuhashi who is NTT DOCOMO’s Chief Representative in Hanoi. ■

The APEC Publication 2012

The APEC Publication 2012

Sponsored Feature / Chile

ThoughT LeadershiP

Chile: A country that punches above its weight the investor that ours is a serious country which respects the rule of law and sticks to its commitments and its word.”

But Chile is not just about percentages and rankings. It is above all a stunningly beautiful and diverse country, thanks to its extraordinary long, thin shape. The far south is a land of forests, fjords and ice – 77% of all the southern hemisphere’s glaciers are in Chile. In the north lies the Atacama Desert, the driest on earth. Its crystal clear skies make it an astronomer’s paradise (see box). The centre of the country is its agricultural heartland. Chile’s is the world’s biggest exporter of blueberries, table grapes, plums, trout and dried apples and the second biggest exporter of salmon, avocados and cherries. Its wines are enjoyed by millions of people around the world (see box).

LAter thIs mOnth, Chile will celebrate 202 years of independence from spanish rule.

In those two centuries, the country has transformed itself from a remote corner of a foreign empire to one of the great success stories of Latin America.

It is the only south American member of the OeCD; it boasts one of the most open, marketorientated economies in the world; it has free trade agreements in place with countries accounting for 87% of global GDP. that gives it preferential access to a market of more than 4 billion people.

Chile is a country that punches above its weight. It is the 60th largest country in the world in terms of population and yet is among the top 20 recipients of foreign direct investment (FDI). Last year, FDI totalled US$17.3 billion.

It is an easy place in which to do business.

Taxes are relatively low and corruption is rare.

According to the World Bank, a medium-sized company in Chile pays only 25% of its profits in taxes, compared to a regional average of 48% and an OECD average of 43%. At 18.5%, Chile’s corporate tax rate is the lowest in Latin America, and Chile boasts double-taxation agreements with 24 countries.

The Economist Intelligence Unit ranks Chile among the top 20 countries in which to do business, and the best in Latin America.

In 2011, Chile ranked 22nd in Transparency 44 ❙ theapecceosummit.com

International’s Corruption Perceptions Index, above the United States, France and all other Latin American countries.

Chile has been a member of the World Bank’s dispute settlement mechanism ICSID since 1991 and abides by its rulings. Its central bank is independent, and the government, led by entrepreneur Sebastián Piñera, is a staunch believer in the free market.

“Our mission is to turn Chile into a developed country by the end of this decade,” Piñera says.

“We’re moving in the right direction: our economy is growing strongly, we’re creating jobs, wages are rising and exports and investment continue to grow.

“Chile is a extraordinarily open country. Over 80% of our gross national product is linked to foreign trade. Ours is a country that needs and welcomes foreign investment and we guarantee

Investment Opportunities The country offers tremendous investment opportunities, particularly in mining, tourism and energy. In renewable energy, Chile has the potential to be a world leader. The Atacama Desert is ideal for generating solar power; Chile’s enormous coastline has fantastic potential for wave and tidal power; the country is home to around 10% of the world’s active volcanoes, a great source of geothermal energy. Currently only 3% of Chile’s electricity comes from these renewable sources but the government has proposed that by 2020, that should rise to 20%.

Investment opportunities abound.

Mining is another industry rich in promise.

Chile is famous for its copper but also produces gold, silver, lithium, molybdenum and nitrates (see box). Mining companies plan to invest $91 billion in mining projects between now and 2020. That is over a third of Chile’s current GDP. Tourism is growing steadily. The number of visitors to the country has increased by 5.2% a year over the past decade. Most are drawn to the majestic peaks of the Torres del Paine national park in Patagonia, to the mysterious stone statues of Easter Island and the lunar desert landscapes of San Pedro de Atacama. But increasingly, they are visiting Chile’s cities like the atmospheric port of Valparaíso, a UNESCO world heritage site. In 2011, The New York Times ranked the capital Santiago as its number one city to visit, ahead of Milan, London and Melbourne. The potential is huge, and investment in the tourism industry is growing at 9% a year.

Wine Last year, the world drank 664 million litres of Chilean wine. The country is the 5th largest exporter of wine on the planet. Its wine exports were worth $1.69 billion in 2011.

Because of its extraordinary shape and diverse topography, the country can produce virtually any kind of wine, from sweet dessert wines in the arid north, to cool Sauvignan Blancs in the central Casablanca valley and full-bodied reds south of Santiago.

Chile even boasts its own trademark grape variety, Carménère. Once widely grown in France, Carménère was wiped out by a plague in the 19th century. Fortunately, French growers had already exported it to Chile, where the vines flourished, even though the locals believed them to be Merlot. It was only in the 1990s that a French wine expert confirmed that the vines were in fact the long-lost Carménère variety.

Since then, production has boomed.

Cheers to that!

Astronomy If we human beings ever discover life on other planets, we will probably do so from Chile. That’s because the country boasts some of the world’s best observatories and is building the biggest telescopes on earth. By 2025, an estimated 70% of the image capturing capability in the world will be in northern Chile, which enjoys some of the clearest skies on earth.

The two biggest projects are ALMA and the E-ELT. Once it’s completed next year, ALMA (The Atacama Large Millimeter Array) will be the most powerful network of radio telescopes on earth. It will consist of 66 giant radio dishes on the Chajnantor plateau, high in the Andes at a breathtaking altitude of 5,000 metres.

The E-ELT is the European Extremely Large Telescope and will be built at the Paranal observatory, in the Atacama Desert. It will be the size of a football stadium with a central mirror bigger than a tennis court – and four times bigger than the mirror on any existing telescope.

Astronomers say the images it produces will be 15 times sharper than those from the Hubble space telescope.

They will help us fill in the gaps in our knowledge about the universe, and might help us answer the question we all, surely, occasionally ask: is anyone out there?

mining Pick up an electrical appliance, open it, look inside, and the chances are that the copper wiring you see inside it came from Chile. The country produces a third of the world’s copper.

Sales of the metal abroad account from over half of national export revenue.

The Escondida mine, owned by BHP Billiton and Rio Tinto, is the world’s most productive copper mine. Chuquicamata, owned by state-owned Codelco, is the largest open-pit copper mine on earth. Codelco’s El Teniente mine, high in the Andes, is the largest underground copper mine on the planet. Chile produced 5.26 million tonnes of refined copper in 2011, and there is plenty more to come the country sits on some 40% of the world’s known copper reserves.

But Chile is not just copper. It also has 40% of the world’s reserves of lithium, used in batteries and electric cars. It’s a top-ten producer of gold and it has nearly a quarter of the world’s reserves of molybdenum, a metal used to make high-strength alloys.

Chile is at the forefront of developing technologies to maximize this mineral wealth. It is home to a revolutionary bioleaching plant in the Atacama Desert – the first plant in the world dedicated to using bacteria to leach copper from ore on an industrial scale.

Culture Chile is often referred to as “a land of poets”. In Pablo Neruda, it boasts one of the giants of 20th century literature, and a visit to Neruda’s home at Isla Negra on the Pacific coast is a must for many tourists. Neruda won the Nobel Prize for literature in 1971, but he wasn’t the first Chilean to do so. That honour belongs to another poet, Gabriela Mistral, who was awarded the prize in 1945.

The country has produced some fine novelists too. Isabel Allende has enchanted readers for decades with her novels The House of Spirits, Of Love and Shadows and Eva Luna.

The acerbic Roberto Bolaño is another Chilean writer whose reputation goes far beyond his homeland. His novel 2666 has been widely acclaimed since his tragically early death in 2003.

Chile’s film industry is vibrant. Directors like Andrés Wood (Machuca) and Sebastián Silva (La Nana), have helped put the country on the map.

And thanks to its stunning scenery, Chile is often used as a backdrop for films – much of the James Bond movie Quantum of Solace was filmed here.

And the music scene is blossoming. In 2011, Chile became the first country outside the United States to host the annual Lollapalooza music festival, now in its 21st year. ■

“Chile has a lot to show the world,” Piñera says. “It has nature, history, culture, beauty, rivers, lakes, volcanoes, indigenous people, friendly people. Indeed, I wonder if any country in the world has the kind of tourism opportunities we have. This is a country that has everything.”

5,000 m

The high of the the ALMA project, that will be set in the Andes

Chile by numbers: (All figures 2011) › Population:

17.2 million

› GDP:

Us$248.93 billion

› GDP per capita:

Us$14,413

› GDP growth:

6.0%

› Percentage of global GDP: 3.7% › Inflation:

4.4%

› Unemployment:

7.0%

› Value of exports:

Us$81.41 billion

› Value of imports:

Us$70.62 billion

› Net foreign reserves:

Us$41.98 billion

› Literacy:

97%

› Life expectancy:

78

Vladivostok. Russia 2012 ❙ 45

The APEC Publication 2012

The APEC Publication 2012

Feature / Global Trade

ThouGhT LEAdErShiP

Story by: Manuel C. Menendez III

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

S

ince 1989, the Asia-Pacific Economic Cooperation forum has become a key venue for the global dialogue on international trade. Its 21 member economies, themselves powerhouse economic players constituting the majority of the world’s GDP, have created in APEC a unique opportunity for Small, Medium and Micro Enterprises (SMMEs) to have input in the shaping of an interdependent Pacific economic structure. More than 50% of all private sector employees earn their living in SMMEs, which have generated an astounding of all new private sector jobs in the United States since 1981. Therefore, the leaders of the APEC member economies are in a powerful position to utilize the strength of SMEs by allocating sufficient resources and attention to this extremely productive area and therefore encouraging economic growth.

