Murray McCully
20 November, 2009
APEC: 20 years of evolution and progress
Address to the NZIIA's seminar marking APEC's 20th anniversary

Victoria University Law School, Wellington

5.45pm, 19 November 2009

Ladies and gentlemen, thank you for the invitation to join you today in marking the 20th Anniversary of APEC.

Exactly a year ago today, I was involved in my first international meeting as Foreign Minister.

That was a breakfast meeting of APEC Foreign Ministers at the National Museum in Lima, Peru.

I have to admit I was actually masquerading as Foreign Minister that day.

Although the new government had been announced, Trade Minister Tim Groser and I had to leave for Peru before the Prime Minister took his new Cabinet to be sworn in at Government House.

In fact Crown Law advice had to be obtained to ensure that I had the legal authority to sign a Working Holiday Scheme with my Peruvian counterpart.

A year on, I have now been to my second APEC Ministerial meeting and have visited many of the member economies on official visits.

The faces around an APEC table are constantly changing but I now know most of my counterparts personally, and have enjoyed establishing warm and constructive relationships with them.

Much of the value in APEC for a New Zealand Prime Minister, Finance Minister, Foreign Minister, and Trade Minister is in this bilateral activity that takes place on the edges of the meetings.

The fact is, APEC is a collection of economies, not countries. Its core agenda is about trade and economic relations. It is an opportunity for Trade Ministers and officials and the business community to engage on these issues.

So what is in it for a Foreign Minister? Indeed, what is in it for a Prime Minister?

For the Prime Minister, and for me, the APEC meeting in Singapore was another valuable opportunity to meet twenty of our regional counterparts, including major players from the US, Australia, China, Indonesia, Japan, and Canada - all key members of APEC.

This year, the big event for New Zealand during APEC was President Obama's announcement that the US would join the Trans-Pacific Partnership negotiations.

This development offers New Zealand the chance to strengthen our trade and economic relationship with the US.

More importantly, it is an opportunity to be part of the design team for what President Obama called a trade agreement for the 21st century - something we hope will become the blueprint for the economic architecture of the Asia Pacific region.

In Tokyo, President Obama also confirmed that the United States intends to be fully engaged in Asia economically, politically, and in security terms.

This is equally important news for New Zealand, and for the region, and we will look to work closely with the US as well as with Australia and our Asian partners to maximise the benefit from this trans-Pacific cooperation.

While in Asia, Prime Minister Key was able to announce, with his counterpart Donald Tsang, the conclusion of trade negotiations with Hong Kong.

Following on from signing the FTA with Malaysia, and the conclusion of negotiations with the Gulf Cooperation Council, this is the third time in recent weeks we have been able to successfully conclude agreements that secure preferential access to important markets for New Zealand business.

These steps are important as an indication of the path that the Asia Pacific region is embarked upon in terms of developing a robust regional architecture for its economic relationships.

That is a long-term goal, but it is one that New Zealand policy-makers have had clearly in their sights from APEC's earliest days.

Our first steps towards the objective of bringing regional economies closer together included an insistence on high-quality agreements, and the conclusion of the original Trans-Pacific agreement, which reached across the Pacific to Chile and provided for wider accession.

This process will be given a positive push, and I am confident that over time we can expect to see more steps towards growing coherence among regional policies that affect traders and investors, and may impact on other economic areas.

What of APEC itself?

It has grown enormously over its 20 years.

As many of you know, the APEC concept first saw the light of day in a speech that Australian Prime Minister Bob Hawke gave in Seoul in early 1989. Later that year 12 economies met in Canberra.

Back then, APEC was conceived as a process involving officials and Ministers.

But in 1993, when President Clinton hosted APEC in Seattle, he invited Leaders as well and took them across to Blair Island in Puget Sound.

He was uncertain about what the weather would be like so he issued Leaders with bombardier jackets.

And thus two traditions were born.

