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U.S. Department of State

Diplomacy in Action

Preview of Issues to Be Addressed at the Upcoming Asia-Pacific Economic Cooperation (APEC) Leaders Meeting in Bali, Indonesia

Robert Wang, U.S. Senior Official for APEC; and Arrow Augerot, Deputy Assistant USTR for APEC Affairs & Localization Barriers to Trade
Washington, DC
September 18, 2013




2:00 P.M. EDT

THE WASHINGTON FOREIGN PRESS CENTER, WASHINGTON, D.C.

MODERATOR: Good afternoon, everyone. Welcome to the Washington Foreign Press Center. We’re delighted to have you here. We are also honored to have two representatives from the U.S. Government to talk about APEC and what’s coming up for the upcoming APEC session. Our first speaker will be the U.S. Senior Trade Official Bob Wang [U.S. Senior Official for APEC], and then he will be followed by the – I’m going to get this right – Deputy Assistant U.S. Trade Representative for APEC Affairs and Localization Barriers to Trade – right? And her name is Arrow Augerot.

So with that, I will take – or I’ll let the floor go to Mr. Bob Wang.

MR. WANG: Do you want to sit down? Yeah. Good. Thanks.

Well, thank you all for coming. We’re told that we actually have about 45 minutes, and so we’ll – I want to leave time, room for questions. So I’ll probably just make some comments right now and then have Arrow follow up with her comments.

Actually, what was just said is that – I’m not really the senior trade official; I’m just a senior official, period. So I don’t really know anything. It’s just – but she does the trade. She’s from USTR, and I’m from the State Department.

So I know that you’re – I’m not sure if you’re all very familiar with APEC, but I’m sure quite [a few]. But let me just describe what’s going to happen from October 1st to October 8th. That’s essentially the APEC week, Leaders’ Week. So let me explain a little bit what’s going to happen there. Let me then talk about why it’s important, and then let me talk a little bit about, at least, U.S. priorities. And then I’ll leave Arrow to talk about some of the more specific trade priorities that we have. Okay.

Now, in terms of Leaders’ Week, as I said earlier, we will essentially start off with what we call the CSOM, which is the concluding SOM, senior officials like myself and counterparts from the 20 other economies. That will be from October 1st until October 2nd. There will be a little bit of a break so we can all go to the beach, and then from October 3rd to the 4th, we will have what we call the APEC Ministers’ Meeting. So that’s from the 4th to the 5th. And so we will have, of course, in our side, basically foreign – the foreign side, meaning the State Department, and, of course, USTR, and as well as, in our case, the Secretary of Commerce will be there. But generally, it’s just the foreign and the trade side. And then on the 7th and the 8th, we will have the economic leaders of the different economies come. So, of course, President Obama and others will be joining us. And I understand that also President Putin, President Xi Jinping, and others will be coming as well. So that’s essentially the outline of the week from October 1st to the 8th.

And in terms of why it’s important, just very briefly, I know you all have the background already, but obviously, if you look at APEC itself, we have some 21 economies that essentially have a population of about 2.7 billion people. The three top economies in the world – U.S., of course, China and Japan – will be there. And you have about 50 percent of the world’s GDP represented among the 21 economies, including, of course, Mexico, Chile, and Peru on the Western Hemispheric side. And we have about 44 percent of global trade among these 21 economies. So there’s a very significant group of people gathering together.

Now, in terms of this year’s particular APEC themes, each year, as you know, a different economy hosts. This year’s theme, of course, by host economy Indonesia, will be – first of all, there are three. First of all, it is that of trying to obtain the Bogor goals. And these essentially are goals of moving us towards free trade; 2010 for developed economies and 2020 for developing economies – so essentially, trade investment liberalization.

The second theme that they have, or a goal, is what they call promoting connectivity, which is essentially promoting more and more connections between different economies. And that could mean physically in terms of infrastructure, flights, ports, and so on; customs, of course. Could mean institutional ones in terms of, again, customs or government policies, regulatory policies, structural reform, things of that nature.