The Power of SMMe’s SMMEs, as a major driver of significant economic progress and growth, are a prime target for partnership by the unique combination of leaders and experts at APEC. The challenge, then, for APEC member economies, is to better integrate SMMEs into the global economic dialogue. APEC members, as some of the strongest players in the world economy today, have the economic wherewithal, global influence, and wealth of expertise needed to best make use of the power of SMMEs while helping them to develop into the economic dynamos they have proven to be during both stable economic conditions, as well as, having great resiliency in times of economic crisis. It behooves the leaders of the APEC member economies to deeply consider the potential benefits of stronger ties with SMMEs. APEC is one of the most uniquely successful communication forums in existence. In its own words, it exists in part

46 ❙ theapecceosummit.com

“to develop and strengthen the multilateral trading system between members” and “to increase the interdependence and prosperity of member economies”. Communication has proven to be a great force for achieving these goals, particularly between member economies and business leaders, who often benefit greatly from wide-open channels of communication with one another. The leaders of the APEC member economies would do well to reflect on how strong ties and open communication between member economies and SMMEs could benefit both parties.

The diversity of interests present in the Asia Pacific region can present a challenge for those who wish to create interdependence between nations. SMMEs, being smaller and more adaptable than larger firms, are in a unique position to address the myriad needs and interests of APEC member economies by adapting to the specific situation. Only the immense influence of APEC member economies and their leaders can open the gates for SMMEs to efficiently address such unique interests by making it easier for SMMEs leaders to get involved at APEC, interfacing with member economy leaders and large business leaders alike. The formation of the Small, Medium and Micro Enterprises (SMMEs) & Entrepreneurship Working Group of APEC’s Business Advisory Council (ABAC) is a step in the right direction but much more can be done and should be done to enhance, expand and make meaningful the SMMEs partnership with APEC…one immediate idea would be to

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

devote ample time and provide a platform to SMME’s to play a larger role at the APEC CEO Summit meetings.

As the Asia Pacific region endeavors to secure the future, it would be mistaken in ignoring the obvious economic potential of SMMEs. As US Secretary of State Hillary Clinton said at APEC in 2011, “this Summit ‘just might’ make the history books. But it will do so only if we make history by empowering our rhetoric with concrete action.” The leaders of APEC member economies and industry experts alike can take further concrete actions to benefit immensely and mutually from a closer and more robust partnership with Small, Medium and Micro Enterprises (SMMEs) & Entrepreneurs. ■

APEC iS onE of thE MoSt uniquEly SuCCESSful CoMMuniCAtion foruMS in ExiStEnCE. Vladivostok. Russia 2012 ❙ 47

The APEC Publication 2012

The APEC Publication 2012

Feature / Looking Forward

ThoughT LeAdershiP

Editorial by: Kathryn H. Floyd

After Vladivostok Food and energy are two areas where the international community can make quantifiable steps toward better cooperation and sustainability.

B

y some estimates, over a billion individuals across the globe face undernutrition while many more live with erratic access to clean water and unreliable electricity. Imagine being hungry at seven years old or walking six kilometers every day to stay hydrated in Africa. As nations prepare to gather for the Asia-Pacific Economic Cooperation (APEC) summit in Vladivostok, Russia in September 2012, food and energy are two areas where the international community can make quantifiable steps toward better cooperation and sustainability.

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Food and Hunger When the world’s largest exporter of wheat, corn, and soybeans faces its worst drought in 50 years, the world shudders, grocery prices sky-rocket, and experts start warning of a “food crisis” that will hit the poorest and most fragile communities the hardest. In the United States alone, one in five children is hungry. By no means limited to the rural areas, childhood hunger is acutely evident in various elementary schools in Northern Virginia where spring and summer breaks— times when families must feed their little ones—are dreaded. Although recent federal

agricultural aid by President Barack Obama will likely ease the economic pressure, the relief stops short of being an international solution. Indeed, world food prices increased 6% in July with a 23% rise in corn prices according to the United Nations.

Russia is also experiencing a drought, but will propose to address food insecurity through a program called “organic integration” at APEC. Specifically, “Improving Access to World Markets for Russian Grain Export” will create a “Far East Grain Corridor” and focus on the more efficient delivery of Russian grain to Asia-Pacific nations. To do this, Russia will

push for looser restrictions on the flow of goods, as well as the liberalization of services and investments according to Ziyavudin Magomedov, Chairman of the APEC Business Advisory Council. Meanwhile, food quality standards will remain high and economies will be closer and more open through a public-private Policy Partnership on Food Security (PPFS). Building on the momentum of recent G20 meetings, Russia also hopes to recommend better financial access for smalland medium-scale enterprises, like the microfinancing evident in the developing world.

While the Russian proposal will have many fiscal components—like lowering the cost of trade, ensuring the necessary quantities of the good, and making its products affordable—its success may hinge on something far more cultural and innate. As the Japanese proverb states, “A meal is no meal without rice.”

Russia, or indeed any nation following this plan, must convince Asia-Pacific nations that grain can substitute rice or it will find itself without the willing buyer. If the switch is made, grain or wheat would then account for 200 to 500 pounds per capita per year in Asian populations. To put this in perspective, Americans consume just over ten pounds per year. This is not a market without its rewards, even if the benevolent goal is to increase food stability and ebb hunger. energy security In July, approximately ten percent of the world’s population was left in the dark as India experienced the largest electrical blackout ever. Over 650 million people, or twice the population of the United States, were without power. Though this was clearly an epic energy failure, the power outage highlights the delicate balance that rapidly advancing nations face as population demand outpaces capacity. And then the circuit breakers are not thrown.

As nations seek energy solutions and security that does not rely on coal and other environmentally hazardous materials, APEC will be the perfect moment to focus on green technology and build on past agreements. In November 2011, APEC members agreed to scale back tariffs on environmentally friendly goods down to five percent or less over the next four years. The real challenge will be agreeing on which products are covered in this deal as nations better understand the economic potential that something other than oil has.

With hundreds of billions at stake each year, it should come as no surprise then that nations want a level playing field with solar and wind energy products. China and the United States have already had some small tiffs over preliminary duties on Chinese products and allegations of American subsidies to undercut the Asian market for energy materials like polysilicon. In the end, the goal of APEC discussions should be concrete ways that new developments in wind and solar technologies, among other kinds, enable nations to lessen their dependence on foreign energy supplies. The world’s leading economies should also take a page from the playbooks of other nations.

Mali uses poisonous black seeds from the jatropha plant, which is little more than a worthless weed, to make biofuel.

Biography Kathryn H. Floyd teaches on international security at the College of William and Mary. She has been researching conflict over the course of the past decade.

Looking to aPeC Discussing food and energy security solutions is as much a part of the American campaign trail as it is an international summit, but it will take serious and long-term commitments by many nations to keep the bellies of babies full and better their future by moving away from toxic pollutants that power industry.

Nations gathered in Russia need to avoid the pitfalls of prioritizing energy over the environment or poverty. In particular, APEC must do a better job at understanding how these critical issues are related in rewarding but also dangerous ways. Billions of people are waiting. ■

In July, approxImately ten percent oF the world’s populatIon was leFt In the dark as IndIa experIenced the largest electrIcal blackout ever.

Vladivostok. Russia 2012 ❙ 49

The APEC Publication 2012

Feature / Chinese Economy Story by: Dr. Richard Rousseau

A Low “Value-Added” Production Hub in East Asia Since 2006 China has become the “assembler of Asia,” as two-thirds of its imports are intermediary goods from East Asian countries which China then transforms into end products.

C

hina has become the world’s leading exporter, and specialists in international relations confirm that it is increasingly exporting high-tech products. However, a rigorous e analysis of this development confined to the traditional study of trade flows would be misleading.

In fact, from the 1980s onwards East Asia has been characterized by the development of regional production networks and trade patterns that are radically modifying the paradigm of international trade. Important consequences for the dynamics of multilateral trade agreements are now being seen.

As demonstrated in the figure below, this process gained traction at the mid-1980s, after the revaluation of the yen imposed by the United States as part of the Plaza Accord of 1985, when Japanese corporations began to relocate entire value-added production chains from Malaysia to South Korea, Taiwan and other Southeast Asian countries.

The 1990s and the first few years of the 2000s witnessed the emergence of the United States and the People’s Republic of China (PRC) in the regional production networks.

However, by 2005 the production dynamic had shifted toward China, which quickly and incontestably became the region’s most

50 ❙ theapecceosummit.com

important trade hub, both in terms of exports and imports.

In fact, Taiwan, the Philippines, Thailand, South Korea, Singapore and Malaysia became major suppliers of China, relegating Japan, the traditional regional trade power, to a secondary trade status, even though it remained a relevant regional player by means of its massive investments in Taiwan and Malaysia. main “assembler” in asia Although China is often referred to as the “world’s factory,” a more complex picture of its role in the world economy emerges when the value-added content in each unit of Chinese-exported manufactured products is analyzed. Since 2006 China has become the “assembler of Asia,” as two-thirds of its imports are intermediary goods from East Asian countries which China then transforms into end products.

