Push free trade and restore confidence: business' call to APEC leaders: ABAC, APEC's business arm, has made some frank assessments about the state of the world economy in its 2002 report to leaders. . Business Advisory Council - Cover Story - Asia Pacific Economic Cooperation APEC - ABAC

Business Asia, Oct, 2002 by Randolph Ramsay

The world economy is in dire shape, and steps need to be taken urgently to address the situation, global business leaders say.

The Asia Pacific Economic Cooperation (APEC) Business Advisory Council (ABAC), in its annual report to APEC economic leaders, has given a frank assessment of the global state of play. There is no talk of an upturn, no discussion about the light at the end of the tunnel. ABAC's members, made up of the region's leading business minds, are deeply concerned about the depressed state of the world economy, and want APEC leaders to do something about it. Paul Song, a US-based ABAC member and the CEO of Noetix Corporation, sums up the seriousness ABAC members view the current situation by comparing what is happening now to events early last century.

"In many ways, we have not seen such a disruption to so many different sectors of our economic engine since the Great Depression," he said. "Given the fact that our economies are much more linked globally than ever before, these disruptions are not isolated to a country or even a region. The need to coordinate a recovery plan amongst many countries with different political, cultural and economic priorities is real, but in practice extremely challenging."

Much concern

In a letter to APEC 2002 chair Mexican President Vincente Fox, ABAC members made it clear in no uncertain terms the depth of their concern. The letter, drafted after ABAC's last meeting held in Hong Kong in August, stated that "the central challenge facing APEC economies today is the prospect of a precipitous decline in the global economy".

"Our main concern is that actions taken in difficult times should not exacerbate the problem by stepping back form the vision of free and open trade."

In these uncertain times, ABAC has urged APEC member economies to join together and tackle the problems they face as a cohesive global unit. Javier Prieto, ABAC chair for 2002, in his opening letter to President Fox as part of the 2002 ABAC report, has called for APEC to "band together to ensure a stable and prosperous future for all citizens".

"We must remain vigilant in the face of adversity, and APEC has a historic opportunity to lead the global community back onto the road of security, peace and prosperity," he said. "For these reasons, ABAC has chosen `Sharing Development to Reinforce Global Security' as its theme for 2002."

Push trade

Topping off the list of ABAC concerns is that no backwards steps should be taken in regards to free trade. ABAC members have called for Asia Pacific economies to embrace the concepts of free trade and globalisation to ensure greater benefits for all.

"Now is the time for APEC economies to reaffirm their commitments to the Bogor Goals and to undertake initiatives to secure desirable outcomes from the WTO negotiations at the earliest possible time," the report to APEC leaders stated. "These actions should continue to be balanced with a more focused capacity building program aimed at promoting the growth and the competitiveness of its developing member economies."

ABAC wants concrete action to take place on the trade front, and has nominated several key areas where government attention should be focused. "In our view, urgent action is required to free up access and eliminate export subsidies in agricultural products; free up access and reduce tariffs on tropical products; liberalise the services sectors; lower high tariffs on manufactured products including textiles and apparel; and eliminate the misuse of anti dumping actions and trade restrictive non-tariff measures," the report stated. "Priority must also be given to enhancing the capacity of members to negotiate effectively, implement WTO commitments, and lock in gains from liberalisation of trade and investment."

Restoring confidence

Responding to recent corporate scandals such as Enron and WorldCom, ABAC members have stated their concerns about the effect these scandals have had on global investor confidence. ABAC has urged APEC economies to improve corporate governance as a key step towards restoring confidence and stimulating economic recovery.

"(ABAC must) take urgent action to restore investor confidence by measures to improve corporate governance standards and practices in member economies and to promote the transparency of policies affecting trade and investment," the report says.

"In particular, APEC economies should move to adopt one set of internationally accepted accounting standards, implement measures to promote the highest standards of ethical corporate behaviour, audit independence, and transparency and fairness in reporting."

Taking steps against the global threat of terrorism is another important move to restore investor confidence.

"Terrorism has effects that go beyond the political arena and impact directly on the entire business environment. It stifles and erodes business confidence," the report said.

"The APEC community must join forces to enhance security, curtail terrorist financing and develop effective management processes to resist, respond and recover from crises."