Speeches: BCIU Luncheon Discussion

(As Prepared for Delivery)
Thank you, Desiree (Green), for the introduction. I also want to thank BCIU for inviting me to speak this afternoon on my favorite topic…APEC. As the U.S. Senior Official for APEC and the Economic Policy Coordinator for East Asia at the Department of State, I’d like first to offer some brief remarks about APEC, in particular, about our agenda for this year, and also say a few words about our current efforts with respect to the Trans-Pacific Partnership (TPP) before taking questions.
As you all know, APEC has now been around for over 25 years, since 1989. And I believe that APEC has made a very significant contribution to the remarkable economic growth, as well as the stability, of the region. On the trade side, APEC has worked to reduce tariffs, for example, through the Information Technology Agreement (ITA) as early as in 1996 or the more recent commitment to lower tariffs on environmental goods reached in 2012. During this period, the average tariff rate in the APEC region has fallen from nearly 17 percent in 1989 to about 5 percent in 2012.
But perhaps more important than this, APEC has focused on facilitating trade by introducing new customs rules and streamlining regulations and procedures. In the final analysis, tariff rates don’t matter as much if goods are stuck at ports for days and weeks or even months. So, APEC economies have adopted electronic customs processing systems that reduce the average time needed for goods to clear customs. As a result of measures like these, we estimated that trade transaction costs in the region dropped by 10 percent from 2002 to 2012. Cost reductions during the 2007 to 2010 period alone saved businesses nearly $60 billion. Over the past five years, APEC has been working on further measures, such as pre-arrival processing, advance rulings on tariff classifications and electronic payments, to reduce the time, cost, and uncertainty of moving goods and services through the region. We have set an APEC-wide objective of a 10 percent improvement in supply chain performance from 2010 to 2015. The U.S. and other APEC economies created a fund in 2013 of about $3 million to do capacity building in specific APEC economies to make sure we reach this target. We believe we are on track to achieve this goal. With the volume of merchandise trade in the APEC region reaching trillions of dollars, this would mean additional savings of billions of dollars per year.
Similarly, as part of our Ease of Doing Business Initiative, we have worked on improving regulations throughout the APEC region. During the past five years, the time to start a business in the APEC region fell about 55% (from 22 days to 10 days) versus 32% (from 20 days to 13.5 days) for the rest of the world. We’re also making travel in the region easier, faster and more secure through the APEC Travel Facilitation Initiative, and expediting border entry for business travelers through the use of the APEC Business Travel Card. While starting much later than the others, the U.S. began issuing these cards last June, and we have now issued over 6,000 cards to U.S. business travelers.
So, APEC has produced concrete results. Today, APEC economies combined account for approximately 47 percent of global trade and 57 percent of global GDP and are home to nearly three billion consumers. We expect that over the next five years, nearly half of all economic growth outside the United States will come from this region.
And as I noted at the beginning, APEC has also contributed to the stability of the region. Although what we do in APEC is seldom front page news as we don’t deal directly with the latest political or security crisis, the work done in APEC is aimed at increasing economic interdependence and helping to bring our economies closer together in this region. We are creating an environment and habits of cooperation from the working level up to our Leaders that help to prevent, or at least mitigate, those front page crises that we see so often around the world.
Beyond this, APEC is also addressing many of the critical issues that create political instability and eventually stymie economic growth in many countries. For example, we’re combatting corruption by establishing a network of law enforcement officials and agreeing to APEC anti-bribery principles and corporate compliance guidelines. We’re expanding economic opportunities for women by facilitating their access to markets and capital and ensuring equal access to employment opportunities by identifying barrier to their economic participation. We’re setting up an electronic APEC Women entrepreneurship network to link women entrepreneurs across the region. We’re promoting cross-border education, with eight APEC economies establishing over 150 APEC scholarships and internships last year. We expect to expand the numbers this year, so please see me after lunch if you’re interested. We’re also working to reduce carbon emissions by agreeing to conduct peer reviews to reduce and phase out inefficient fossil-fuel subsidies and promoting the deployment of clean energy technologies.
This year, while we continue to follow through on our previous commitments and initiatives, our Philippine host is focusing our efforts on the theme of promoting inclusive and sustainable growth. Unfortunately, even as the APEC region has grown, we have found that the degree of income and social inequality has increased quite sharply in many individual economies across APEC. This, along with the level of corruption, is a sure recipe for domestic conflict and political instability. So, this year, we will work specifically to increase small and medium and micro enterprises’ (SMMEs) access to capital and regional markets, with the goal of developing an SME Action Plan by the end of the year. We will focus on human capital development, including improving working conditions for people with disabilities. We will be looking at economic and financial structural reforms and policies that can provide more training and opportunities for young people from remote communities and disadvantaged groups.
In the wake of the recent Ebola crisis in Africa, I also want to note that APEC will increase our efforts to expand cooperation in promoting measures to combat the growing threat of infectious diseases, anti-microbial resistance (or the “superbugs”), health-care associated infections as well as non-communicable diseases, including cervical cancer in women and the increasing issue of mental health. We will be advancing efforts to strengthen health systems and improve access to medical products by identifying barriers to trade in health care products and combatting the spread of counterfeit and unsafe medicines.
This year, recognizing the particular vulnerability of the Asia-Pacific region to natural disasters, the United States, will work with others to build a regional trade recovery communications mechanism to coordinate public and private cargo transport after a disaster, improve the movement of humanitarian goods across borders, encourage appropriate donations after disasters, and generally work to improve the resilience of the global supply chain.
Finally, much of the work we do in APEC is also aimed at promoting good governance and good regulatory practices. Many of the initiatives APEC has pursued aim not only to expand trade and investment but also to increase openness, transparency and high standards in government regulations. In fact, APEC goals are in many ways precisely those goals that are now sought by the 12 TPP members. In fact, all 12 TPP members are also APEC members.
As Deputy Secretary Tony Blinken said recently, the single most important step we can take for our economic relationships in the Asia-Pacific at this time is completing the TPP. This agreement will further lower tariffs and open markets to exports of American goods and services, supporting jobs and giving our companies access to more consumers. It is a new kind of a trade deal: It is comprehensive, putting labor and environmental standards at the core of the agreement; it will limit the role of state-owned enterprises as they compete with private companies; and it will establish how we protect intellectual property. It supports our efforts to create a rules-based regional trade architecture, built on transparency and competition. When concluded, TPP members will collectively account for one-third of global trade and 40 percent of global GDP.
The contours of a final agreement are coming into focus, as USTR Froman has said, and we have told our 11 partners that the time is now for final offers. We appreciate that Congress is working on finding a path forward on trade promotion authority (TPA); this is a tool that would help the President bring home the most progressive trade agreements in history for U.S. companies and workers.
I’d also like to underscore here the important role of the private sector. Many of our achievements and successes are because of our close partnership with you. APEC has long made it a priority to include the private sector as a partner and we truly value your input and help. We will continue to need the private sector’s help to advocate for economic partnerships governed by rules-based approaches that give businesses the chance to compete and that are grounded in shared principles so that we may achieve a future of shared prosperity in the region. We now need you to make your voices heard in our efforts to complete the TPP process.
With these brief opening remarks, I’d like now to take your questions.