APEC VOICES 2010

While every day was exciting and interesting, the highlights of the programme for us were:

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Cultural

Being APEC delegates meant all the major tourist destinations were free to us. Highlights include: the Landmark Tower and the Marine tower which showed stunning views of Yokohama during the day and at night – both of which were breathtaking; the Yokohama Museum of Art was spectacular, showcasing traditional and contemporary Japanese art; the stunning Edgar Degas exhibition; viewing the Japanese experience exhibition- ability to experience new technology and robotics. We also enjoyed being “immersed” in Japanese way of life, this included visiting local Japanese shops, using its world-famous subway system to travel around the city, understanding local business practices and cultural etiquettes.

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SME Summit

Listening to the likes of Jessica Rodriguez from Peru, and hearing about the  barriers affecting SME’s the most (e.g. flexibility of banks with loans to businesses, starting out, and having reasonable interest rates).

CEO Summit: the chance to see and speak to some of the most important APEC leaders was an incredible experience. Speaking with some of the staffers and people who presented reports at the ABAC Summit provided us with great insights on how to get into other things in the International Trade and Business world, and how to make the most of the conferences we were to attend. The speakers were also extremely insightful, some highlights include:

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• US President Barack Obama:  This was the last visit of a series of trips which President Obama made after the visit to India and Seoul for the G20 meetings. It was evident the disappointing results of the mid-term elections had an effect on him as President Obama framed America’s engagement with Asia as a “job strategy”. For example, the USA wants to export more goods to Asia and not vice versa. Although at face value Obama’s speech didn’t go down well with the audience, one important point to remember is that free trade is mutual and it is important for APEC to give Obama concrete results to ensure the continued support of his constituencies (and to avoid any tendencies of isolationism/protectionism).

• President Hu Jintao of China: We couldn’t help but noticed the thunderous applause when Mr Hu came and left stage and how this contrasted with the relatively muted response compared to Obama. This almost symbolises the shift in power today, as the PM of Singapore summarised succinctly: “If China wasn’t growing, then I don’t know where we’d be now…we’d probably be hiding in a cave sitting on top of our gold bars”. Mr Hu talked at length about the concept of “inclusive growth”, growth which not only brings economic benefits but also social and environmental benefits, which is known as the triple bottom line in the West.

• Australian Prime Minister Julia Gillard talked about the importance of ICT innovation. In particular, Ms Gillard emphasised the importance of cyber security. Interestingly, one development raised by Mr Mundie of Microsoft and Mr Nishide of Toshiba was the development of quantum cryptography. This technology would make it virtually impossible to crack open an encrypted message and was hailed as one of the potential breakthroughs in internet security.

• Donald Tsang, the Chief Executive of Hong Kong spoke at length about the importance of China as the driver of economic growth.

• Simon Tay from Singapore reminded us we should not take sides between China and the US but work with both economies to create win-win trade relationships.

• Japanese Prime Minister Naoto Kan made an impassioned speech about the need for Japan to reform and stay relevant in the 21st century. Mr Kan went on to say Japan is ready to engage with other countries on free trade to tackle its slow-moving economy through increased competition and innovation.

• Vietnamese President Nguyen Minh Triet on the importance of ASEAN economic integration.

• Our very own Prime Minister John Key warned that we should be careful of potential currency retaliatory wars.

• Philippines President Benigno Acquino III spoke of the importance of regional architecture in facilitating free-trade.

Meeting the NZ ABAC members

The chance to get past the political issues to the heart of what was a priority for our ABAC members (Tony Nowell, Gary Judd and Stephen Jacobi) was very insightful. It was a great hour-long chat about the importance of APEC: the significance of Japan’s desire to enter the Trans-Pacific Partnership, where Japan’s market would open up to the world for the first time – this is especially relevant for New Zealand due to agricultural tariffs; the importance of a modern comprehensive free-trade area rather than a restrictive free trade agreement; and the importance of optimising the global supply/value chain. We were told that in the Asia Pacific region, US$325 million is lost every day of delays caused by non-business reasons such as tariffs and customs.

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Meeting Prime Minister John Key

We had a candid and friendly chat with the Prime Minister and we all left the room buzzing, feeling incredibly lucky that as Kiwis, we have such immediate access to our leaders. In the 45 minutes, we covered the following topics:

• The dangers of foreign exchange retaliatory wars: The need to understand that larger nations in emerging economies have a number of issues they need to balance and retaliatory measures are often counter-productive and might inhibit growth. This is especially concerning given that Asia-Pacific is one of the few areas of growth in the world economy.

