The 29^th PECC General Meeting concluded on 3^rd November 2022. The event was hosted by the Thailand National Committee of the Pacific Economic Council (TNCPEC) and the International Study Centre of the Thai Ministry of Foreign Affairs on the theme of “Asia Pacific beyond Thailand APEC 2022”. The conference provided insights and in-depth discussions on 3 key themes:

1.    The disruption affecting APEC connectivity during 2016-2022
2.    Trends of trade and investment liberalization / restrictions of APEC economies beyond 2022
3.    APEC cooperation to enhance the development of the BCG Economy; impact on climate change

Thailand’s Deputy Prime Minister and Minister of Foreign Affairs, H.E. Mr. Don Pramudwinai opened the event with a keynote address. He highlighted on the challenging global issues on food, fuel, and financial crises that are faced by many economies. He underscored that the shifting of geo-politics caused adversities for most economies to undertake transformative changes, particularly towards sustainable growth, assuring security, healthcare, food and reducing income inequality. He expressed his confidence that the region has the ability to overcome these challenges. He added, “For economic development and cooperation to take place, there must be peace and stability in the region.”

Minister Pramudwinai then underlined the progress of regional cooperation in the Free Trade Area of the Asia-Pacific (FTAAP) agenda, the Regional Comprehensive Economic Partnership (RCEP), and the Indo-Pacific Economic Framework (IPEF). He highlighted the United National General Assembly meeting last September, where most members  “adopted a more or less common agenda – that resilience and diversification are urgently needed in the supply chains and material sourcing”.  He accentuated the need to strengthen trade liberalization and the necessity for more inclusive social protection systems in order to overcome the non-tariff barriers.

Minister Pramudwinai stressed the importance of harnessing digitalization and innovation to address the impacts of COVID and climate change. He added that in achieving APEC 2022 Theme of “Open. Connect. Balance.”  apart from promoting the Bio-Circular-Green (BCG) Economy, “It’s also important to look beyond short-term recovery, towards longer-term goals such as the Sustainable Development Goals (SDGs) and the Putrajaya Vision. All sectors of the economy should therefore be geared towards this whole-of-society change in mindset and lifestyles.”

Amb Zhan Yongxin, International Co-Chair of PECC highlighted on the fragility and unsteadiness of the global and economic recovery due to the global pandemic situation. He said, “As we face various global challenges, our best strategy is to stick together and work closely with each other to navigate the storm and steer towards the bright future.”  Amb Zhan also underscored PECC’s role as a stakeholder of the region and said “PECC should also work towards this goal and achieve more liberal and facilitated trade and investment and maintain stability and safety of supply chain in the world.”

Dr Narongchai Akrasanee, Chair of TNCPEC said that the theme of the General meeting, “Asia-Pacific Economic Beyond APEC 2022” reflected concerns on economic cooperation and commitment to open regionalism in the region. Through the discussions in the General Meeting, Dr Akrasanee said that disruptions of connectivity due to the COVID19 pandemic and geopolitical situation could still curtail “International Production networks even though they have proved quite resilient”. He observed that some economies are able to manage disruptions by digital technology.

On reinventing trade and investment, Dr Akrasanee mentioned that there is a need for cooperation and collaboration as the region is facing “trust deficit” issues. He suggested that PECC and APEC develop “schemes for the member economies to help manage the changing global economic order particularly on energy and finance, and also evolving trade patterns in core intermediate goods.” Towards the end, Dr Akrasanee underscored that “the meeting sees values in continuing APEC economic cooperation schemes despite the changing geopolitics, schemes of concerted unilateral actions and concerted pluralism. All schemes, reinforced by digital technology should eventually lead to the adoption and functioning of the Sustainability Theory of Value.”

In closing the PECC General Meeting, Dr Richard Cantor, International Co-Chair of PECC highlighted that despite the challenges faced by the region particularly on the rise of trade restrictions and geopolitical threats to open markets, there are “some areas where we can still hope for incremental progress such as improved logistics through common digital standards where we have an opportunity to improve connectivity without the need to tackle to more sensitive areas like trade barriers.” He underscored the PECC State of the Region 2022 survey findings together with the meeting discussions coincide with agreement that APEC leaders should focus on ameliorating the geopolitical trade complex in the region.

(Click here for the program and presentations)

 Dr Richard Cantor, International Co-Chair represented PECC at the APEC Finance Ministers Meeting held on 22 October 2021. At their meeting Finance Ministers from the Asia-Pacific shared views on responding to COVID-19 for a sustainable and inclusive recovery and the use of fiscal policy and budget management to address ongoing challenges.