China primarily sells its finished products to countries of the European Union and the United States (between 1992 and 2006, Chinese exports of finished products to East Asian countries fell from 55% to 26.5% of its total exports). Although processing trade (this term refers to the business activity of

importing all or part of the required raw and auxiliary materials, parts and components, accessories and packaging materials from abroad in bulk, and re-exporting the finished products after processing or assembly by enterprises within the Chinese mainland) now accounts for a declining share of China’s total trade, this share is still significant: In fact, it decreased from 49% (55% of all exports and 42% of all imports) in 2000 to 39% in 2010 (47% of all exports and 30% of all imports). We can therefore deduce that China’s growth depends on exports as much as imports, and that the high technological content of the latter may explain that Chinese exports are now more sophisticated than one would have expected, especially considering the current moderate level of China’s industrial development.

In other words, until one computes the domestic value added (DVA) present in the Chinese processing trade, the full significance of the role played by China in world trade can hardly be grasped. For example, the export of an iPod that is recorded in China’s trade statistics as having a value of $150 has actually gained an added value of only $4 after being processed in the Chinese manufacturing system. Its remaining value >

The APEC Publication 2012

Feature / Chinese Economy

1985

1995

1990

Biography Richard Rousseau is Associate Professor and Chairman of the Department of Political Science and International Relations at Khazar University in Baku, Azerbaijan. He teaches Russian politics, Eurasian geopolitics, international political economy and globalization.

2000

2005

C

China

N

Chinese Taipei

I

Indonesia

P

Philippines

J

Japan

S

Singapore

K

Republic of Korea

T

Thailand

Source: IDE-JETRO

M

Malaysia

U

United States

>is simply the sum of the costs of the imported components. Moreover, a recent academic study reveals that, while the total manufacturing cost of an iPad is $275, the value added in China is only $10.

Since components for electronic products make up a significant quantity of the goods traded among Asian countries, the difference between the market value (final price) of China’s exported products and the value added by processing them in China has huge importance. Moreover, if trade statistics use the value-added criterion for calculating trade volumes then some interesting numbers can be derived. For example, according to estimates by the weekly magazine The Economist the use of the value-added method would significantly reduce the current account deficit incurred by the U.S., with

China in 2011, from $300 billion to only $150 billion. In addition, a report released by the United Nations Conference on Trade and Development (UNCTAD) in 2010 stated that an appreciation of the renminbi (China’s currency) would not necessarily lead to a reduction of the U.S. budget deficit, as it would make both Chinese imported goods and U.S. exported goods made with Chinese components more expensive. In essence, the U.S.-China trade imbalance is more due to multilateral then bilateral trade.

Finally, after delineating the value of the imported components, even in the period 2005/2006, over 80% of exports from China were still made up of labor-intensive goods, an indicator that showed that the rise of high-tech manufacturing would be a long process and not a particularly obvious one.

ChinA primArily SEllS itS finiShEd produCtS to CountriES of thE EuropEAn union And thE unitEd StAtES. 52 ❙ theapecceosummit.com

asia’s economically complementary countries The integration of China into global production networks has given East Asian countries new opportunities to specialize in one or more specific value added links in the production process, with the products’ final assembly being undertaken in mainland China. Rather than talking about competition between East and Southeast Asian countries, we should interpret the new interconnectedness of these economies as a growing complementarily in the production process. For instance, it has been estimated that a 1% increase in Chinese exports contributes to a 0.51% increase in Japan’s total exports, 0.42% in South Korea’s, 0.70% in Thailand’s and even 0.89% in the Philippines’. Moreover, a 1% increase in its GDP means that China will import 0.7% more from East Asian countries than OECD countries.

Two final points are worth mentioning, First, the Chinese leadership is being faced with the dilemma of having to choose between retaining its neoliberal technoglobalism, i.e. continuing to welcome foreign capital (which, as is well known, is heavily concentrated in the final assembly of products for export), or focusing instead on reinforcing the internal technology apparatus, which may mean adopting old and new forms of protectionism (“techno-nationalism”).

Second, regionalization without regionalism in East Asia appears to be proceeding without there being a need to create Free Trade Areas (FTAs), a measure traditionally associated with the reduction of tariff barriers. For example, the vast majority of the components for assembling electronic products cross the border under duty-free terms. The recent proliferation of FTAs in the region, however, seems to be more politically than economically motivated, being part of the complex process of forging friendly relations and alliances between trade partners against the backdrop of an emerging new chess game between China and the Unites States. ■

The APEC Publication 2012

Feature / China-Russia Relations Story by: Ralph Winnie

Chinese-Russian Economic and Political Relations Russians have responded favorably to increasing trade contacts and ties with China. Russians view the rise of China as the resultof a more multi-polar world.

D

uring President Obama’s recent trip to the People’s Republic of China, he strongly urged China to strengthen its currency as tensions have escalated between the USA and China over exchange rates. While both President Hu Jintao and President Obama agreed to work together on pressing international issues, Obama has joined many world leaders calling on China to allow its currency, the reminbi, to appreciate. Obama contends that the currency is undervalued and damages US exports. Interestingly enough, the Russian Federation has been quiet on this matter.

The People’s Republic of China has become a major economic player in the world community. As China continues to grow, Russia views the situation as more of an opportunity rather than a threat. China

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has been successful in actively promoting joint venture partnerships with profitable Western companies. Currently, Russia lacks the ability to effectively integrate these new technologies into the fabric of its economy.

The Russian government recognizes that the key to developing a robust and stable economy is to push strengthening relations with China. Russia is eager to understand how China has been able to rapidly absorb and utilize Western know-how and entrepreneurial business success and seeks to emulate China’s relatively open economy.

Privatized Chinese companies can now work together with Western companies to develop, refine and control capitalism. By contrast, Russia’s economy has been characterized as unstable, unmanageable and unworkable.

It has been alleged that this is due to the interrelation of organized crime with Russian

political leaders an nationalization of successful foreign businesses.

Many members of the Russian politburo have strong ties with oil and natural gas companies seeking to increase and expand their presence in Asia. Many people associated with these firms are former high-ranking Russian military officers, including ex-KGB who were among the most professionally trained in the former USSR. These people seek out profitable joint venture business opportunities, thereby hoping to prevent the United States from dominating global affairs. According to recent studies, many Russians have responded favorably to increasing trade contacts and ties with China.

Russians view the rise of China as the result of a more multi-polar world. While the Russian government wants to protect and defend Russia’s sovereignty, they recognize >

The Official APEC Publication 2012

Feature / China-Russia Relations >that the Federation may be better protected through closer economic ties with China rather than the West. Many Russians believe that the Chinese respect a country’s internal affairs and don’t seek to enforce the ideals of a “global society” on other sovereign nations.

Moreover, President Hu Jintao echoed the Russian sentiment toward US policy when, during a recent meeting with President Obama in Beijing, Hu mentioned “We will continue to act in a spirit of equality, mutual respect and non-interference in each other’s internal affairs.” trade partners China is already Russia’s largest trading partner and its second largest export market.

Leaders of both China and Russia have set a trade target of 100 billion US dollars by 2015 and 200 billion US by 2020. Despite the European debt crisis, China-Russia trade surged by 42.7% from 2010 to 79.25 billion US in 2011 which, according to the General Administration of Customs in China, outperformed the growth of 22.5% for China’s foreign trade during the same period.

Furthermore, according to Russian Foreign Minister Sergei Lavrov, since Russia and China signed the Treaty of GoodNeighborliness, Friendship and Co-Operation in 2001, the two countries have witnessed many breakthroughs in the development of their relations which have reached unprecedented levels. Some of these achievements include settlement of border issues, 80 billion US in bilateral trade in 2011, strategic co-operation in energy (oil and gas), the recent launch of a reciprocal cultural exchange agreement called National Years of Language Cross Cultural Exchange Program and close co-ordination in international affairs. On the political front, both China and Russia have agreed to continue enhancing mutual trust, promote high level exchanges and provide mutual support to safeguard their own sovereignty, state unity and territorial integrity. On the economic front, China and Russia are working on the establishment of a Sino-Russian investment fund with the initial capital of 1 billion US expected to begin operation during the second quarter.

The state visit of newly elected Russian President Vladimir Putin was of great importance for the future of the ChineseRussian economic and political relationship.

Putin is relatively popular in China and many Chinese consider themselves “Putin fans.”

Furthermore, Putin is quite familiar with the Chinese economic model and has close personal relations with Chinese leaders, having met his Chinese counterparts on many 56 ❙ theapecceosummit.com

previous occasions both in a bilateral and multi-lateral format. Putin must continue his friendly diplomacy in China to convince Chinese leaders that Russia, a large energy exporter, has largely recovered from the global recession and that the Russian economy has greatly benefitted from the increase in the price of oil. This issues has been reviewed by many Chinese scholars such as the renowned Qu Xing, director of the China Institute of International Studies who supports President Putin’s assertion.