And finally, they have what they call sustainable growth with equity. And I guess this theme, essentially, from all of our points of view, is intended to try to promote sustainable growth, in other words, not just focus on GDP. A lot of countries focus simply on the GDP growth, how fast you grow. But, of course, you have to – when you grow, clearly there’s an impact on the environment, there’s an impact on social fabric, and so on. So sustainable growth with equity means that you have to take into consideration all of the different factors that really go into sustaining growth for the long term, and not just a very fast growth in the short term.

So those are the three basic themes that the Indonesian host economy has proposed for this particular year. And we’ve been working on this this whole past year, although I’m new to this game. But they’ve been proposing – they’ve been – proposed this early in the year, and we’ve been going through here for the past year, and we’re ending up now at the final sum. And I’ve only been on the job for one month, so --

Now, in terms of U.S. priorities, let me very quickly go into that and try to characterize that, essentially, along these different categories. I think in terms of – and I’ll let Arrow talk a little bit more about that. But in terms of the Bogor goals, or moving towards greater trade and investment liberalization, obviously, this year we will be trying very hard to continue to try to move this process forward, and trying to make sure that we are careful about protectionist tendencies, especially when the world economy – the global economy tends to be a little bit fragile sometimes, a little volatile.

So we have – here I’ll, again, let Arrow talk more about it – but things about maybe offering proposals or policies that will promote jobs and competitiveness that would be alternatives to, sort of, more protectionist policies like local content requirements or discriminatory innovation policies, et cetera. So we’re trying to make sure that we keep the momentum going forward in terms of liberalization rather than protectionism. So that’s one thing we’re doing. And again, [for specifics], we’ll have Arrow talk more about that.

In terms of promoting connectivity, we, in line with trade and investment liberalization, what we’re trying to do is, of course, try to facilitate trade in terms of the supply chain. As you know, among the 21 economies, one of the reasons you have such a vibrant economy is because there’s so much supply chain crossing between one economy and another economy. Sometimes a product that’s sent eventually to Japan or the United States has gone through many stages in different economies, and so, assembly and so on.

So obviously, one of the key factors in trying to make sure that we are able to have vibrant trade and make – take advantage of the connections that we do have is to make sure that we have fairly smooth customs facilitation when it gets from port to port, from airport to airport, and make sure that we have people who can do that at each economy.

So what we’re trying to do here is, in fact, we’re trying to see if we can propose a fund that will actually be used to – and we already have studied some of the issues in the supply chain to see where it’s being held up, where certain things are being held up. And so we’re trying to propose a fund that we will gather, hopefully, a lot of the economies to support to try to not only study it but also to recommend policies to try to address what we would call some of these choke points. And if we’re able to succeed in doing this, also building skills among the 21 economies, then the goods that are being sent through the supply chain will be traveling faster, easier, and with greater certainty. And APEC has set a goal already of trying to increase it by about 10 percent by 2015. So we’re working on that as well.

And beyond that, I think we’re also going beyond, sort of, just moving goods and services. A lot of things that APEC has been working on this year has been, for example, in terms of trying to promote people-to-people connectivity, meaning essentially, for example, improving travel so that tourists and business travelers can go faster from economy to economy. That facilitates travel people.

One other thing we’ve done is in terms – in the economic front, we are – we have, proposed a visionary goal of about one million students going cross border for education among the APEC economies, so that we can have people studying, students studying in different countries. And that would, of course, facilitate, first of all, knowledge building for these students, but at the same time, it would facilitate understanding of each other’s system, not just economic systems but also cultural systems, and so on. So we think this people-to-people connectivity is very important, and we’re trying to push it this year, and hopefully, we have a work plan for bringing it to next year.

And finally, I think on the sustainable growth with equity side, I attended, for example, a conference on the women and economy in Bali a couple weeks ago, and that was also joined by a conference on SMEs, small and medium size enterprises. And so what we’re trying to do here is, to sustain this growth we know that we have to tap the potential of, for example, women in the various economies because there’s a great source. And we had a McKinsey report study tell us that, in fact, if you look at a lot of companies they were comparing, companies at high levels with women on the board, that they actually perform, on average, much better, because they bring something to the management side. And so there’s a vast potential there, and we’re trying to tap that and find ways to tap that potential.

Same thing with SMEs that normally are the ones who employ people. And there’s sometimes up to 90, 95 percent of an economy in terms of numbers of companies in that economy. So, very important, and so we’re trying to find different ways to increase their access to financing. And so from our side, from our point of view in the U.S., this is a very important priority, to try to, again, sort of galvanize these different groups within society.