Dr Cantor, also the chair of the USPECC committee and the Chief Credit Officer for Moody’s Corporation and Moody’s Investors Service shared highlights from PECC’s forthcoming State of the Region report with the region’s Finance Ministers. With economic growth returning to the region, our respondents are fairly optimistic. However, expectations for growth diverged significantly between economies, with respondents most optimistic about the growth prospects for economies with relatively high vaccination rates.

He underscored that achieving regional and global goals to reduce carbon requires major structural changes of the economy and major coordination across all parts of the APEC process – including the Finance Ministers’ Process. We are hopeful that APEC can provide a platform for dialogue to promote understanding on the comparability and compatibility of the actions economies are taking individually.

The 28th PECC General Meeting concluded on 22nd July 2021. The event was hosted by the New Zealand Committee of the Pacific Economic Cooperation Council (NZPECC) on the theme of “Implementing the Putrajaya Vision: Revitalising the Regional Economy and Ensuring Sustainable and Inclusive Societies”. The 2- days conference provided valuable insights and in-depth discussions from distinguished speakers and panellists, focusing on 4 key themes:

1. Challenges of the COVID recovery: Managing COVID and the Challenges of Reviving Regional Growth
2. Rebuilding Support for Open Trade
3. The Emerging Issues in the Digital Economy
4. Climate Change

The Pacific Economic Cooperation Council elected Ambassador Zhan Yongxin, Chair of the China National Committee for Pacific Economic Cooperation (CNCPEC) as International Co-Chair. Prior to joining CNCPEC, Amb. Zhan held various governmental positions such as Second Secretary, Department of International Organizations and Conferences, MFA, and Ambassador to Israel. On assuming the role of Co-Chair of PECC, Amb. Zhan observed and recognized the challenges and impact of the Covid-19 on the economic recovery and Covid-19 response, the importance of international cooperation and the implementation of Putrajaya vision to forge a better future in the Asia-Pacific region.

In his opening remarks, Dr Richard Cantor, International Co-Chair of PECC highlighted the importance of international cooperation. He underscored that “It is critical that make the most of opportunities to show that governments can come together, and see that our own domestic interests are best served when we find cooperative solutions to the problems we face”. He highlighted the milestones in 2021 with the APEC leaders meeting, the COP26 climate change summit, and the 12th WTO Ministerial Conference as opportunities for progress.

New Zealand’s Minister for Trade and Export Growth, Hon. Damien O’ Connor opened the event with a keynote address in which he underscored the New Zealand overarching approach for APEC 2021, which are trade and economic policies will strengthen recovery, increasing inclusion and sustainability recovery, and pursuing innovation in a digitally enabled recovery. Minister O’Connor highlighted the recent APEC informal leaders retreat meeting, where 3 key elements for recovery were discussed by the leaders: getting vaccines and other essential goods flowing efficiently across the region; the role of trade and investment in tackling the impact of Covid-19 pandemic; and enabling a strong economic growth recovery for all our people. Additionally, he underlined that leaders recognized the importance of harnessing innovation that enable people and businesses to emerge stronger through high quality jobs and increased opportunities. Minister O’Connor said that the “The deep linkages between our economies and communities mean we all have a stake in each other successful return to growth”.

Mr. Brian Lynch, Chair of NZPECC reflecting on the discussions over the course of the General Meeting said that there were new lines of thoughts, knowledge and understanding on Asia-Pacific’s most pressing challenges during the pandemic, which delivered much worthy materials to ponder upon. They can be brought to bear to benefit the successful execution of PECC projects. This will also reinforce PECC’s reputation as source of sound ideas and put PECC is a strong position to contribute to the discussion of the Putrajaya Vision’s implementation.

In closing the PECC General Meeting, Amb. Zhan said, “it’s very important to strengthen international cooperation for Covid response, particularly for boosting cooperation for products and distribution of vaccines. And increase the accessibility and the affordability so that we can effectively overcome the challenges and revitalize the regional economy". Amb. Zhan also highlighted that “the Putrajaya vision sets out ambitious goals and important guidelines for future cooperation. This should be taken as a new starting point for us to begin another phase of Asia-Pacific cooperation”. To conclude, he underlined that by “Playing an active role in building an open trade economy, holding multilateral trading system, and spearheading economic globalization, the day will come when we beat the covid-19, let us work in solidarity and weather the storm together. Let us stay true for openness and cooperation. Together we can surely ensure a bright future for all of us in the Asia Pacific”.