Consequently, in Vladimir Putin’s short inauguration speech, he referenced Russia’s determination to strongly promote economic development along the Chinese-Russian border which has risen drastically over the past decade due to China’s rapid economic development. Compared to Russia’s European region, development in its Far East has been limited. As China’s economy is on the rise, more and more Russians are realizing the enormous economic opportunities along the border. For example, “Yuri” is the owner of a clothing store in Khabarovsk which borders China. It usually takes about two hours by boat for the local residents to go from one of the largest cities in Russia’s Far Eastern region to the Chinese country of Fuyuan which is on the border. According to “Yuri”, at one time the variety of goods offered where much fewer in Russia so he and a friend decided to start a business. Yuri bought the first shipment and sold the items via the internet.

What started as a trial run turned out to be a success and now Uri goes to Harbin to make purchases at least once a month. Like “Yuri”, there are now many Russians who travel to the Chinese side of the border for business every day due to a special program set up

by China and Russia to coordinate the development of Russia’s Far East and China’s north eastern regions.

While skeptics may point out that the commerce and business environment in the Far East may not be readily developed, with infrastructure lagging behind and the natural environment being quite severe, the Russian government is trying to make the necessary changes to create a better business climate for investors. This way more people like

Biography Ralph E. Winnie, Jr. has worked extensively in China, advising individuals and companies regarding Chinese business practices and customs. Ralph was appointed as a Business Development Representative for the province of Guangxi in Southern China, responsible for the promotion of business development, tax and trade between the province of Guangxi and the United States.

He has been interviewed by CCTV and Phoenix Satellite Television and has been published in Russia Now, the international supplement of the Washington Post.

“Yuri” will be encouraged and inspired to set up businesses and prosper.

Pragmatic Cooperation China has what the Russians do not have in the Far East, human resources and technology, Conversely, Russia has what China does not have and that is natural resources, The leaders of China and Russia recognize that strengthening their comprehensive strategic partnership will allow both countries to share these natural resources and create a win-win situation for both countries with frequent high level exchanges further facilitating strong economic ties between China and Russia.

In conclusion, a realistic estimate by the leaders of China and Russia regarding the other side’s capabilities, a desire to implement projects that produce tangible benefits to both sides and a recognition that the future of Chinese-Russian economic relations will be based on common development and pragmatic co-operation serves to enhance the reputation of both countries as strategic economic players in the world community. ■

As ChinA’s eConomy is on the Rise, moRe And moRe RussiAns ARe ReAlizing the enoRmous eConomiC oppoRtunities Along the boRdeR.

The APEC Publication 2012

The APEC Publication 2012

Sponsored Feature / Becamex

ThoughT LeadershiP

Sustainability: A Basic tenet at Vietnam’s Becamex

SuSTAInABIlITy IS a much used word nowdays. It seems advertisers can’t wait to use it and even APEC seems to have caught the “fever” and the term often appears in APEC literature including that at the APEC CEO Summit. What is sustainability? The uS government through the u.S. Environmental Protection Agency defines sustainability as follows: Sustainability is based on a simple principle: Everything that we need for our survival and well-being depends, either directly or indirectly, on our natural environment. Sustainability creates and maintains the conditions under which humans and nature can exist in productive harmony, that permit fulfilling the social, economic and other requirements of present and future generations.

The above simple truth is one that Vietnam’s Becamex IDC, the country’s largest infrastructure, industrial park developer and operator and one of the largest real estate companies in Vietnam internalized and took as a basic tenet right from its earliest days.

Starting with its establishment in 1976, Becamex dedicated itself to the welfare and material advancement of Binh Duong province where it was based. Over the 35 years of building its name into a prestigious brand name in industrial, residential, urban and transportation infrastructure, Becamex always looked out for their employees and their neighbors in Binh Duong as they took on infrastructure and other industrial and building projects.

58 ❙ theapecceosummit.com

The Creation of an Industrial City In 1996, they commenced work on their highly successful joint venture with Sembcorp to build the first Vietnam Singapore Industrial Park (VSIP) in Binh Duong province, Vietnam. Becamex, the majority owner, learned from Singapore and adopted those policies that made sense or modified them to meet Vietnam’s different development timeline. VSIP by common agreement is the best managed and most successful industrial park in Vietnam and has now led to further VSIP parks in the North of Vietnam in Bac Ninh and Haiphong and most recently in the center of the country. The success of VSIP is based on three principal factors. First, VSIP offers a healthy economic and attractive investment environment. Second, it is a key location with favorable conditions and

quality of competitiveness on the side of the industrial park itself. The third factor is its transparent and liberal framework.

In 2002, building on the success of VSIP but also learning from the whole VSIP endeavor, Becamex started a new concept - an industrial city - My Phuoc Industrial City. From the first, My Phuoc utilized all the good points of the VSIP project but furthered the entire concept by creating an integrated meeting point for workers, entrepreneurs and business management, service providers and government officials all to come together in a more way that facilitated not only economic production but also the welfare and happiness of all levels and increased worker happiness and satisfaction by giving them better housing, better access to government services like schools, universities, hospitals, entertainment, retail stores, police and other services. As Becamex CEO Nguyen Van Hung has noted “ We looked broadly in the region and elsewhere to see what had worked and what hadn’t worked in terms of industrial organization. In many places we saw increased production and GDP growth but also negative factors like workers having to leave their families and locate

in separated dormitories which caused increased turnover and other negative factors.

We set out to create a more sustainable and humanistic environment that gave all levels of society the services and resources they needed.

Building the hardware was easy, but getting all of the “software” to make all parties supportive and engaged took more time but the result has been worth it”. This is true sustainability - not just a slogan.

The new CIty In 2007, Becamex further extended their range by adding a new industrial park in Bau Bang.

Soon thereafter, Becamex commenced its mega-project, building Binh Duong New City.

Binh Duong New City is a new modern city located about one-hour drive from Ho Chi Minh City (HCMC), the country’s main commercial hub. This new city will be a model for all facets of redefining the future, not only in Vietnam, but regionally. The New City is sometimes dubbed by media as the “Pudong” of HCMC. Its Master Plan has the cooperation of French, Singaporean, Malaysian, Thai and other international architect, construction firms and other supporting companies, and is now over 50% complete. This is where the best opportunities in manufacturing, products, services, infrastructure and many other sectors are now arising. Binh Duong, with its close proximity to HCMC, has been a manufacturing center and top province for the Southern area of Vietnam for many years. Its new township, expansion of industrial park areas, residential areas, university, hospital, office space & shopping center and entertainment areas have created new markets and opportunities.

Becamex is taking the current financial challenges to the world as not a call to slowdown or stop programs but to persevere and innovate. Becamex continues its efforts to improve infrastructure. A leading example: the new Expressway from Binh Duong to Ho Chi Minh City which will be the first real expressway in the country and greatly reduce travel time between Ho Chi Minh City and Binh Duong. This project is nearly complete and will open in 2012.

Another example is the new 800 million dollar upgrade of Highway 13 which Becamex received last year. These projects link Binh Duong to Ho Chi Minh City and the South but inside the province Becamex continues to work to improve infrastructure and most investors are pleasantly surprised at the high level of electric, water, sewage, communications and building infrastructure throughout Becamex projects throughout the country. They also are surprised

by Becamex continuing efforts to improve environmental protection and through effective city planning like in our Binh Duong New City to

increase green areas, protect fragile wet areas and rivers and to incorporate energy efficiency and effective urban planning.

Becamex early saw human resources as key to success of the province, last year Becamex opened the $100 million dollar new Eastern International University (EIU)in Binh Duong New City, which is now offering studies in business, engineering and nursing that will meet the highest international standards with additional majors to be added in the years ahead in many additional fields.

Vietnam’s Future in the Region Not only must employees and new communities be well trained but they also must be healthy and well cared for. In terms of improving medical care and welfare for employees, neighbors and people throughout our region - Becamex also is soon to open an ultramodern International Hospital and expand operations and training at its current 2nd hospital plus expand pharmaceutical cooperation through its two pharmaceutical subsidiaries to improve access to medicine.

Becamex is optimistic and excited about the future of the APEC region. The ASEAN Economic Community (AEC) built to link the 10 nations in AFTA represent over 500 billion people and in terms of total population is larger than both NAFTA and the EU. Increasingly Vietnam and the region will benefit as AFTA continues to breakdown barriers and opens a market across Southeast Asia which will take advantage of the young, consuming population that characterizes the area. We are hoping that more APEC countries will deepen ties with AFTA and utilize the lower cost labor, improving infrastructure and human resources of Vietnam as a gateway to AFTA and as a crossroads to site factories, businesses and to work and trade.

Vietnam continues to show increased GDP growth even despite the financial difficulties that many nations are seeing. The reason is that Vietnam has a very young population and a work ethic that is among the best in Asia. The Vietnamese government continues to offer business friendly support through government regulations and Vietnam continues to invest in

infrastructure, education and training that help new businesses locating here improve their productivity and profitability and build a sustainable and progressive environment for the company and its employees to prosper. The news for all is that Vietnam is “open” for business and even in the midst of the current world financial difficulties continuing to innovate and improve to better serve business. Becamex would like to invite all of the CEO summit to learn more about the opportunities in Vietnam which are substantial and can offer new opportunities for your company to expand sales, grow and improve the company’s future prospects. Grasp the Opportunity for Success in Vietnam with Becamex. ■

Starting with itS eStabliShment in 1976, becamex dedicated itSelf to the welfare and material advancement of binh duong province where it waS baSed. Vladivostok. Russia 2012 ❙ 59

The APEC Publication 2012

The APEC Publication 2012

Feature / Trans Pacific Partnership

ThoughT LeadeRShiP

Editorial by: Tony Nowell

Trans Pacific Partnership to Build Supply Chain Resilience Whereas not so long ago business leaders were focused simply on how to increase imports and exports between economies, today much of the discussion and effort is focused on how to best leverage complex regional supply chain networks to create greater trade efficiency and value for business and consumers.