And I think apart from that, we are also trying to, on the sustainable side, of course, worry about the environment. So we have workshops and so on on food security, health security, and we’re trying to move forward on these – in these different areas. For example, I think in the food security area, we have now developed our – the working groups have developed a – sort of a roadmap, a 2020 roadmap in terms of food security, where we’re trying to reach by 2020, by doing different – using different policy means in terms, for example, of freer trade, not having export restrictions on your food products, and biotechnology, the use of biotechnology for certain kinds of food and so on – all of these things to try to make sure that we are able to increase the food security for the region as a whole going into 2020 then.

So those are the general – our agenda. It’s a very full agenda. And I know that our leaders will be discussing a lot of these issues for – again, the ministers and the leaders – for several days. Hopefully, we’ll be able to take some actions that will actually lead to policy changes, maybe agreements among the 21 economies or maybe, in some cases, it would be simply individual action plans so each country that – or economy that learns from this process will decide to go back and implement certain policy changes or reforms that will allow the – again, this region to not only prosper, but also increase integration among the 21 economies.

So those are our priorities for the moment. And now, if you don’t mind, let me turn it over to Arrow.

MS. AUGEROT: Well, thanks, everyone. I will focus my remarks today on what are the trade and investment priorities for our – for the meetings in Bali, the APEC meetings in Bali.

The U.S. vision for APEC in 2013 on trade and investment really is to focus on ensuring that APEC remains a dynamic place to do business and achieve results. When we hosted APEC in 2011, we tried to foster a more results-oriented environment and ensure that all of our officials are working towards delivering concrete outcomes. And so in 2012, when Russia hosted APEC, we took [this forward], they carried on that momentum, and we had a very significant outcome in the Russia year, which was reaching agreement on a commercially and environmentally credible APEC list of environmental goods on which APEC economies will cut tariffs to 5 percent or less. This was an historic achievement. Until 2012, no body, not even the WTO, had been able to come up with this kind of list of environmental goods. And this was the first tariff-cutting deal in over 15 years.

So the fact that the APEC was able to do that speaks volumes about the dynamic environment there, and so, of course, we’re trying to work with our Indonesian hosts this year to deliver additional meaningful and concrete results, and make sure that our leaders and ministers carry forward on past years’ commitments.

To that end, the United States is seeking four main trade and investment-related outcomes in Bali. First, as Bob discussed, Indonesia’s focus this year on connectivity has provided momentum to our work on supply chain performance in the region. We did set a goal of improving supply chain performance by 10 percent by 2015. In order to meet that goal, we in the United States believe very strongly that we’re going to need an accelerated pace to get there, and we’re not going to be able to achieve that without additional resources. That’s why that we’re working very hard with our APEC colleagues to establish a dedicated supply chain fund that would help APEC economies implement their supply chain and trade facilitation commitments around the region.

Secondly, we at USTR have – increasingly hear from stakeholders, private sector representatives, about their concerns with respect to trade-distorting local content requirements around the world. This year in APEC, we’ve been working on discussing the long-term economic growth impact of local content requirements and identifying ways that economies can promote job creation and competitiveness without resorting to these measures. And we hope to see leaders endorse the APEC best practices on job creation and competitiveness, which will be a model for how to promote domestic economic growth goals without resorting to localization barriers.

Third, we are looking forward to carrying on APEC’s successful agenda to improve the regulatory environment in the region. Again, we hear from stakeholders consistently that regulatory issues are among the biggest barriers that they face in trading and investment, investing around the world and in the Asia Pacific. APEC has a long-term agenda on this. In 2011, we took some significant steps forward toward strengthening implementation of what we call good regulatory practices by having APEC economies commit to ensure internal coordination of regulatory work, assess the impact of regulations, and conduct public consultations. We’re advancing that agenda, and specifically this year we’re asking APEC economies to do that by taking on some additional tools related to single online locations for regulatory information, regulatory planning, and periodic regulatory reviews. This is all very detailed technical work, but it has a huge impact on the overall goal to promote trade and investment in the region.