(Click here for the program)

  
Alan Bollard (CNZM; PhD Auck; FRSNZ) is a Professor of Pacific Region Business at Victoria University of Wellington, and inaugural Chair for Pacific Region Business. 

Alan is also the Chair of the Infrastructure Commission, Chair of the cross-university Centres for Asia-Pacific Excellence, and Chair of the New Zealand Portrait Gallery. He is NZ Governor of the Economic Research Institute for ASEAN and East Asia, and was on the Organizing Committee for NZ APEC 2021. He is a Director of China Construction Bank (NZ).

Previously, Alan was the Director of the New Zealand Institute of Economic Research 1987-1994; Chairman of the New Zealand Commerce Commission from 1994 to 1998; and was the Secretary to the Treasury between 1998 and 2020.

Between 2002 and 2012, Alan was the Governor of the Reserve Bank of New Zealand, responsible for monetary policy and bank regulation, helping steer New Zealand through the global financial crisis. Bollard became the Executive Director of the APEC Secretariat based in Singapore, the world’s largest regional body that promotes trade, investment and sustainable growth in the Asia-Pacific, serving from 2012 to 2018. 

He wrote a best-selling account of the GFC called Crisis: One Central Bank Governor and the Global Financial Collapse.  He has published several novels: The Rough Mechanical and The Code-cracker and the Tai Chi Dancer. He has also written a biography of famous economist Bill Phillips, and a popular economics book Economists at War. A sequel, Economists in the Cold War, is due out shortly.

In 2012 he was honored as a Companion of the New Zealand Order of Merit. He is a Fellow of the NZ Royal Society. He also has honorary doctorate degrees from the University of Auckland and Massey University.   

Professor Kar Yan TAM is Dean of the HKUST Business School and Chair Professor of Information Systems, Business Statistics and Operations Management. Prior to being Dean of the Business School, he was Dean of Students and Associate Provost at HKUST. Professor Tam is a board member of the Association to Advance Collegiate Schools of Business (AACSB) and the European Foundation for Management Development (EFMD) and was the Past President of the Association of Asia Pacific Business Schools (AAPBS). Currently, he is the Chairperson of the Curriculum Development Council of the Education Bureau and serves on the Exchange Fund Advisory Committee of the Hong Kong Monetary Authority. He is also a member of the Hong Kong Productivity Council, the Board of the Hong Kong Metropolitan University, THEi Council, and the Anti-Money Laundering and Counter-Terrorist Financing Review Tribunal.

Ambassador Roberto Romulo being presented with a token of appreciation by then PECC co-chair, Mr Jusuf Wanandi at the PECC General Meeting in 2015 for this services to the organization.

PECC mourns the passing of Ambassador Roberto Romulo. Bobby Romulo served as the PECC chair from 1996-1999 and as chair of the Philippines PECC committee from 1996 to 2005. He was also the founding chair of the APEC Business Advisory Council.

Former chair of the New Zealand PECC committee and Emeritus Professor Gary Hawke fondly recalled that “Roberto Romulo was one of the major figures of PECC in my time. I remember him for many contributions, both personal and institutional, but not least because I often use his definition of " concerted unilateralism". Organizations like APEC are just like Alcoholics Anonymous. Members know perfectly well what they should do; they also know that their future depends on what they themselves do; but they gain strength by coming together from time to time and sharing their experiences.

As with many people in the organization he embodied PECC’s tripartite character, he began his professional career with IBM in New York and rose to become Managing Director in Thailand, Burma and Bangladesh and the Philippines (President and GM). He joined government service in June 1989 when he was appointed Ambassador to Belgium, Luxembourg and the Commission of the European Communities. In 1992, he was appointed Secretary of Foreign Affairs.

In 1995, he rejoined the private sector and was elected as Chairman of PLDT. From 1999 to 2001, he was Chairman of the e-ASEAN Task Force. He was also chairman of non-profit foundations: Carlos P. Romulo Foundation for Peace and Development, Zuellig Family Foundation, and Asia-Europe Foundation of the Philippines. He is a Co-Founder and Trustee of the US-Philippines Society.

As a diplomat, he has been decorated by the governments of Belgium, Thailand, Spain, Chile, France and the Philippines. He was the fourth recipient of the Arangkada Lifetime Achievement Award for 2016 presented by the Joint Foreign Chambers of the Philippines. He graduated from Georgetown University and the Ateneo de Manila University (College of Law). 