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his year’s aPeC CEO Summit in Vladivostok takes place against a continuing revolution in the way business is being done in the Asia Pacific region. Whereas not so long ago business leaders were focused simply on how to increase imports and exports between economies, today much of the discussion and effort is focused on how to best leverage complex regional supply chain networks to create greater trade efficiency and value for business and consumers.

Supply chains are the way in which supply links to demand and goods and services are delivered from producers to consumers.

Supply chains work best when there is speed, efficiency and transparency. It is well known that a one day delay in exports can lead to a loss in export value of 1%. The World Bank has identified that improving trade-related transparency in the region could increase trade by 7.5 percent or $148 billion.

APEC is home to many best-in-the-world supply chains – both within firms and at the economy-level. However, inefficiencies are built into every part of the supply chain, adding time and cost to trade flows. APEC Trade Facilitation Action Plans, Supply Chain Connectivity initiatives, and Single Windows all target significant increases in supply chain performance.

Finding practical solutions is important – for example, ABAC is strongly supporting enhancement of the Single Window Initiative by utilising new information technologies such as cloud computing and the creation of an APEC Single Window Cloud, facilitated by the use of global data standards for trade Major gains can also be achieved by removing chokepoints to the free flow of goods and services around the region. A comprehensive report commissioned by ABAC from the University of Southern California’s Marshall Business School confirmed that

improving supply chain connectivity requires co-operation between governments and within government agencies and with the strong input of business.

This is where the negotiations for a Trans Pacific Partnership (TPP), now underway between eleven economies within APEC, start to become really interesting. TPP provides a means to take this important trade development work from a voluntary, nonbinding forum like APEC into a rules-bound framework of a free trade agreement. a 21st Century agreement TPP is being deliberately promoted as a “21st century agreement” which addresses both market access and market integration or behind the border issues, and is high quality, ambitious and comprehensive in scope and coverage.

The broad outlines of TPP released at APEC in Honolulu last November specifically mention that the agreement aims “to facilitate the development of production and supply chains among TPP members”.

To deliver on this vision, the final agreement once concluded will need to include a range of disciplines and commitments relevant to supply chains including technical barriers to trade, regulatory cooperation, trade facilitation, transparency, and other issues, as well as proposals that have been tabled covering specific sectors.

For the time being TPP remains a work in progress. At Vladivostok we may get an

Biography Tony Nowell is a New Zealand Member of the APEC Business Advisory Council (ABAC). He chairs ABAC’s Regional Economic Integration Working Group.

In New Zealand Mr Nowell is Chair of Scion Forest Research, and Wellington Drive Technologies Ltd, a director of New Zealand Food Innovation Auckland and the Export Advisory Board of Export New Zealand . He was formerly CEO of Zespri International and Managing Director of Griffins (NZ).

Information about ABAC can be found at www.abaconline.org.

indication of the progress being made.

The negotiations are complex but the potential prize in terms of opening up new business and reducing cost is great – the overriding aim is to overcome the “noodle bowl” of conflicting and sometimes contradictory agreements, to reflect this new way of doing business and to build a pathway to the wider goal of a Free Trade Area of the Asia Pacific (FTAAP).

Whether this ambitious agenda can be achieved remains to be seen, but TPP is likely to stimulate further thinking on how to make the region’s supply chains work faster and better. ■

Major gains can also be achieved by reMoving chokepoints to the free floW of goods and services around the region.

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The APEC Publication 2012

The APEC Publication 2012

Feature / U.S. – China Trade Relations Story by: Herbert S. Hill

Integrating Common Interests through Comprehensive Negotiations:

USTR Charlene Barshefsky’s Negotiation with China over its Enforcement of IP Rights

In December of 1995, an American delegation under USTR Mickey Kantor travelled to the People’s Republic of China to continue negotiations with regard to the lack of enforcement of American intellectual property rights in China. While staying in Beijing, one of the U.S. negotiators visited a Chinese store to buy some shampoo. After purchasing what he thought was a bottle of Procter & Gamble shampoo, he later discovered that the bottle contained a high concentration of lye and was not a Procter & Gamble product at all, but simply a bottle with a pirated label.

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ThoUghT LEadERShIP

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o say in 1993 that manufacturers and markets in the People’s Republic of China were infringing intellectual property rights would be an understatement. The development of increasingly sophisticated counterfeiting techniques combined with the growth of the Chinese economy and international trade “fueled piracy on a scale never before witnessed.” Despite previous efforts going as far back as 1980 by the Office of the United States Trade Representative (USTR) to negotiate an agreement on IP rights, blatant violations continued in the PRC not because the Chinese statute books lacked the laws to protect such rights, but rather because the government was unwilling to carry out any enforcement of those laws.

Confronted by this growing problem, the Clinton Administration in 1993 appointed Charlene Barshefsky as a new Deputy USTR to develop a negotiating strategy that would reach a bilateral agreement on piracy of intellectual property in the PRC with more success than her predecessors’ efforts. Such an assignment presented Barshefsky with several multi-faceted challenges to overcome, and despite the need for an IP rights enforcement agreement, many contemporary observers feared that Barshefsky would make little progress by reaching an agreement on paper that would then fail to induce significant action on the part of Chinese to stop the counterfeiting of American goods.

Nevertheless, Barshefsky did manage to reach two separate agreements in 1995 and 1996, and although the first agreement did suffer from some of the same enforcement issues as ones prior, the second agreement yielded tangible results in the form of actual enforcement, specifically through closed factories and the near elimination of pirated exports within two years. Barshefsky’s utilization of a comprehensive negotiation strategy enabled her to find and integrate common interests that ultimately proved effective in reaching a historic negotiated outcome.

Prior to 1949, Chinese IP law was near non-existent, having little regard for such rights and providing few legal remedies for foreigners with IP-related complaints. With the Communist Revolution in 1949, any laws protecting IP rights that had emerged were repealed along with all other laws that had existed under the nationalist Kuomintang government. As a result, the general lack of IP rights (along with many other rights) continued in “the legal void of the Maoist era,” as Barshefsky herself described it.

The Communist Party under Mao Zedong

considered IP rights to be part of a bourgeois and capitalist conception of rights held by foreigners and intellectuals who were not part of the proletariat.

When the U.S. and the PRC reestablished diplomatic relations in the late 1970’s, the U.S. put pressure on the Chinese to ensure the protection of American IP rights, which the reforming Chinese government was eager to do in order to attract foreign capital investments and technological transfers to support domestic growth and innovation.

In accordance with this outlook, both countries reached the 1980 U.S.-China Trade Agreement, which secured Most Favored Nation treatment for each country’s exports, and in which both the U.S. and the PRC promised to offer IP rights protection “equal to the protection correspondingly according in the other country.” However, as trade between the U.S. and the PRC increased in the 1980’s, so too did piracy of American goods, in spite of the Trade Agreement. The U.S. began negotiations in 1986 to bring the PRC in line with international standards. iP Rights and Protections The IP Rights Memorandum of Understanding reached in January 1992 focused primarily on reforms to the PRC legal system to match international standards. Although by the end of that year, Chinese statute books contained IP protections similar to the laws of many advanced nations, the change in the law resulted in very little advances on the ground where piracy and counterfeiting continued unhindered by its newly created illegality.

When this issue came to the recentlyappointed Barshefsky’s attention in 1993, the widespread Chinese indifference to violations of American IP rights was well-recognized, particularly in the southern province of Guangdong, one of the most capitalistoriented of the PRC provinces. Specific to that province were twenty-nine factories producing approximately seventy-five million CD’s per year containing pirated software and stolen audiovisual works, of which the vast

majority (about seventy million) were not consumed in China but rather were exported.

Although cautious of being too confrontational with the Chinese to the endangerment of cooperation in issues of trade and nuclear non-proliferation, the Clinton Administration sought to take a tougher position than the previous administration. President Clinton signed an Executive Order in May 1993 to place conditions on the renewal of the PRC’s Most Favored Nation status based on six related areas including human rights, freedom of immigration, and nuclear non-proliferation.

Such a revocation of Most Favored Nation status, reserved only for pariah states, would have resulted in sharply higher tariffs on Chinese exports to the U.S. Soon after the Executive Order announcement, however, the PRC responded with contempt, threatening tens of thousands of trade-dependent American jobs as well as stepping up human rights abuses in defiance of American “human rights” imperialism. As a result of the PRC’s reaction coupled with calculated indifference from other U.S. trading partners and strong domestic opposition from the business community, “a deeply embarrassed [President] Clinton] ultimately felt forced to revoke the order. . . [in] a politically humiliating about-face.”

Against this backdrop entered Barshefsky.

