David's Blog on SOM3 Beijing - Post 7

August 25, 2014

Summary of Key Issues in SOM3 Beijing
My blog reports were woefully inadequate over the last three weeks of Senior Official meetings in Beijing. Feeble as it may seem, the work pressure just to stay on top of the many important issues we were listening to, and contributing on, overwhelmed the need to write daily reports back. Here are some of the issues and initiatives that I failed to give proper attention to. Many we will need to follow up in ABAC:
  • The Great FTAAP debate: a big announcement on trying to create a Free Trade Area of the Asia Pacific has been seen by our Chinese Chair as perhaps the most significant potential “deliverable” from the 2014 chairmanship. In Beijing there was a big push to forge an agreement that would launch the quest towards this ambitious goal. Despite protracted discussion, there was brittle stalemate. A draft is ready and largely agreed, but it has the same two phrases in uncomfortable square brackets that aroused diplomatic hostilities in Qingdao at SOM2. They are:

o     the call for the launch of a [Feasibility] Study on realizing an FTAAP. The US continues to insist that the word feasibility implies the formal launch of negotiations – something they are not willing to commit to, especially if it further muddies the waters on trying to complete the troubled Trans-Pacific Partnership (TPP) deal while Obama visits the APEC Leaders meeting in Beijing in November. The US says we should just launch a Study.

o    The second square brackets say APEC will pursue the FTAAP [with an aspirational goal to realise an FTAAP by 2025]. The US wants no firm date, no matter how aspirational it is.

In Beijing last week there was absolutely no sign of compromise on these square brackets.  The conversations were stiffly choreographed, tense and brittle. It seems that China will insist on keeping the phrases in square brackets – and the US will continue to reject them – until leaders meet in November. If TPP discussions falter, or the TPP timetable slips, then there is a tiny chance the US will cut a deal. Otherwise, this is a discussion stuck in the deep-freezer box.

  • Services and supply chains everywhere: Hardly a day passed without some brainstorm or other on global value chains, and the importance of services in them. This is clearly the “sujet du jour” as our French Canadian colleagues would possibly say. There was a full day “Trade Policy Dialogue on Promoting Open and Competitive Services Markets to Support the Growth of Global Supply Chains”, run by Australia. Then Japan is pursuing an initiative on “Manufacturing Related Services in Supply/Value Chains” underpinned by a Policy Support Unit report on Services-Manufacturing linkages. There was the Inaugural meeting of A2C2 – the APEC Alliance for Supply Chain Connectivity”. There was an OECD presentation on Policy and Regulatory Frameworks that support Global Value Chains. There was another big report from the US on Strengthening Supply Chains.

Part of the impetus for this blizzard of activity is the need to achieve the 10% cuts in supply chain costs by the end of 2015 – a commitment facing APEC for over five years. Part is also the insights that are arising from the OECD-WTO Trade in Value Added database (TiVA). As more economists and officials delve into the database, the more they see the importance of (often long) value chains, and of competitively delivered services within them. In this context, the work ABAC has undertaken in services – in particular the Patrick Low study, the Marshall School project, and building a database of business organizations engaged in services development – strikes a powerful chord. There will be immense APEC interest in this work.

  • The Connectivity Blueprint: huge work is going into this important and fascinating new project, introduced to ABAC in Seattle by Alan Bollard and the internal think-tank, the Policy Support Unit. Fresh documents were tabled in a half day meeting just before the Beijing Senior Official meeting. The document pretty fundamentally reframes how APEC structures and prioritises its work going forward, built around the three pillars of Physical, Institutional and Human Connectivity. There are some detailed “asks” of ABAC and the private sector, and we will clearly need to consider these carefully in ABAC4 in November.

  • Global Data Standards: this initiative, championed by ABAC with strong support from GS1 for the past three years, now has strong traction among APEC officials. A valuable and detailed workshop – the second this year – was run jointly by Hong Kong China and New Zealand. In certain respects our Global Data Standards work has moved into the important and unglamorous phase of capacity building, building pilots and best-practice case studies. But there are still many detailed asks of the business sector, and we will need a solid report back and fresh proposals from GS1 at ABAC4 in Beijing. Pathfinder initiatives are being looked at in clothing, wine and seafood, as well as in life sciences.

  • Earn Learn and Return: ABAC’s new initiative intended to improve the management of international labour around the APEC region, seems to have captured the imagination of a number of APEC economies, and was discussed in many of the SOM cluster meetings in Beijing. It is explicitly referenced in the new Connectivity Blueprint; it was discussed in CTI and in Business Mobility Group. From the Health Working Group, the possibility has arisen of a pilot on the movement of “allied health” workers – which groups nurses, physiotherapists, dentists, and so on… Going forward, much will depend on the outcome of the Human Resources Ministerial in Hanoi in just under two weeks time. I will be attending this, with Doris Ho, who will arrive hotfoot from the Women’s Summit in Beijing.

Meanwhile, I have an Oceans Ministerial to go to, in Xiamen. 

Chen Lianzeng, at Xiamen Forum’s opening. Chen is deputy administrator of the State Oceans Administration (SOA)

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