As chair of PECC on the eve of the dawning of the 21st Century he selected the theme "The Pacific E-conomy in the 21st Century." His closing statement for that meeting 20 years ago echo with some prescience “Information Technology holds the promise of prosperity and bringing together the people of the region into an e-community. However, realizing the potential of IT means overcoming the ‘digital divide’ which separates developed and developing economies of the region and sectors within societies. A major theme that emerged from the conference is the need for inclusiveness and greater representation in processes that drive the regional and global economy.” That prescience was evident in having committed much of life trying to bring the benefits of technology to more people in anticipation of the digital revolution he dedicated much of his time and energy to trying to achieve better health outcomes especially for rural communities through his work as chair of the Zuellig Family Foundation.  

EXECUTIVE SUMMARY

From mid-August to mid-September the Pacific Economic Cooperation Council conducted its annual survey of the regional policy experts’ views on the state of the region. The findings show a 180 degree turnaround from last year’s results on expectations for economic growth. The  percentage of respondents expressing an optimistic view on the prospects for global growth changed from 55 to 17 percent and those with a pessimistic outlook rose from 17 percent to 60 percent. Risks remain heavily tilted to the downside with inflation by far the main concern. While views varied across the Asia-Pacific, there remain continued concerns over the risk of new waves of the Covid-19 virus emerging indicating that the region is not yet fully out of ‘pandemic mode’. Forecast for growth for the region this year have similarly come down from 5.1 percent in October 2021 to 2.6 percent in October 2022.

By far, inflation was considered the top risk to growth with 51 percent of respondents selecting it as a top 5 risk to growth for their economy. This was followed by some margin by a series of inter-related risks: a slowdown in the Chinese economy; fragmenting global economy; climate change; increased protectionism and trade wars; and the Ukraine Conflict.

Trade growth in the region is anticipated to be at about 3.1 percent for 2022, 3.9 percentage points lower than forecasted last year. The recovery from the pandemic-induced recession is slowing with fears of stagflation looming on the horizon and the possibility of a recession.

Regional Inflation (weighted on a GDP basis) is expected to be 5.7 percent, 3 percentage points higher than forecasted a year ago, with a return to a more stable trajectory at about 2.4 percent in 2024.

In spite of the immediate concerns over inflation and a fragmenting global economy, the policy community continues to see climate change as a key risk to growth. Regional initiatives undertaken in APEC and other bodies can go a long way to reducing the risks that emerge from climate change and a focus of cooperative efforts at this time of immense geopolitical uncertainty.

The Ukraine Conflict is the last of the top risks to growth. The conflict has had a substantial impact on energy, food and fertilizer prices although the extent to which economies saw the conflict as a top risk varied across the region. As part of the fallout from the pandemic, there has been a focus on the efficiency and resilience of global supply chains, increasing the appreciation that essential services, especially logistics, play in moving goods across borders. Bottlenecks and delays in production and distribution need to be addressed to reduce the impact that the pandemic is having on supply chains already stretched by shifting demand patterns and constraints on supply. According to our survey results, 62 percent of respondents believe that capacity constraints in port operations and related logistics constraints had a major impact on supply chains.

Looking beyond short-term horizon, the long-term trend for growth in the region is also on the negative side, with growth currently expected to be 1 percentage point lower during the post-pandemic period than the post-GFC era. Some of this may be due to the impact the pandemic has had on education, but also momentum for reform needs to be injected into areas that will help regional economies boost growth. APEC has a long term plan through its work on structural reform to address these issues but respondents were generally ambivalent about progress.

Travel and tourism have been the hardest hit sectors as a result of the pandemic, with international travel closed for much of the 2000-2021 period. The action areas highlighted by the survey were: increasing the percentage of population that are vaccinated; reducing or harmonizing the remaining restrictions on travel due to Covid-19; and reducing postpandemic travel costs (eg cheaper/no need for Covid-19 insurance, fewer testing requirements). The recovery of the tourism sector in the region is lagging behind other parts of the world pointing to a need for further work on this issue. However, while recovery is urgent, care needs to be taken that business models do not return to previous models that tended to be less inclusive and sustainable. The reset presents an opportunity for more sustainable models that preserve and protect the environment and enhance livelihoods for the less well-off.

At perhaps no other time since the foundation of APEC has the region faced a more complex landscape. The region has gone through, and in some respects, continues to face a global pandemic. While the growth experienced in 2021 might have been a rebound given the depths that had been reached in 2020, events this year have not helped to sustain that momentum. It is difficult to not draw comparisons with the Global Financial Crisis and the recovery from it. The recession caused by the pandemic was deeper than the GFC but the recovery in 2021 was also much stronger. Problematic for the region (and the world) is that what one might have hoped to be a transition year to a ‘new new normal’ has been anything but a transition.

