Alan Bollard: Anti-globalisation, digital trade among challenges for APEC

New Zealander Dr Alan Bollard, the Executive Director of the APEC Secretariat, talks to the Asia Media Centre about the economic challenges in the Asia-Pacific region as well as growth opportunities for New Zealand.

What are the key challenges for APEC at present?

APEC has been a story about liberalising borders to improve trade and investment, and unleashing huge potential growth drivers from regional economic integration.

Now we are seeing a growth of some views about anti-globalisation and others really wanting to see things go a lot further yet. So there are different views around the region. We’re also seeing that trade for the future isn’t just about putting goods on containers on ships. It’s all about electronic commerce, digital stuff. That means potentially if we get that right, small business can have a much bigger slice of imports and exports – something that hasn’t happened in the past and something that is important for New Zealand.

We’re spending a lot more time now looking at digital trade rather than just traditional trade – rules about electronic commerce. It’s a difficult area and there are quite different views around the table about all of that – but the dividend from getting that right is potentially really big. 

What keeps you awake at night?

We’ve also, I guess, moved from a period when we’ve had lot of support right around the table for increased trade and investment, and people movement and data movement and so on. Now there are some questions about that, and that has made things a bit tougher for us. We are having to query much more about who’s benefitting from a lot of this liberalisation, and are some groups being hurt, and working out what that means for domestic policies to help mitigate those sort of things.

At the same time, countries like, this year Vietnam is hosting APEC, want to see a lot more trade because they want to see to see a lot more growth off the back of that. 

What can we expect to see at the Leaders’ meeting in Da Nang, Vietnam?

We will expect to see leaders signing off a whole bunch of ongoing initiatives around supply chains, single customs windows, authorised economic operators, reducing tariffs further, e-commerce rules – a whole bunch of technical things like that.

In addition, there will be a lot of aspirational discussion about how we can make this all work better for the future. So we’re expecting to see initiatives on how to help small businesses modernise and get into these big growth drivers; how to see better ways of tying the region economically – understanding and doing better with this big 'noodle bowl' of different arrangements about free trade in the region.

There’s a big focus on food security this year as well, and there are different views around the table, but we expect to see some of that come together in the Leaders’ Week.

"APEC was set up quarter of a century ago and it needs to change, develop and move into potentially new directions."

What does the 'noodle bowl' refer to? 

We are talking about the TPP11 ­ will we see any announcements about agreeing to an amended version of that? We’re looking at Regional Comprehensive Economic Partnership (RCEP), which is sort of an East Asian version of the TPP – and it doesn’t have really exciting content to it, but it’s got a pretty exciting footprint because it’s got China and India, so that means it’s most of the world.

We’re also seeing some interesting new ideas coming from Latin America, via the Pacific Alliance. New Zealand is looking at an associate membership of that organisation. There are some things changing with the NAFTA re-negotiations going on. It’s the 50th year of ASEAN and we have the ASEAN Economic Community. There’s whole bunch of things happening in all of that. APEC is a place where we incubate new ideas and ways of doing things better. We’re not a legally binding agreement like those ones are; we try things out by consensus and see if it works, then get embedded into those.

We are also looking at the possibility for a free-trade agreement for Asia and the Pacific in the maybe distant future about how all the things could converge and come together.

What are the key economic drivers in the Asia-Pacific region?

I see an emerging middle class. In another decade most of East Asia will be middle class – that was never the case before.

Middle-class people want different products and services; they quite like New Zealand’s supply of products and services, whether it be food or tourism. They are looking out much more than they used to, they are prepared to do things in different ways. There are more millennials and fewer baby boomers. They are demanding more of their governments; some of the things they’re demanding are the same things New Zealanders are demanding – things like environment and social services.

Does all the change going on in the region affect APEC’s relevance?

Actually, at time when there are different views about trade liberalisation, it’s easier to do stuff through a voluntary, consensus-driven arrangement like APEC than it is through WTO or a legally binding set of agreements with quite difficult disputes resolutions processes in place.

At the minute, APEC is quite important as a forum for keeping all this open.

New Zealand will host APEC in 2021. Any sense about what we can expect from that?

First of all, I’ve had a bit of challenge speaking to my Singaporean colleagues explaining why New Zealand has had to set a date so far in advance for the leaders' meeting in 2021, because there’s this thing called a yacht race happening before that. Assuming we get through that, it’ll be a very important year. 

In 2020, we’ve got a number of programmes coming to an end at APEC. APEC has already said it wants to have a big exercise looking at future directions. APEC was set up quarter of a century ago and it needs to change, develop and move into potentially new directions. It will be up to New Zealand as lead host that year to get APEC on track for where it goes, but we don’t know quite what that will be yet. 

What are the untapped opportunities for New Zealand in the region?

New Zealand is an unusual economy in APEC because it is so small and so far away. We don’t always feel that, but it is a long way away – even with electronic technologies. By some measures, the Economist magazine says New Zealand is the remotest country on earth. That’s got some big advantages and some disadvantages.

We start from a slightly different point. We know in New Zealand one of our advantages is we get stuff together, we work it pretty well, we punch above our weight. We’ve got a great but not always accurate image in the region which is sort of clean, green. 

But in terms of economic engagement in the region, scale is a really big problem and our commodity export composition can be a real problem as well. We’ve not been good at going upmarket, getting value-add. We are now putting out more and more tonnage but that doesn’t necessarily translate into more and more dollars.

We know we’ve got this problem; we’ve been very good at on-farm and off-farm production and not very good at marketing. So we need to just keep working on that. There’s plenty of economies that are keen to be part of that, but they’ll always be looking at what’s in it for them and we need to be tough about some of that as well.

There are big economic opportunities that continue, but we’ve got to be pretty tough about getting value for New Zealand out of some of those. 

New Zealander Dr Alan Bollard is the Executive Director of the APEC Secretariat, based in Singapore. He is also an Asia New Zealand Foundation Honorary Adviser. 

The APEC Summit 2017 runs from 11–12 November in Vietnam.

– Asia Media Centre