Message from the Co-Chairs of PECC
On behalf of the members of the Pacific Economic Cooperation Council (PECC), it is our pleasure to present our eleventh annual report of the State of the Region.
This year we have chosen to focus on services trade, which merits special attention given that the services sector contributes around 67 percent of the region’s GDP and employs about 65 percent of workers in the Asia-Pacific. While the overall regional economic performance is mediocre judging from the relatively slow growth in GDP and the historically slow trade growth, the services sector presents itself as one of bright spots for the Asia-Pacific with potential for further growth and opportunities. In Chapter 2, Dr. Sherry Stephenson outlines the rationale behind our collective efforts to push for services sector reforms. Tariffs, quotas and other trade barriers for goods have been greatly reduced over the years; however, we now need to shift our attention more to obstacles that contribute to behind-the-border barriers to trade and importantly, services trade.
Chapter 3 contains the results of our annual survey of the Asia- Pacific policy community. Views on the global economic outlook largely remain negative. However, the survey identifies key sectors that could drive growth in the future, and these are, in order of importance: digital trade including e-commerce and the Internetbased economy; information and communications; education; financial and insurance activities; and health. These are, not surprisingly, all services in nature. The results also indicate that while the policy community sees significant potential benefits from liberalization of the services sector, policy reforms required may be hampered by the lack of competitiveness of local firms.
For several years, progress on regional economic integration – in the form of Bogor Goals or the Free Trade Area of the Asia-Pacific (FTAAP) - has been the top issue for APEC Leaders to discuss at their annual meeting. This year was no exception. What was interesting to note however, was the importance attached to structural reforms and the anti-globalization sentiments. These are discussed further in Chapter 3. Of deep concern is the relatively pessimistic assessment of the political environment for freer trade in the region, especially among the region’s more advanced economies. While the net assessment remained positive, it challenges all of the policy community to better articulate the importance of free trade and globalization to the prosperity and stability of the entire Asia- Pacific community.
With the advent of digital technologies and sophistication of Internet-based tools for information sharing and financial transactions, it has become easier to set up and participate in international commerce, for both small and big players. Regardless of whether in urban or rural areas, as long as basic infrastructure is in place, it has become possible to start businesses with very little or no cost upfront. Pushing ahead in structural reforms in the services sector, addressing behind-the-border issues, and facilitating vocational and higher education in new skills are needed to empower individuals and companies to be able to harness these opportunities. We are seeing APEC’s work on regional trade integration being complemented by work to address gaps in connectivity, sustainability issues, and the digital economy. While there are undoubtedly challenges ahead, the future of the Asia- Pacific is one of potential – but the emphasis should be on quality and distribution of growth rather than just the pace.
We thank Mr. Eduardo Pedrosa for coordinating this year’s report and for providing the chapters on the macroeconomic outlook and the survey results. We are also deeply appreciative of chapters contributed by Dr. Sherry Stephenson that features the importance of services trade liberalization and to Dr. Chen Bo for his work on the regional integration index.
Don Campbell
Co-Chair
Tang Guoqiang
Co-Chair