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Asia Pacific regional cooperation – it’s more than jargon

UN Economic and Social Commission for Asia and the Pacific (UNESCAP)

Address to the UNESCAP High Level Dialogue on Regional Economic Cooperation and Integration for Enhancing Sustainable Development in Asia and the Pacific, Bangkok, April 20, 2017

Trade, not aid, is the key driver for development, prosperity and opportunity for people of our region.  We can set  Sustainable Development Goals, provide important aid and assistance, and write any number of government policy papers but the reality is that we won’t get development without a central role for the private sector, including businesses that trade with the region and the world.

This is a statement that might have been controversial in decades past and in many parts of the world but it is no longer controversial.  It is an observation of the present era, at least in the Asia Pacific region.  We live in the Asia Pacific Century, built on trade.  If we have learned anything in recent times, though, it is that if trade liberalisation is to continue we will need to work harder to sustain a public consensus on the value of openness and international cooperation.

If we are to maintain such a consensus the first thing we could do is drop the jargon around trade, the acronyms, TPP, RCEP, RECI, the noodle bowl of trade agreements and indecipherable terminology of trade facilitation and so called “harmonisation.” The arcane language of trade is fine for bureaucrats but does nothing to convince the general public of the benefits from international economic cooperation.

We need to find a more approachable way to talk about what trade and investment really means and how international economic cooperation benefits people, communities and nations.

With Head of Finance for the Federated States of Micronesia, Sihna Lawrence, at the Opening Ceremony

In the Asia Pacific at least most people are not fretting about globalisation or rushing towards simplistic answers to the challenges of growth, unlike in Europe and America.  In the Asia Pacific we only need to open our eyes to  see the benefits from trade and investment.  East Asia, in particular, has become the growth engine of the world.  As a result of trade and economic engagement with global markets, the lives of hundreds of millions of people have been transformed with better paid work and as a result of growth governments have been able to invest in better education and better infrastructure.

Asia has benefited from the trends underlying globalization such as flows of foreign direct investment, access to knowledge and innovation, open markets for trade in goods and services and rapid technological progress.  We should not forget Asian growth has also been built upon the foundation of prevailing regional peace, security and stability offered by regional and multilateral cooperation.

The growth of East Asia can assist other regions that have not yet benefited as much from trade and investment.

There is an opportunity, for example, for the small island states of the Pacific to think regionally and to build greater economic cooperation with the broader Asia Pacific region.  Individually they are small and remote from major markets.  Together, however, the Pacific Island Countries have rich regional resources that hold great promise if we can add more value locally and integrate with major markets.  Examples of the Pacific region’s potential competitive strengths include the  vast but finite fisheries resources, deep sea minerals and of course the potential for a regionally-connected tourism industry with future air and sea links that will traverse and benefit multiple countries.

As we pursue development through regional initiatives we need to ensure the benefits of economic integration are shared, that the trade liberalisation, harmonisation and other measures we pursue are not just resilient in the face of pressure from populist politicians but also genuinely improve opportunities for people in all corners of the region.  And that the development is genuinely sustainable.

There is no doubt some trade agreements that have taken scores of negotiators years to resolve have resulted in marginal benefits. Others have had broad-based transformational impact, such as the China Australia Free Trade Agreement, an agreement between two highly complementary economies in which each has what the other needs. As a resident of Beijing, I have been a beneficiary of the 50% increase in Australian wine exports to China in the last year!

But not every negotiation is evenly balanced. 

In the recently concluded trade negotiations in the Pacific between the developed economies of Australia and New Zealand and their neighbouring Pacific Island Countries, all of which are developing nations, there were some who questioned that the benefits of the so-called PACER Plus agreement would be fairly distributed.  These were negotiations after all, and there will always be give and take according to the national interests of each negotiating partner.  If, at the end of the day, though, a national government cannot say the outcome is in the interests of their population, then there is a problem.  And the whole region is not yet convinced, with the two largest developing economies of the Pacific, Papua New Guinea and Fiji, opting out.

When we think about regional and global trade, there is an understandable focus on trade negotiations to reduce tariffs and other hard barriers to trade, but non-tariff  harmonisation measures to reduce the regulatory barriers to trade can also help.  Again, we need to do better in explaining the benefits of this work to governments and to the public.

UNESCAP’s work in developing the Framework Agreement on Paperless Trade is one practical initiative that can not only make the business of trade more transparent and accessible but also make trade easier across the region.  Yet few governments have ratified the agreement to date.

One of the reasons is the lack of capacity to implement paperless trade in some less developed locations.  To ensure the benefits are spread across the region, we must adequately support those member countries with fewer resources to build capacity and implement the technological capabilities for paperless trade.

Once the technological capabilities are in place, it holds great promise for much easier paperless exchange and mutual recognition of trade data and documents online, speeding up the work of regulators to help businesses get on with the business of trading.

One of the biggest obstacles slowing and sometimes hindering trade can be navigating the different documents required.  Certainly our small exporters from the Pacific Islands often find dealing with the bureaucracy of China makes it all too difficult to explore an export market that should hold great promise.

In the implementation of paperless trade we can build what is referred to by experts as “interoperability” across the region. I first heard the term interoperability at a UN peacekeeping conference in Ottawa in the early 1990s, when military contingents from different nations were looking at how they could better collaborate to keep the peace in complex and rapidly changing  security situations in conflict zones.  Trade regulators are not comparable to peacekeepers but of course utilising similar systems will similarly allow us to better understand each other and provide a platform for more cooperation in future.

Paperless trade will not only be more efficient, but it will also be more transparent and better guarantees compliance with the law.

It is a good example of where it makes good sense for us to think regionally and in which building a harmonised approach should benefit all countries of the region, thus reducing the confusion and diversity of bilateral arrangements.

Paperless trade creates the opportunity to build a system of documentation that facilitates rather than hinders trade.  A similar approach to investment facilitation would go a long way to encouraging investors to create jobs across the region, which is otherwise daunting with its diversity of policies, procedures and implementation.

There are other non-tariff barriers to economic cooperation that, if reduced, can make a real difference across the region, including the small, distant, developing nations of the Pacific Islands.

Increased access to labour mobility is a good example, through which workers can access job opportunities and fill skills gaps in receiving countries, assisting their home communities with remittances.

But, for the small island states of the Pacific, reducing the regulatory barriers can only go so far.   There remain practical barriers to international trade created by distance from major markets. The biggest thing we could change to further integrate the Pacific Islands with the major markets of the region would be to invest in better connectivity.

Luckily there is a new focus and capability in the Asia Pacific region to build greater connectivity and related infrastructure, for transport, energy and communications.

In line with their strong economic performance, major Asian economies are taking a greater leadership role in global economic governance and that includes financing for development.  New financial institutions such as the Asian Infrastructure Investment Bank and China’s Silk Road Fund are dedicated to supporting development projects that will build regional supply chain connectivity to reduce the distance and cost of economic cooperation.

It is going to require regional thinking to make the most of these opportunities. We will need to think about hubs and spokes, the best nodes for logistics chains and for transport by sea and air.  The growth of the Asia Pacific can provide the platform for even the most remote members of the region to benefit if we focus on their practical needs and the benefits to all of economic integration.

In working for sustainable economic development we in the Pacific should more seriously think, plan and cooperate as a region and not just a collection of states.  The rise of Asia is a global and regional story of integration into the global economy as much as it is about national development and the Pacific region too can benefit together from greater economic integration with Asia and the world.  We need to ensure no nation is left behind.

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