Fourth and finally, we are on environmental goods and services. APEC this year has been planning for implementing our tariff reduction commitments, and we’re asking leaders and ministers to endorse a plan for assisting economies in the – who need individual help in that regard. We’re also shifting our focus on environmental goods and services to addressing non-tariff measures, and we’re asking leaders and ministers to endorse in Bali the establishment of the APEC Public Private Partnership on Environmental Goods. This is a group of business and government representatives that will serve as a mechanism on addressing issues like local content requirements, regulatory coherence, government support programs and procurement in the environment – related to environmental goods and services. The body will meet for the first time next year in China and will focus its discussion initially on renewable and clean energy issues.

As you know, Indonesia is also hosting the ninth WTO ministerial meeting this year in early December, just two months after the APEC leaders meeting. So MC9 will clearly be a big topic of discussion in Bali, and certainly for APEC trade ministers. We would like to see the APEC meetings in Bali provide a real – a strong political impetus to achieving a meaningful outcome at the MC9 that would include a binding trade facilitation agreement at its core as well as successful conclusion of negotiations for an expanded information technology agreement. APEC has a long history of spurring progress in the WTO negotiations. This is the perfect year for them to again step up and give – contribute some collective leadership to positive momentum at the WTO.

In conclusion, what I want to tell you, that the last time that Indonesia hosted APEC was in 1994, and 1994 was a memorable and successful APEC year because that was the year that APEC came together to develop the Bogor goals, free and open trade and investment. I think we have a real opportunity again this year to take forward work towards achieving those Bogor goals and to demonstrate APEC’s collective commitment to free and open trade and investment, and to this – advancing this organization that has proven it can produce meaningful and practical results. Thanks.

MODERATOR: All right. With that, we’re going to open the floor to questions. If, as usual, you wouldn’t mind introducing yourself, saying who you are and which outlet you’re with, and please also indicate which of our briefers you would like to direct the question, and let’s also try to keep the questions on the topic. Thank you very much.

So up here in front.

QUESTION: Guohua Zang with CTI-TV of Taiwan. I have a question for Mr. Wang. Many of the 21 economies have been hosts to these annual meetings. Some of them have been more than once, but Taiwan has never been a host. Would arrangement be made, with the United States support, arrangement for Taiwan to actually play host? That’s question number one.

Number two: President Ma Ying-jeou has wanted to attend the leaders meeting. Can – would the United States support arrangement for President Ma to actually be part of the leaders meeting? Thank you very much.

MR. WANG: Sure. I think, as all of you know, APEC is an organization that essentially makes decisions through consensus. So whether one economy or another economy supports it or so on is not sufficient. So obviously, I think if we were able to get consensus on Taiwan’s participation, then I think that would be something that’s possible. So the question’s whether we can get consensus on Taiwan’s participation or not.

QUESTION: Participation? Taiwan has been --

MR. WANG: I’m sorry, not participation, excuse me – hosting, excuse me, hosting. So the question is whether and what – we can actually get a consensus among all of our economies for Taiwan hosting the – an APEC year.

QUESTION: Would the U.S. support that? Would the United States support that?

MR. WANG: Well, I would say I don't know now that I can actually say that, but I would say at this point I don’t see why we have any problems with it. But we’ll have to work consensus on that.

QUESTION: Given the relations – well, the improved relations between the two sides of the Taiwan Strait --

MR. WANG: Right.

QUESTION: -- between China and the United States --

MR. WANG: Right.

QUESTION: -- and the United States and Taiwan --

MR. WANG: Right.

QUESTION: -- would arrangement be made? Is it possible to make arrangement --

MR. WANG: Well, to --

QUESTION: -- for President Ma to attend?

MR. WANG: Right. Well, to be – on President Ma himself and also on the question of Taiwan, I think we just want to be very direct. Obviously, the key player here will be China.

MODERATOR: Thank you very much. Yeah.

QUESTION: Hi. Chen Weihua, China Daily. I want to see – I mean, multiple questions about China. I mean, going to be the next year’s host?

MR. WANG: Right, (inaudible).

QUESTION: You have any expectation? I mean, what you think would be the major thing? I mean, this year, I don't know, is there going to be bilateral, I mean, at the APEC between China-U.S. leaders? And what you think would be the major issue? Are they going to talk about, like, China showed interest in TPP?