Ever since then, APEC's programme has included an annual Leaders Meeting, and APEC Leaders have been given a distinctive outfit to embellish the photo opportunity.

You may recall the sailing jackets that Jenny Shipley gave her guests in 1999.

I don't want to burden you with a history lesson, but it is worth noting how APEC has changed over the last 20 years.

In 1991 APEC broke new ground when China, Hong Kong China, and Chinese Taipei all joined, making APEC one of the few international organisations in which China and Chinese Taipei are both members.

Later expansion brought in three Latin American economies, as well as Papua New Guinea, Russia, and Viet Nam.

There have been no new members since 1998 due to a moratorium on membership, but a number of economies in Asia and Latin America have shown interest in joining at one time or another.

The current moratorium runs out next year, and we will need to tackle the issue of whether or not we bring in more members.

The key question is whether India should be invited to join.

APEC has grown in other ways too.

It now holds a number of Ministerial meetings each year across a number of policy areas. Next year when Japan hosts, there will be ten.

An enormous structure of committees, working groups, experts groups, and task forces has sprouted.

Alongside APEC there is the APEC Business Advisory Council, which brings together senior business representatives from across the region four times a year to try and make sure that officials and Ministers have their focus right.

What do we get for all this?

APEC gets a mixed press. It has critics who regard it as a talk shop where nothing gets done, and inevitably there is some truth in this.

As we all know, it is much harder to shut down a committee than to create one.

If we were designing APEC from scratch today, it wouldn't look like what we have. But we could say the same about a lot of organisations.

So APEC needs a process of continual improvement. And that's what it has.

At the moment the focus is on making the APEC Secretariat's work more efficient; getting its budget under control, and getting better value out of its capacity-building work, its workshops and the projects it organises.

Part of the criticism is levelled at the fact that APEC only talks about things; that Ministers and Leaders don't conclude agreements. They just agree to talk some more.

Those criticisms misunderstand the point of APEC.

It's not a forum for formal negotiations, even though quite a few other agreements are signed in the margins of APEC meetings.

Economies come along to APEC knowing that they are not going to have to sign on the bottom line at the end of the day.

They are thus freer than they would be in the WTO for example, to explore new ideas and discuss about how to tackle problems.

And that is what goes on in many of APEC's committees and working groups, including when Ministers come together.

This is true, not only for the issues on APEC's formal agenda, but also for other issues that are on the minds of Leaders and Ministers.

You may recall, for example, that when New Zealand hosted APEC in 1999, at the last minute the government convened an important meeting on East Timor which was held in the margins of the Auckland APEC meetings.

This year APEC Foreign Ministers met over breakfast and we discussed how we might make regional bodies and processes more effective.

APEC sits alongside the East Asia Summit process, ASEAN, and other bodies.

The question of what type of regional architecture best serves the region - and would best serve New Zealand - is a complex and important one. It was valuable for Foreign Ministers to have this opportunity for an informal discussion about these issues.

You will also have read of the informal meeting of APEC Leaders in Singapore to discuss climate change issues ahead of Copenhagen.

This was an important opportunity, away from the climate change negotiations themselves, for Leaders from across this region, including many of the key players like China, Japan and the US, to take stock of the situation as we go into Copenhagen and send a signal about the need for an ambitious and realistic outcome there.

Discussions within APEC can also help with gestation and propagation of ideas that over time lead to progress in other contexts.

We have had interesting discussions within APEC over the last few years about how we can liberalise trade in products and services that have an environmental application.

Initially some economies were suspicious that the advocates for this discussion, including New Zealand, were trying to re-litigate a difficult negotiation going on in the WTO.

Over time, however, a much broader appreciation has developed about what environmental goods and services are, and the fact that most economies are becoming involved in this trade.

They are seeing that it is in their interests to liberalise this trade.

That's progress, and it will have a positive impact on discussions back in Geneva.

There are other concrete contributions that APEC has made over the years.

Work that started in APEC led to the multilateral Information Technology Agreement.

