APEC: A new phase of journey
By: Guillermo M. Luz
Philippine Daily Inquirer / February 22, 2020
Last week, I attended the first quarterly meeting of 2020 of the APEC Business Advisory Council (ABAC) in Sydney, Australia. ABAC is composed of three members from each of the 21 economies which make up APEC or the Asia-Pacific Economic Cooperation. Collectively, these 21 economies make up just under one-half of the world’s population but account for the majority of global GDP and trade. The economies include Australia, Brunei, Canada, Chile, China, Hong Kong, Indonesia, Japan, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, Philippines, Russia, Singapore, Republic of Korea, Chinese Taipei, Thailand, and Vietnam. Chairmanship in APEC rotates every year among the economies and this year’s chair is Malaysia. The Philippines served as chair in 1996 and 2015.
ABAC’s role is to serve as a business advisory council to APEC by discussing and delivering business-related recommendations to senior officials, Cabinet ministers, and leaders (e.g., Presidents and Prime Ministers) of the 21 economies. APEC’s original mission and objective was to promote free trade in the Asia-Pacific. Formally created in 1989, APEC created a 25-year plan in 1994 known as the Bogor Goals to create a Free Trade Area of the Asia-Pacific by 2020, with a deadline for developed economies set for 2015 and a time frame for developing economies by 2020.
ABAC was founded in 1995 to advise government officials on how to help achieve these goals. It held its first meeting in 1996 in Manila. It delivers a formal written report to leaders and holds a dialogue with them every November. Aside from that, it delivers written recommendations to at least eight sets of ministers, including trade ministers, finance ministers, energy ministers, and others. Its international secretariat is based in Manila.
ABAC carries out its work through five working groups on regional economic integration; finance and economics; sustainable development; digital innovation; and micro-, small, and medium-scale enterprise development. Some details of the annual work plan have evolved over time but its basic mission has remained the same: trade and investment liberalization and continuous movement along the path toward a free trade area for the Asia and Pacific.
With its 25-year timeline for the Bogor Goals coming to a close, we have all been assessing what’s been accomplished and reflecting on what the next steps should be. As a group, ABAC has seen its real GDP grow from $19 trillion in 1989 when it was formed to $42 trillion by 2015, the latest available data. Per capita income has risen by 74 percent over that period, raising millions out of poverty and expanding a middle class over that period. Much of that was driven by trade growth which grew 6.7 times to $20 trillion (versus 5.6 times for the rest of the world). While the free trade area of the Asia-Pacific outlined in the Bogor Goals has not yet been achieved, movement has been seen along several pathways in that direction, most notably through the Regional Comprehensive Economic Partnership which covers some 18 countries; Trans-Pacific Partnership (around 11 countries); and Pacific Alliance (four countries)
However, the ride has not always been smooth nor have results been equally felt across the region. Poverty and lower per capita incomes still persist and the middle class has not expanded that much in some economies, including the Philippines. While millions have been lifted out of poverty, clearly some have still been left behind. The tide has risen, but not lifted all boats. This is one of the reasons why there has been an anti-globalization sentiment in spite of the benefits which global trade and investments have brought.
More challenges lie ahead and this is where APEC will need to adjust its lenses even as it keeps its eyes on the path toward free trade for the region. Climate change, resilience, and sustainability will feature large in all our futures. Business practice and individual behavior will need to change to shape that new future. Digital innovation already is a transformational factor today. Artificial intelligence and machine learning will transform the way we work and educate our workers. Inclusion and inclusive growth will also be the new mantra as Apec moves into its next quarter century.
The next leg of this journey continues as the Philippines hosts the second ABAC meeting of 2020 in April in Manila.
Guillermo M. Luz is an alternate member of ABAC, associate director at Ayala Corporation, and chief resilience officer of the Philippine Disaster Resilience Foundation.
Business Matters is a project of the Makati Business Club (email@example.com).