MR. WANG: Mm-hmm, mm-hmm.

QUESTION: I mean, they’re promoting the RCEP, obviously, but do you think that this is going to be the topic, and also maybe even the BIT, B-I-T?

MR. WANG: Sure.

QUESTION: So – thank you.

MR. WANG: Right. Yeah. No, as some of you may know, I had served in Beijing before as a deputy there for two and a half years, and I had also served in Taiwan for three years prior to that. And even when I was there before I left, the Chinese – my Chinese counterpart had actually come to me, Tianjin (ph), and actually wanted to start discussing 2014, because we all expect that 2014 will also be a very good year for us to be able to get trade liberalization, among other things.

So I think we will – we have been discussing it already, and I think in Bali, this would be a great opportunity, because we do have a number of ministers there as well as different level of people. And so I’m sure we’ll meet in some form in Bali, and clearly, because the torch is being handed over to China for 2014, the question of what their priorities might be will certainly be, I think, discussed.

QUESTION: TPP-RCEP?

MR. WANG: Sorry?

QUESTION: TPP-RCEP?

MR. WANG: Oh, yeah. Well, TPP-RCEP, I think as you all know, the initial reaction of China to TPP was not very positive. That’s sometime back. But I think over the last – I’d say the last several months, last half a year, we’ve seen really a more sort of positive attitude in terms of China being willing to consider and discuss TPP and how it somehow compares to RCEP. And our point of view, of course, has always been that at some point, these – all these processes have to be transparent. And so I think we would be very glad in the coming year to certainly discuss how TPP and so on is being negotiated and how – and what sort of standards we have, and as with RCEP, as with other sort of RTAs, FTAs.

So discussion of these types of agreements is certainly something I think that is – would be useful to everyone to understand.

MODERATOR: Please also remember to identify before you --

QUESTION: Ivan Lebeden from the Russian news agency TASS. If I’m not mistaken, it was mentioned in the final declaration of the previous summit that took place in the Russian city of Vladivostok last year that the world economy is – was in the rather dire straits, the markets were volatile, the situation in Europe caused a lot of concerns. So the question is: How the global economic environment has changed during the last 12 months, and how it would affect the upcoming Bali summit?

And the second question is: Some American experts or scholars consider APEC summits to be famous for taking rather good decisions that are never implemented. So how do you think the decisions that were taken during the last summit in Russia, APEC summit in Russian city of Vladivostok, are implemented? Can you report any progress in this process? Thank you.

MR. WANG: (Inaudible.) The first one on the world economy. Well, I think I understand that Bernanke is coming up here to give a talk soon, right? (Laughter.) Why don’t you save the question for him? (Laughter.)

No, you’re right. I mean, last year as I read the leaders declaration and statement, and there was in this first part, clearly, discussion of the rather precarious situation that the world global economy is in. But since then – again, I’m not – I studied kind of economics, but I’m not an expert on this. But clearly, people have taken steps. Economies have taken steps. We took a lot of steps in terms of sequestration, and sometimes – some even say too drastic. But I think all of the economies, maybe including in Europe, because of the problems have begun to take certain steps to correct it. And this year it looks like – look at Japan. That’d be one thing. Look at the United States. It’d be another thing. Europe, I’m not as familiar with.

But I think in some ways – I don’t know whether we’re out of the whale or not yet, but I think it’s somewhat better than last year. And so, I guess, how would that affect the Bali? I guess I’m not sure if it really affects it, except that perhaps in one way when you have a poor economy, certainly a lot of countries tend to lean towards more protectionist measures, keeping jobs in place and not really trading. And we think that’s exactly the wrong approach. So we’re going to – that’s why with this year we’re trying harder to make sure that we can underscore the importance of an open economy to growth. So that’s exactly why – what APEC is about. So I think it doesn’t affect it in the sense of discouraging us, but it rather poses challenges for us to try to move forward even faster.

MS. AUGEROT: On your second question about implementing APEC agreements, I think when – as I said in my opening remarks, when we hosted APEC in 2011, we were well aware of some of the things that people said about it, including that we don’t implement or that it’s sort of the talk shop. And that’s why we tried to shift the focus away from sort of vision statements and closer to practical and meaningful outcomes which you can actually measure implementation. A lot of what APEC does in terms of its commitments are broad statements of policy, and it’s hard then to figure out or to measure how much that changes specific economy regulations or laws.