Her appointed position did not entitle Barshefsky to the support of the nation in her pursuit of a trade agreement, mainly because of the many parties with diverging interests both inside of as well as outside of (but still aligned in general with) the U.S. Although the USTR’s negotiations enjoyed strong support from IP-related industries such as film, music recording, and software industries (who were often considered favored by and inclined toward the Democratic Party), other industries dependent on free, unhindered trade with China were as actively opposed to efforts that might sour Sino-American business relations. A similar attitude prevailed among other U.S. trading partners, who were >

Prior to 1949, Chinese iP law was near non-existent, having little regard for suCh rights and Providing few legal remedies for foreigners with iP-related ComPlaints.

Vladivostok. Russia 2012 ❙ 67

The APEC Publication 2012

The APEC Publication 2012

Feature / U.S. – China Trade Relations >also unwilling to risk a direct confrontation with the PRC that might disrupt their own economic interests. Finally, there were some industries such as domestic manufacturers that opposed maintaining trade relations with the PRC because the cheaper Chinese labor market was driving them out of business.

At the same time, other American constituencies opposed wasting negotiating time and capital on the “low-level commercial consideration” when there were more pressing issues on the agenda, such as human rights abuses, environmental concerns, and PRC cooperation in leveraging North Korea.

Within the federal government itself, Barshefsky faced lukewarm support from the White House, who was cautious to avoid the same business community backlash and political embarrassment that resulted from the Most Favored Nation debacle.

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ust as the U.S. was not a monolithic entity, so too was Barshefsky’s opponent across the Pacific Ocean not a unified party (despite the One Party System).

Although the main negotiations took place between the Barshefsky and her counterpart in the PRC’s State Council in Beijing, Barshefsky and her team also reached out to the provinciallevel government officials in the province Guangdong where much of the illegal production was taking place. Although both the national and provincial governments opposed further American interference in the internal Chinese matter of rights (IP or otherwise) enforcement, the Guangdong officials had both more control over as well as a direct economic interest in the piracy and counterfeiting occurring under their (most likely fake Rolex) watches.

Although the positions of the Chinese government and the UTSR seemed diametrically opposed, there were still a number of shared interests between the two sides. Both the U.S. and the PRC had a strong common interest in free trade and access to each other’s markets uninterrupted by a trade war. Specifically, the PRC wanted to acquire American technology to develop its own domestic industries while the U.S. wanted to invest its capital in those growing industries.

As Barshefsky herself described, “China knew it needed to accelerate its development, and that to do so it would need to jump over many of the stages of development.” In addition, both countries had an interest in the PRC’s eventual accession into the World Trade Organization. The principle divergent interest of the U.S. was stopping both the manufacture and export of

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ThoUghT LEadERShIP

ameriCan ConstituenCies oPPosed wasting negotiating time and CaPital on the low-level CommerCial Consideration. counterfeited goods. Another American interest, particularly for the USTR, was to induce the Chinese to enforce the agreements that the USTR had negotiated in the past that had looked promising on paper but had resulted in minimal to no enforcement. The U.S. also had an interest in not disrupting the American jobs linked to trade with the PRC and the domestic markets that had become dependent on cheaper Chinese imports.

As the party more interested in changing the status quo, Barshefsky and her team needed a strong but tempered alternative to simply hoping that this time the Chinese would carry out any agreed enforcement of IP rights. The first potential alternative, which enjoyed some support both domestically and internationally, was to do nothing in the hope that continued trade and regular business engagement would eventually lead to more enforcement of IP rights in the PRC. Barshefsky determined quickly that this was not a viable alternative because American interests were being harmed far too much to justify waiting. A second alternative was to halt technology transfer that had to pass through the Department of Commerce, which would have limited some of the IP rights damages but at a high economic cost and with little stoppage of the piracy already in progress. A final alternative was to amass international support from other U.S. trading partners such as Japan and European Union countries to seek a multilateral agreement, or at the very least to put multilateral pressure on the PRC from countries affected by piracy and who had power over the PRC’s accession to the WTO. Although this option was not exclusive of pursuing directed negotiations, Barshefsky decided that it would be insufficient to resolve the problem due to the reluctance of such states to rock the boat with the PRC.

For these negotiations, Barshefsky judged that “real results would require a multipronged approach, underpinned by a threat to initiate [unilateral] Section 301 sanctions.”

As a result, Barshefsky and her team’s Best Alternative to a Negotiated Agreement (BATNA) was to pursue Section 301 sanctions tailored to fit the violation. Disclosing this alternative to the Chinese in the form of declaring the PRC a “Priority Foreign Country” under Section 301 as the USTR had done in 1991 served to strengthen the USTR negotiating power because the Chinese realized that unlike the Most Favored Nation threat, the U.S. would follow through with this alternative if no agreement was reached.

Revealing her BATNA of Section 301 sanctions was only the beginning of Barshefsky’s negotiating strategy as the power of that alternative depended on presenting as credible the threatened sanctions. Barshefsky bolstered the credibility of the Section 301 sanctions while overcoming opposition by arguing that unlike the Most Favored Nation revocation, this alternative matched trade sanctions to trade violations with tariffs designed to compensate the U.S. in direct proportion for losses due to piracy. The USTR also promoted the impact of Chinese piracy as wide-spread across the U.S., and indeed the world, thus framing the issue as broader than the narrow conception of a few stolen movies and software.

In order to gain the support of resistant parts of the U.S. business community, Barshefsky argued that IP violations would threaten other industries as Chinese imports and exports increased, and as more patented and copyrighted materials found themselves in the hands of potential exploiters in the PRC. Additionally, she framed the USTR’s goal of enforcement of PRC law as not limited

to the realm of intellectual property, but as an issue of the rule of law that could result in the Chinese living up to their fungible and often ignored human and civil rights laws, thus making IP rights a test case for broader U.S. concerns in the PRC. Although Barshefsky had no control over with whom she would be negotiating, she took notice that one of her counterparts was a scientist by trade, and adjusted her strategy to negotiate with that person from his individual background. As a scientist, her counterpart “understood perfectly that the lack of [IP] enforcement was dampening indigenous scientific progress in China,” and as a result, was more receptive to the argument that technological transfers from the U.S. to the PRC would be severely hindered if the rights to them were not protected. Even still, after months of negotiation in 1994, Barshefsky’s Chinese counterparts were still unwilling to accept the full range of demands that the USTR presented. Renewing her threat of Section 301 sanctions, the Chinese responded to Barshefsky with threats of countersanctions and cancelling several important U.S. contracts with PRC companies.

Finally, after a marathon negotiations session, a Memorandum of Understanding agreement was signed on February 26, 1995, a full ten hours after the sanctions imposition deadline. Such last-minute deals were typical in Sino-American trade negotiations due to a Chinese strategy of holding out in order to give the impression that the maximum possible concessions had been extracted from the opposing side. Barshefsky acknowledged that the Chinese interest in avoiding a perception of caving to the demands of American imperialists was part of the broader problem of lack of IP rights enforcement.

Thus, she adjusted her negotiating strategy to match the Chinese’s by meeting their impatience and insistence with patience and flexibility that avoided a contest of wills. For example, when her counterpart aggressively leaned over the table and insisted that his current proposal was a take-it-or-leave-it deal, Barshefsky “surprised her counterpart by sitting quietly [and waiting thirty to forty] seconds . . . [before replying:] ‘If the choice is take it or leave it, of course I’ll leave it, [but] I can’t imagine that’s what you meant.” After they reconvened to negotiate the next day, much more progress was made as the Chinese discovered that no amount of intransience was going to break Barshefsky.

Barshefsky argued that the 1995 MOU agreement was the “single most comprehensive and detailed [IP rights] enforcement agreement that the [U.S.] had

ever concluded.” While prior USTR agreements with the Chinese had focused on the PRC laws, Barshefsky shifted the focus to enforcement with an action plan for specific enforcement measures. These included a six-month “special enforcement period” from March through August of 1995, during which the PRC was to increase enforcement of its IP rights laws while the two countries consulted regularly, giving the USTR a direct mechanism to evaluate the progress made under the agreement. Such a mechanism proved necessary as after seven months of being in force, the Chinese attempts at compliance with the 1995 MOU were not having the intended effect.

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ith very little decrease in the production of pirated goods, Barshefsky and her team in early 1996 attempted repeated consultations with the Chinese to enforce the previous year’s agreement with little success. As a result, the USTR started the “Section 301” provisions process and negotiations with the Chinese all over again, this time on the topic of continued non-compliance. Deciding that a different approach was required, Barshefsky and her team broke with diplomatic protocol by going to Guangdong Province to engage with local businessmen and government officials in order to learn more about the pirated production and to engage with those in direct control over it.

Despite the fury of Chinese negotiators in Beijing, Barshefsky was able to gain valuable information about the illegal factories and brought even more precise demands that the PRC government shut down fifteen specific factories. Although Barshefsky’s counterpart initially denied the existence of the factories and later argued that they could not take action due to involvement by People’s Liberation Army officials, an Implementation Agreement for the 1995 MOU was reached in June 1996. Now facing two agreements and a very persistent USTR, the Chinese followed through not only closing those fifteen factories, but also closing an additional 55 over the following two years. As a result, the export of pirated goods from the PRC to the outside world was reduced to “virtually nil.”