As frayed as relations have recently become, geopolitical events this year seemingly would have made international cooperation on any issue a distant dream. In this context, the outcomes from the World Trade Organization’s 12th Ministerial Conference (MC12) were an unlikely and highly welcome boost. In spite of placing the need for ameliorating geopolitical and trade conflicts in the region as the highest priority for APEC Leaders to discuss at their meeting in Bangkok, respondents also hope that Leaders will discuss the long-held (but still distant) vision of a Free Trade Area of the Asia-Pacific as well as supporting the WTO and the outcomes from MC12 as 2nd and 3rd highest priority. The outcomes from MC12 including a long discussed agreement on fisheries subsidies; work on the pandemic response and electronic commerce among others reflect areas where international consensus is still attainable.

There was high agreement among our survey respondents on the need to reduce barriers to the growth of the digital economy with this issue ranking 4th most important overall as well as for business and non-government stakeholders but 2nd overall for government respondents. People have become increasingly dependent on the digital economy over the course of the pandemic but governments are finding its cross‐cutting nature a challenge with the traditional industry-specific approach to policy‐setting.

APEC work on sustainability is diffuse, taking place in multiple groups, initiatives to take a more holistic look at the issues and their inter-relations may help get more track on this issue, increasingly seen as a top risk to growth.

Economic cooperation in the Asia-Pacific region constitutes one of the few bright spots in the global trading system today. The Regional Comprehensive Economic Partnership (RCEP) agreement went into effect this year, creating the largest free-trade area (FTA) in the world. It follows the entry into force of the Comprehensive and Progressive Agreement for Transpacific Partnership (CPTPP). The APEC envisioned the TPP (now CPTPP) and “Asian” (now RCEP) as pathways toward the goal of a Free-trade Area of the Asia-Pacific (FTAAP) in the largest and most comprehensive free-trade area (FTA) in the world. Moreover, since APEC approaches to trade and investment liberalization have always been predicated on “open regionalism,” the FTAAP project would also be a means of building an open global marketplace.

But the integration project is incomplete: the FTAAP continues to be a key goal strongly supported by APEC-based regional organizations such as ABAC. Respondents from the PECC 2022 Survey strongly support continuing along the pathways to the FTAAP. Nevertheless, these are challenging times in which to envision an ambitious step forward in economic integration. The global economy is in a state of high uncertainty, perhaps as high at any time since World War II. The economic effects of both agreements are estimated to be significant for the integrating economies with only marginal negative effects on some non-members. There are alternative approaches to reaching the FTAAP, one that involved making the two pathways more compatible in terms of sectoral coverage and depth and the other that involves converging to the FTAAP via enlargements of the pathways. A return of the United States to the CPTPP would be essential, but unfortunately that is difficult to imagine in the short-term. Still, the strategic and economic benefits of staying actively engaged in Asia-Pacific economic integration could be a strong pull. And given that the RCEP agreement has built into it the possibility of improving its template, these processes can be done simultaneously.

Unfortunately, while the economics favor the realization of the FTAAP whatever the process, ranging from US$724 billion to US$1024, the politics do not. Geopolitical, economic and policy uncertainties are rendering ambitious approaches to economic cooperation difficult at all levels. Ongoing conflict in the areas of technology and US-China relations, inwardlooking industrial policy, and a populist backlash against globalization are creating strong headwinds. Hence, APEC leaders will have their work cut out for them. But the potential gains from working toward the creation of “open, dynamic, reliant and peaceful Asia-Pacific Community” are high not only for the region but for the world.

In spite of APEC being an economic forum, respondents selected ameliorating geopolitical and trade conflicts as the top priority for Leaders’ discussions this November. This follows from previous year’s results when similar issues received the same level of priority. As indicated by respondents’ views on what impacts attitudes towards trade – 73 percent believe that geopolitical tensions have either a serious or very serious impact on attitudes towards freer trade and investment. Taken together these findings might be interpreted as meaning that the policy community believes that working together on these issues can be a way to help to resolve longstanding trade issues and led to greater tensions over the years. Another interpretation or factor behind these results might be that even though APEC is an economic forum, the Leaders’ Meeting provides an opportunity for side meetings and establish a better, more predictable atmosphere which is well-appreciated by survey respondents. In other words, the regional policy community emphasizes the value of dialogue on issues of substantive mutual concern.

(Click here for the full report)

(Click here for the Press Statement)