The APEC Business Travel Card makes travel in the region easier for tens of thousands of business people.

The APEC Non-Binding Investment Principles and other materials are used in FTA negotiations.

APEC has established training programmes for financial regulators, and produced tools such as codes of conduct for the fight against corruption.

Another criticism levelled at APEC is that it is failing to meet its own Bogor Goals.

You will recall that in 1994 at the Bogor Leaders Meeting in Indonesia, Leaders agreed to achieve free and open trade and investment by 2010 for developed economies, and by 2020 for the developing economies.

What we mean by "free and open trade and investment" has never been clearly defined, although in 1995 in Osaka APEC established an elaborate process for measuring progress towards that goal.

On the one hand we can say that the region as a whole, and at least most economies within it, have made considerable progress towards this goal.

On the other hand it is clear that the six developed economies, including New Zealand, will still have some tariffs and other barriers in place.

Some of them, like the agricultural tariffs that New Zealand exporters still face around the region, are substantial barriers.

Next year there will be something of a reckoning about this.

You can bet that APEC will put the best spin on the situation that it can, which will annoy some of its critics.

But while we need to continue to hold to account some of our trading partners for the trade barriers they still maintain, we should also remember the benefit we get from being in this region.

Some of the East Asian members of APEC will be among the most dynamic drivers of the world economy next year, leading the global economy out of recession.

The challenges we face in New Zealand are global challenges.

There are few issues that come before the New Zealand Cabinet that don't have an international dimension in one form or another.

The solutions are global as well. We can only find them in dialogue with our neighbours and partners, regionally and globally.

We need organisations like APEC, but it doesn't exist on its own.

There is also the very important East Asia Summit, which New Zealand joined when it was formed in 2005.

The EAS is much younger than APEC.

It doesn't have the trans-Pacific element, but is centred on the ASEAN countries, and includes our other East Asian partners - Japan, China and Korea - as well as Australia and, crucially, India.

Just last month at the EAS, leaders agreed to embark on a study towards a Comprehensive Economic Partnership for the region.

Like the Free Trade Area of Asia Pacific concept in APEC, it is a long-term goal, but it would have major benefits for New Zealand trade.

In Singapore President Obama was the first American President to meet with the ten ASEAN Leaders.

In his speech in Tokyo he said that the US looked forward to engaging more formally with the East Asia Summit.

That does not necessarily mean the US is about to join the EAS.

There are only so many summit meetings a US President can attend around the world.

However it does show that the US is paying close attention to this region and to its regional organisations.

At the moment one of the important issues facing the Asia-Pacific region is how we should organise ourselves to work together on regional and global issues.

What regional architecture do we need?

We have APEC, the East Asia Summit process, the ASEAN Dialogue, the ASEAN Regional Forum, and others. They have overlapping memberships and inevitably there is duplication.

From a Ministerial perspective, that means a lot of meetings and a lot of international travel.

The question is, can we manage these regional partnerships more efficiently?

Prime Minister Rudd of Australia has proposed that over time we develop an Asia Pacific community which might develop as an umbrella regional body.

There will be an important discussion on this in Sydney in a few weeks' time which will involve officials and academics.

Prime Minister Hatoyama of Japan has proposed a similar idea of an East Asia community.

He repeated this proposal in Singapore on the weekend, describing a network of functional communities promoting cooperation in practical, concrete ways.

These ideas may represent a sense of frustration with the current plethora of structures and processes.

But more importantly they represent a growing sense in the region that, despite our diversity, we need a greater level of cooperation and community and that this is achievable.

In due course a new structure or umbrella process may supersede some of the current structures.

No one expects anything to develop rapidly.

But it is clear that this is now a significant discussion that the region needs to have.

We have a lot of value at stake in the current structures and we must not put those at risk. But we must be open to the possibility that these structures will evolve over time. And whatever develops, New Zealand needs to be part of it.

Thank you

ENDS

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