Barshefsky was able to realize U.S. interests by articulating specific points that the U.S. wanted to address in this agreement beyond some vague notion of respecting IR rights.

Adhering to a very precise list of demands, Barshefsky knew exactly what the U.S. wanted and was prepared to articulate it to her counterpart. She also carefully planned her “multi-pronged” approach by building a domestic coalition that supported

Biography Herbert S. Hill is a third-year J.D. candidate at the George Washington University Law School in Washington, DC, where he is focusing on international business law and has studied Law in the People’s Republic of China and International Negotiations. He received a B.A., summa cum laude, Phi Beta Kappa, in international relations and linguistics from Colgate University in Hamilton, NY in May 2010.

engagement and using trade sanctions against the PRC, which strengthened the U.S.’s BATNA while decreasing the appeal of the PRC’s alternative of maintaining the status quo ante.

Although Charlene Barshefsky’s efforts took two separate agreements, her negotiating strategy worked, securing a deal that advanced the common interests of both nations. Barshefsky’s comprehensive approach enabled her to overcome diverging parties and interests on both sides of the dispute to reach an effective agreement.

Despite the success that followed the 1996 Agreement, Barshefsky acknowledged that this agreement had only “scratched the surface” and that she was “by no means satisfied that piracy [had] been eradicated.”

However, Barshefsky was given the opportunity to continue her work when she became the twelfth United States Trade Representative in 1997 and negotiated more trade agreements with the PRC, including its accession to the WTO in 1999, which was in no small part facilitated by Barshefsky’s earlier success. ■ Vladivostok. Russia 2012 ❙ 69

The APEC Publication 2012

Feature / Rise of the Global Middle Class Editorial by: Deb Henretta

Innovating for the Emerging Middle Class The increase of economic development and growth in countries is also triggering more prosperity.

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cross the globe, we see that the increase of economic development and growth in countries is also triggering more prosperity. More prosperity means that the number of people earning a better income is at the rise, hereby allowing people to move up on the income pyramid. This inevitably leads to a growing middle income class, which is especially becoming very visible in the emerging markets around the globe, in both Latin America, Asia, Eastern Europe as well as in the Middle East and Africa.

This growing middle class represents a growing consumer base which is obviously quite attractive to lots of companies around the globe; this middle class is becoming an increasingly powerful and demanding consumer group; it is also becoming a more vocal group, advocating their

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wants and needs with both governments as well as business.

The emerging middle class is challenging business on how to cater to their needs. They want better products and services at the right price. As always, every challenge creates new opportunities to come up with new business propositions which better meet these needs.

P&G who is targeting primarily families

with its wide range of basic consumer goods is well placed to explore these opportunities and has embarked throughout the years on exploring how to better serve the middle income class in both developed as well as emerging economies.

Every day, we at P&G, touch the lives of over 4 billion people and we aim to reach 5 billion by 2015.>

The emerging middle class is challenging business on how To caTer To Their needs. They wanT beTTer producTs and services aT The righT price.

The Official APEC Publication 2012

Feature / Rise of the Global Middle Class

>We cannot reach this goal by merely focusing on just the “bottom” or the “top” of the consumer pyramid. We need to be able to drive innovation which meets the needs of all consumer segments in society.

But this doesn’t mean our approach is that of a “one-size-fits-all” model.

In order to better meet the needs of the middle class, it all starts with listening to these consumers through consumer research, differentiating between middle class consumers living in rural areas versus cities.

This research is especially important to better understand consumer habits like where they shop and how they use the products in the categories in which we play. Only through this type of research, companies can better understand how to innovate to better meet the needs of this emerging middle class.

P&G’s is inclusive in its growth strategies, trying to reach out with its innovations to both low, middle income as well as high income consumers, each time with a portfolio of products which meet their needs and is affordable to their wallet.

Market strategies Once innovation is in place, we are making sure we have the right go to market strategies to ensure that our products are accessible where the middle class consumers are shopping but also are available at the right price. We increasingly are including e-commerce as a new platform to reach out to these consumers.

As a global company, we are trying to learn from where ever we are operating and reapply insights and learnings from across markets which allow is to do a better job serving consumers. There is enormous potential for exchange of best practices across all emerging economies across Asia Pacific for companies to learn on how to better serve middle class consumers.

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As it is important for companies to be able to continue offering their products and services at an affordable price to these consumers, it is equally important for governments in these emerging economies to remove barriers to trade and allowing easy access of both raw materials and finished products so that products can be produced and sold at reasonable cost. Governments within APEC can contribute to this process.

This is also one of the missions of the APEC Business Council, to ensure that business can work together with governments to identify remaining barriers to trade and explore together win-win solutions for easing trade flows between markets.

Proximity to Markets It is equally important for companies to be able to innovate close to where these middle class consumers are. This means that it is always a big enabler if governments can create the right framework of incentives to attract new investments in R&D closer to the emerging markets; that is why P&G decided to invest in innovation centers in both China and India, closer to the increasingly important middle class in Asia.

As with the importance of innovation close to where the consumers are, the same principle applies to manufacturing: if we can manufacture closer to where the consumers are, we are able to reduce the cost of transportation and logistics which allows us to sell at a more affordable price. This means that it is also important for companies to be able to invest in new production facilities without too much red tape with the reassurance that there is a good transport infrastructure in the country to bring the products closer to consumers.

The above demonstrates the importance of companies working in partnership with

Biography Deb Henretta is Group President-Global Skin Care, Beauty and Personal Care for Procter & Gamble.

She was recently the long-time Group President – Asia and Global Specialty Channel for the Company. With presence across 43 markets, including some of the world’s fastest growing emerging economies like China, India, Indonesia and Vietnam, P&G’s Asia business accounts for 16% of its global revenues, making Deb responsible for revenues of over $13 Billion in 2010-11.

Since assuming her role as the Group President in 2007, Deb has been responsible for delivering five consecutive years of strong growth, redesigning how P&G does business across Asia by creating a One Asia organization, and significantly expanding the Company’s presence in key emerging economies.

governments to ensure that jointly we can better meet the needs of the middle income class in emerging economies. Governments play an important role as enablers creating the right policy framework to attract investments and allowing companies to better reach out to this new population of consumers. By making sure we do the right thing for these consumers, we will help this rising middle class to become a stronger player in society.

As companies can invest more, they will also increase employment hereby providing new stimuli for expanding an already growing middle class.

At P&G, we are committed to make our contribution to reach more consumers in more parts of the world, more completely. ■

The APEC Publication 2012

The APEC Publication 2012

Feature / Public-Private Collaboration Story by: Paul Davies

In Defense of PublicPrivate Collaborations APEC is one of the world’s pre-eminent institutions for business-government collaboration.

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ne of APeC’s more underappreciated assets is that it is one of the world’s pre-eminent institutions for business-government collaboration on a variety of economic issues that arise because of rapid economic integration.

The issues affecting an integrated world economy are more complex than one where we were simply trading goods with each other. Governments have a stake in encouraging investment, and fostering policies that promote integration is a critical element in attracting investment. The certainty, transparency and consistency of regulation is a critical factor in determining how successfully an economy can attract investment. By promoting open businessgovernment collaboration on economic regulation, APEC is helping its governments realize the benefits of integration.

Governments need to set national standards tailored to each country’s structure of government and approach to regulation.

However, each APEC economy has much to learn from the experiences of other countries.

As APEC economies become ever-more integrated through complex supply chains, free trade relationships, and growing trade and investment, there is a strong case for governments to continue to examine their regulatory structures and adapt them to meet the dynamic of global commerce.

The benefits that flow from such “active learning” by economies are substantial. As long ago as 2003, the World Bank estimated that if the APEC economies with below average indicators for trade regulation increased their performance half way to the APEC average, it would increase intra-APEC trade by $254 billion, or one-fifth of intraAPEC trade. Attending to the nitty-gritty effort of reducing administrative costs of doing business, eliminating duplicative regulatory steps or liberalizing standards which diverge from accepted regional practice can boost trade, facilitate investment, and thereby promote higher value jobs in APEC’s developing economies.

The trick in capturing the potential benefit of greater efficiency in regulation is balancing the legitimate interests motivating government policy with the goal of incentivizing businesses towards greater trade and investment. One of APEC’s principal advantages in addressing this balancing act is that it has created numerous examples where business, academics and professionals, and governments have sat side by side to share experiences in tackling regulatory problems, and developed important guidance that helps governments frame better policy.

Take, for example, food safety. Food trade within APEC is rising rapidly, a function of rising incomes, urbanization and growing demand for more sophisticated, often foreign, foods. Increased trade creates new opportunities for agriculture. But ensuring food trade is safe is a critical element in maintaining consumers’ trust. Both business and government have a stake in ensuring confidence in food safety in an environment of increased trade. For APEC’s developing economies, in particular, these issues are important; accessing higher value markets for food is important in raising living standards for rural populations.

APEC has created an innovative way to address the need to ensure the safety of the region’s food supply in increasingly complex global supply chains. Bringing together government regulators, scientific experts and food industry quality and safety experts, APEC has developed a long-term curriculum to train food safety officials on food safety analytical techniques, risk assessment methods and incident response protocols and producers on how to grow and market safe food. This collaboration will help increase the ability of developing economies in APEC to properly manage the safety of their food supply; it promotes the wider adoption of international science based standards and best practices to help meet regulatory requirements in other markets; and it promotes information exchange between government and the private sector which can help increase trust in the food supply.