• What New Zealand needs to focus on in order to compete in the international arena: Mr Key highlighted three areas: 1) food production (including the use/development of innovative/high technology); 2) leveraging the power of the internet to run virtual businesses (e.g. the likes of Xero, virtual consulting firms); 3) Niche industries where we have immense amount of talent, e.g. the film industry. Mr Key also emphasised the need for New Zealand to increase its domestic savings in order to be financially resilient.

• Mr Key finished by leaving a video message to the Voices delegates: “We value the Voices of the Future programme. You are making a contribution to what the Asia-Pacific is going to look like…thank you very much and come and visit us in New Zealand.”

Other highlights that have been noted include:

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• Viewing and contributing towards Nissan’s vision on APEC: its latest developments to help the community and the environment e.g. development of the leaf, the Smart Grid, looking around the eco-houses Network, connect with and befriend other similarly minded individuals across  the Asia Pacific.

• Discussion with other delegates about their cultures, their economies, their situations

• Seeing a real protest against APEC in the main shopping areas- which moved into the city centre.

KEY LEARNINGS

APEC’s Role in the region

APEC’s role is in facilitative discussion in a non-threatening and mutually trusting environment that is very hard to find in other international organisations. The non-binding nature of APEC as well as the economic focus of the organisation is an advantage as it helps the member economies to focus on practical/pragmatic initiatives that can be done now rather than the “ideal” that more formal negotiations often get locked into (e.g. WTO DOHA negotiations).  A good example of this is Japan. No amount of international pressure will “change” the trade policies of Japan. They must adapt from within, and to do so they need support and concepts to draw off from APEC economies.

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From watching the Trans Pacific Partnership (“TPP”) take shape, it is clear the competitive advantage other economies producing competing goods will have, especially if they do not make steps to eliminate the high levels of protectionism, e.g. in the agricultural sector, imported rice has a 777.7% tariff attached. Therefore, Japan took the unprecedented step of wanting to announcing their desire to enter the TPP negotiations, a qantum leap for a country that is deeply conservative in terms of its free-trade policies.

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APEC’s Importance to New Zealand

APEC is hugely important to New Zealand. In fact, fourteen of our (New Zealand) top 20 export markets are APEC members, including the three largest economies in the world – the United States, Japan and China. The APEC region accounts for 70 percent of New Zealand’s total trade and 60 percent of our inward foreign direct investment. Close coordination with APEC economies is vital to New Zealand’s future prosperity. APEC assists New Zealand business by supporting trade liberalisation and promoting high-quality free trade agreements in the region. It has been successful in reducing costs of trading across borders, and provides a channel to improve the business environment. Progress in these areas will continue to make it easier for New Zealanders to do business throughout the APEC region.

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The importance of agriculture and agribusiness in the realisation of free-trade negotiations.

Agriculture was continuously raised as the number one barrier to free trade, despite it making up a small proportion of the member economies’ GDP. Fundamental to all this is each country’s paranoia about being “self-reliant”. This was especially evident with Japan. Despite accounting only 1.3% of the GDP, the agriculture sector is an extremely powerful lobby against free-trade. However, increasingly, countries are realising that if they are impeding free trade, then they will effectively become less competitive in the global supply chain and eventually lose out to a country with more favourable conditions. In addition, by protecting their own industries, countries are actually weakening their own production sector by making it less competitive. The real danger for countries for countries like Japan that impose strict tariffs is that other countries that are more willing to sign free trade deals will get a greater guarantee in food supplies (and hence food security) from countries like New Zealand.

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Women’s Advancement in Society

After World War II, the fixed image of the Japanese woman has been that of the office lady, who becomes a housewife and a “kyoiku mama” (education mother) after marriage. Given these barriers, it is no surprise that many successful Japanese women expressed the difficulty of breaking into the “boys club” and other career-blocking issues that are specific to women, such as the difficulty of finding suitable childcare. These issues have long been confronted in the West; however, it is something that we should never become complacent about.

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Other key learnings that have been noted include:

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• The highly complex and interdependent relationship between political agenda and business needs and how this affects trade.

• The importance of SMEs in International Trade and Business Being updated with the position of each economy in terms of the whereabouts on trade liberalization e.g. whether they are in ASEAN +1, TPP, deciding to be in TPP.

• Learn of Japan’s new growth strategy and how this plays apart in defining APEC goals and aims

• Develop interview skills through firsthand experience

• Understanding the ABAC process

• Understanding how different people from different economies learn about

• APEC and their selection process into Voices – which we can report back to

• VTM-NZ