But in terms of Russia’s year, Russia did a very good job of advancing practical and meaningful outcomes. The environmental goods list that in – that was the basis for our commitment to reduce tariffs on environmental goods is a very important and, as I said before, historic outcome. And we’re taking steps this year to make sure that all of the APEC economies have the technical assistance they need to implement that on time by 2015, as was committed.

We also had – took a lot of steps on innovation policy during the Russia year, and as far as I know all of those have come into play. A public-private group on science and technology and innovation was established and they’ve had their meetings this year. I was just reviewing a set of project proposals they’ve put forward on a range of R&D and S&T issues, and it looks very good.

So I think we can say that APEC has made a significant amount of progress in the past few years on implementing the commitments we’ve made, and that is because of our shift to a more practical and meaningful focus for the work that ministers and leaders do.

MR. WANG: If I could add something to that, just a point. Sometimes APEC works in [a] way that is not as clear sometimes, because as you know, we have individual action plans. So governments and officials will come into the – in APEC and participate in our working groups, will go back learning new things, and they actually will apply certain things in their government policies that actually are effective and actually can change things. So it’s not exactly so clearly – so implementation’s not like you can see it so clearly. It’s just people learning more, officials learning more, going back, practicing, recommending different policies that eventually do make a difference.

And so if you go – if you take a long-term view, just look at the Asia Pacific economy, the regional economy. It’s doing quite well. Indonesia, Philippines, have been growing at 6 percent. And if you compare it to the rest of the world – Middle East, Africa, Europe – this region over the last 20 years has done very well. Now, whether it’s specifically because of some implementation of some program of APEC I don’t know, but I think as a whole this region is some – is a region that is model, I think, in many ways for the rest of the world in the way it’s able to keep on growing in the last 20 years at a pace that is really quite remarkable historically speaking. So I think in some form it’s indirectly related not just to APEC but to the things that all these economies are doing and to the officials who are involved in these talks.

QUESTION: Hi, I’m Ching-yi Chang with Phoenix TV Hong Kong. A question on TPP. We know President Obama is going to meet some members of TPP during the APEC. How promising it is to conclude TPP this year? And also on the prospect, how does the U.S. see the prospect of RCEP? And some say it could be a counterbalance to TPP. How does the U.S. view that? Thank you.

MS. AUGEROT: Thank you for your question. As you know, my area of responsibility is APEC, but so – for additional questions on TPP I refer you to our press office. But with regard to whether or not – what the progress will be, President Obama and other TPP leaders have instructed negotiators to work to try to complete the negotiations this year. And I can testify from the flurry of activity around my building on a daily basis that that is certainly true. We’re working very hard to accomplish this.

The TPP leaders will be meeting at the October APEC meeting and we think that will be a critical milestone, and our goal is to complete as much work as possible by that time.

On your second question related to RCEP, we don’t – we think that given the dynamic trade and investment environment in the Asia Pacific region, it’s not surprising to us that there is more than one large-scale free trade agreement, regional trade agreement, being negotiated. We don’t see those – we don’t see them as mutually exclusive. We think that they certainly can certainly benefit their economies by being negotiated at the same time. We don’t see this as a – we don’t see RCEP as a counterbalance to TPP. We understand that there’s different motivations for different negotiations, and we look forward to – what we’re focused on in the U.S. is to getting a high-quality deal done on TPP as soon as possible.

MODERATOR: We have time for one more question if anyone has one. No? All right. Oh, yes.

QUESTION: I have a question for Arrow to follow up with TPP. I’m (inaudible) Pan Gao from Xinhua News Agency. (Inaudible) media reported that chief negotiators of TPP will hold meetings this week in Washington. Can you confirm this information, and what are the issues on the table?

MS. AUGEROT: Well, the chief negotiators are meeting this week in Washington. That’s part of the flurry of activity I see at my elevator every day near my office. In terms of the issues, they’re working to narrow down to the final stages of the negotiation. And for additional questions about that I refer you to my press office.

MODERATOR: Thank you, everyone.

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