Another good example of public-private collaboration is in the field of information technology. In 2005 APEC Leaders adopted the APEC Privacy Framework to set out common approaches to managing the complex challenge of safeguarding consumers’ legitimate interests in protecting their personal data in an environment of rapidly growing cross border data flows.

Since the adoption of the Framework, government and private sector experts have cooperated on a series of projects to implement the Framework. Included in this

Biography Paul Davies is Director of C & M International, a Washington DCbased public policy consulting firm specializing in international trade and investment policy issues. Mr Davies is a former Australian trade negotiator and adviser to Australian governments on trade policy.

work are areas where the private sector has taken the lead in developing and educating governments on optimal approaches, in particular in the diverse ways businesses can and do contract with each other to protect private information in business transactions, and how technological innovation is changing to enable better standards of protection.

These examples are not headline-grabbing, high level political commitments. But they represent real examples where APEC is tackling major issues thrown up by the rapid integration of our economies. They represent a shift in how governments address economic competitiveness questions. APEC’s advantage, in promoting business collaboration side by side with government, helps ensure a more informed and consisted approach to addressing regulatory issues, to everyone’s benefit. Getting the process of consultation right is key to getting the result right ensuring that APEC economies realize open trade’s potential benefits. ■

GovErnmEnts hAvE A stAkE in EnCourAGinG invEstmEnt, And fostErinG PoliCiEs thAt PromotE intEGrAtion is A CritiCAl ElEmEnt in AttrACtinG invEstmEnt. Vladivostok. Russia 2012 ❙ 83

The APEC Publication 2012

The APEC Publication 2012

Feature / G-Zero World Story by: Ian Bremmer

A G-Zero World For the first time in seven decades, we live in a world without truly global leadership.

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n a world where so many challenges transcend borders – from threats to the stability of the global economy to climate change to cyberattacks, terrorism, and the security of food and water – the need for international cooperation has never been greater. But cooperation demands leadership.

Leaders have the leverage to coordinate multinational responses to transnational problems. They have the wealth and power to persuade other governments to take actions they would not otherwise take. They finance the plans that others cannot afford and provide services no one else will pay for.

In short, they set the international agenda.

Unfortunately, for the first time in seven decades, we live in a world without truly global leadership. In America, partisan rancor, political paralysis and mounting federal debt now preoccupy both lawmakers and citizens, undermining their willingness to continue to accept the costs and risks that come with global leadership. The United States will remain the world’s military superpower for decades to come, and its soft power strengths are formidable. Washington will continue to play an active international role. Yet, its ability to devote substantial political and financial capital to promote its foreign policy goals is now constrained, at least temporarily.

In Europe, policymakers at every level of government face a crisis of confidence of historic scale, one that casts doubt on the future of Europe, its institutions, and its future. The resourcefulness and resilience of Japan’s people and their leaders ensure that recovery from last year’s catastrophic earthquake, tsunami, and nuclear meltdown has made substantial progress, but it is proving profoundly more difficult to reverse more than two decades of political and economic malaise. A generation ago, these were the world’s powerhouses. With Canada, they made up the G7, the group of freemarket democracies that dominated international institutions of governance and powered the global economy. Today, they are struggling simply to find their footing.

We cannot count on dynamic emerging markets like China, India, Russia, Brazil, South Korea, Turkey and the Gulf Arab states to fill this growing leadership vacuum. Each of these countries will face tremendously complex development challenges in years to come, and their leaders are focused overwhelmingly on domestic, not global, questions. China’s leaders in particular are already grappling with some of the most ambitious and complex reform plans in history. China’s interests now extend to every

region of the world, but its willingness and ability to shoulder global burdens and provide global public goods must remain limited for the foreseeable future.

Today’s world has neither a G7 nor a G20 order. The current deficit of global leadership makes this a G-Zero era in international politics, leaving the world especially vulnerable to crises that appear suddenly and from unexpected directions.

Nature hates a vacuum, and the GZero will not last forever. Crises force cooperation. But over the next decade and perhaps longer, a world without global leaders will undermine our ability to keep the peace, to expand opportunity, to reverse the impact of climate change, and to feed growing populations.

The effects will be felt in every region of the world - and even in cyberspace. To mitigate conflict, build upon common interests, and coordinate solutions to increasingly complex transnational challenges in a world without global leadership will prove the defining problem of our era.

For those who would lead nations and institutions through this volatile moment, the GZero will demand more than great power or deep pockets. It will require agility, adaptability, and the skill to manage crises especially those that come from unexpected directions. To further liberalize trade and investment, to help restore dynamism to the global economy though regional economic integration, to strengthen food security at a time of climatic change and rising prices, to establish reliable supply chains and foster innovative growth will require extensive regional cooperation.

In coming years, progress on these transnational challenges will demand coordination among capable, like-minded governments – formal and informal coalitions of the willing that can provide the leadership on individual political and economic questions that is lacking at the global level.

This dynamic will make the work of organizations like APEC all the more valuable. ■

Biography Ian Bremmer is the founder and president of Eurasia Group, the leading global political risk research and consulting firm. The company provides financial, corporate, and government clients with information and insight on how political developments move markets.

Bremmer created Wall Street’s first global political risk index and has authored several books, including the national bestsellers, Every Nation for Itself: Winners and Losers in a G-Zero World and The End of the Free Market: Who Wins the War Between States and Corporations? Bremmer is a contributor for the Financial Times A-List and Reuters.com, and writes “The Call” blog on ForeignPolicy.com. Bremmer has a PhD in political science from Stanford University (1994), and he presently teaches at Columbia University. His analysis focuses on global macro political trends and emerging markets, which he defines as “those countries where politics matter at least as much as economics for market outcomes.”

We cannot count on dynamic emerging markets like china, india, russia, Brazil, south korea, turkey and the gulF araB states to Fill this groWing leadership vacuum.

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The APEC Publication 2012

The APEC Publication 2012

Feature / Food Security

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Editorial by: James C. Borel

Meeting the challenge of global food security We live in a world where nearly a billion people suffer from chronic malnutrition and hunger, and that number is rising every day.

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e live in a world where nearly a billion people suffer from chronic malnutrition and hunger, and that number is rising every day. Our leaders and our citizens are engaged in passionate debates about global food security - and that’s a good thing. How to feed the world was the topic of discussion at two meetings of the most powerful countries in the world - the G8 in May and the G20 in June. But the fact is it will take all of us to ensure enough nutritious food is available to every person.

While tackling the issue can be daunting and quite unsettling, I remain optimistic.

We at DuPont believe that these challenges can be met because we believe there is a science to feeding the world and ensuring food security. The critical question is what will it take to ensure real, sustainable solutions at the local level?

The answer lies in understanding the complex set of issues and vulnerabilities country by country - that together define food security. These issues include agricultural productivity; food availability, access, quality and safety; and trade policy and transparency.

In July, the Economist Intelligence Unit (EIU) unveiled its Global Food Security Index that governments, policy makers and others can use to assess the multiple factors of food insecurity, which will be increasingly important as the world population grows from seven billion people today to nine billion or more in 2050.

As a company of scientists and engineers, we at DuPont are fond of saying that what gets measured gets done. DuPont commissioned the EIU Global Food Security Index with the hope that it will encourage collaborations across the food value chain, generate insights and stimulate action to feed the growing population.

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The Index defines food security as “the state in which people at all times have physical, social, and economic access to sufficient and nutritious food that meets their dietary needs for a healthy and active life.”

A common definition for food security is a starting place. But this interactive tool brings an original dimension to food security discussions. The Index looks beyond hunger to the underlying factors affecting food insecurity. And it employs an adjustment factor for food price fluctuations to examine the risk countries face throughout the course of the year. achieving Global Food Security At the G8 Summit, U.S. Secretary of State Hilary Clinton stressed the importance of food security. “It’s not if we will achieve global food security, it’s when,” she said. We agree.

Employing the Index, we will work collaboratively to target three fundamental areas where significant action and advances are essential to make a tangible difference to feeding the world and ensuring food security.

First, while the challenge is global, food security solutions must be local. Food must be accessible, and to the extent possible, grown where it is most needed.

Second, know-how must be brought to the people and places that need it the most.

The yield a farmer obtains comes down to

Biography James C. Borel is executive vice president of DuPont and a member of the company’s Office of the Chief Executive.

the choice of seed, the use of fertilizers and how the land is managed. In many developing countries of Africa, 90 percent of planting is still done with the same methods used for thousands of years. We believe that by working directly with farmers we can improve agricultural practices and increase yields.

The third area fundamental to achieving food security is ensuring sustainability. We cannot achieve food security without genuine sustainability that encompasses how food is produced, gets to market and is served on our plates - which at the same time reduces how much food is wasted.

Armed with a common language to discuss the root causes of hunger, governments, private and public sector entities can work together to make better informed decisions that drive sustainable results at a local level. ■

As A compAny of scientists And engineers, We At dupont Are fond of sAying thAt WhAt gets meAsured gets done.

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