Why Apec still pays

How much can really be achieved if businesspeople are sitting at home in their trackpants talking past each other over Zoom?

If you want to know what facilitating an Apec meeting is like, picture an anvil with multiple sledgehammers smacking away at it. The anvil is New Zealand; the sledgehammers are the other economies of the Asia-Pacific region.

That was how New Zealand diplomat Vangelis Vitalis, who chairs the Apec senior officials’ meeting, described it at an Apec event earlier this year.

‘‘Two very large sledgehammers are making for a very challenging environment at the moment,’’ he told the audience. Vitalis didn’t have to name those two sledgehammers for everyone to know who they were.

Apec is colloquially known as ‘‘a perfect excuse for a conversation’’, mainly because of how non-binding every document and decision that comes out of it is, but in recent years even a casual conversation has proven difficult to achieve.

At the end of every Apec summit the gathered economies collectively issue a bland statement on behalf of everyone.

The statement usually doesn’t demand much of anybody, but in 2018 the United States and China couldn’t agree on what set of words should be used, with each reportedly ripping apart the suggested paragraphs of the other. For the first time, Apec didn’t issue a communique.

A year later, 2019, the whole thing had to be called off in the face of unrelated mass protests in Chile. The run of bad luck continued last year with Covid-19 forcing everybody to meet via Zoom.

So, think about all of that before you cast too many snide judgments on how Apec is going.

As Apec Business Advisory Council (ABAC) executive director Stephen Jacobi notes: ‘‘It is a major achievement that it [Apec] hasn’t gone off the rails completely, and that is to the very great credit of New Zealand.’’

Of course there are plenty of critics of setting such a low bar for what should come out of Apec. Murat Ungor, a senior lecturer in international trade at the University of Otago, says there are plenty of forums for international conversations now, so you don’t really need this one unless it is going to produce gains in trade.

He says we don’t really need to pay too much attention to it, especially as we aren’t hosting it in person. The major benefit of hosting Apec is that you can attract foreign direct investment into your country by bringing some of the region’s top businesspeople physically in for a visit.

Ungor argues it is less beneficial for the country if businesspeople are just sitting at home in their trackpants talking past each other for extended periods of time over stuttering Zoom connections.

‘‘Many member countries already belong to several bilateral or other trade agreements. Do we really need Apec for the next future generations?

‘‘I’m not that convinced, because countries always have different bilateral and other trade agreements, so Apec is just another platform. It can be a healthy way of [maintaining] diplomatic relations, trade and economic or political relations across member countries in the region, but

I think there is no reason to attach a particular importance [to it].’’

As it happens, this year is a pivotal one for Apec. In 1994, the organisation agreed on a set of goals (called the ‘‘Bogor goals’’) for its member economies to achieve by 2020.

Unfortunately the Bogor goals were so broad that it was unclear whether they had or had not been achieved by the time 2020 rolled around. Bogor’s overarching goal was to achieve free trade and investment in Asia by 2020. Clearly, free trade has not been achieved across Asia, but equally clearly there is a lot of free trade and investment going on.

Predictably, Apec declared significant progress had been achieved and moved on to

setting another slightly more specific dream for the next 20 years, the Putrajaya Vision 2040.

The vision is divided into three categories: trade and investment (which includes work towards an Asia-Pacific Free Trade Area); innovation and digitisation (including strengthening consumer and business trust in digital transactions); and sustainable and inclusive growth (making sure the region is resilient, and economic growth that includes women and minority groups).

This year the rubber meets the road on these goals and New Zealand, as host, is leading the charge to create an action plan for how exactly they might be achieved.

A conference robbed of the energy of face-to-face meetings and plagued by mounting geopolitical tensions, not to mention the non-binding nature of Apec, is a recipe for this action plan turning into an indecipherable word salad immeasurable against any metric.

Jacobi insists this is not the case and the draft plan, which is expected to be signed off by leaders next week, is nowhere near as vague or hopeless as you might think.

He bravely suggests it might even be the opposite: ‘‘I think New Zealand has brought a lot of rigour to this process, and those who have been associated with it have been working very hard.

‘‘I say that even though, from business and the perspective of ABAC, we’ve been pushing them to do more. They are certainly delivering a very credible plan.’’

Jacobi says some parts of the action

plan will need to be implemented across Apec as a whole, while others are for specific economies to do. ‘‘This is a step up in planning. It’s much more rigorous than what we did in the past.’’

In normal times Apec involves a jamboree of meetings. There are two annual meetings for trade ministers and four substantive senior officials’ meetings during the year, and feeding into these are hundreds of working-group meetings of officials at different levels. Then there are two annual meetings for trade ministers. It all builds up to the final leaders’ summit, which is being held in Auckland this week.

Charles Finny, a former Ministry of Foreign Affairs and Trade official, gives full credit to our diplomatic corps for how they have coordinated these virtual meetings.

A lot of the digital tech is being operated from the top floors of Wellington’s

Majestic Centre.

Yet you can’t go past the likelihood that hosting Apec virtually has killed a lot of the informal meetings that would have otherwise happened on the sidelines. The sidelines are often where the most important ideas are hatched.

‘‘A lot of New Zealand’s free trade agreements are the result of those informal discussions between delegates and delegations that are happening outside of the actual plenary room,’’ Finny says. ‘‘And we’ve benefited enormously from that. Can’t see how that would work in the current setting.’’

Still, he will be watching what comes out of the leaders’ summit for indications of which direction economies hope to move in within a couple of areas.

The first is the area of fisheries. Apec economies catch more than half of the world’s fish, and fish stocks are more depleted than they were 20 years ago. Since 2008 there has been a 15 per cent increase in the percentage of catch within Apec exclusive economic zones that has come from overexploited fish stocks. The second is the World Trade Organisation appellate process where international trade disputes are normally settled. The Trump Administration effectively neutered this body in 2019 by refusing to appoint new members to it. ABAC chairwoman Rachel Taulelei says that was a big point of agreement among many of ABAC’s members, and it forms part of their recommendation to Apec leaders. ‘‘Everyone around that table agreed that we all value the ability to move about the world in a rules-based trading environment. We all wholeheartedly agreed that the WTO needed to be returned to its former strength, that the appellate process needed to be restored.’’

This is the first time Taulelei, a former chief executive of food and beverage exporter Kono, has been involved in something like this, and she confidently says there is nothing else quite like ABAC. Any recommendations put forward by ABAC have to be agreed to by business representatives from all 21 economies. (Note the use of the word ‘‘economies’’, rather than countries – this phrase allows both Taiwan and Hong Kong SAR to be separately represented at a forum where China also sits.)

‘‘There is a lot of talking, and that takes some getting used to from a business standpoint,’’ Taulelei says.

‘‘Most people who are in business have a strong bias towards action, and so when you enter this forum you have to temper your pace a little but not your ambition. The conversation is a way to reach consensus; it’s the way to ensure that you all move at a similar pace, that you all have agreed outcomes.’’ Apec’s non-binding nature is often seen as a weakness, but it can also be a strength. It is easier to agree to an idea being put forward when there is no pressure to implement it. This is why Apec has gained its reputation as an incubator for great ideas that come out in other trade agreements.

What starts off as an idea can turn into a concrete pledge over years and years of conversations. Take a onceminor pledge to cut tariffs on environmental goods in 2012. It is now being hotly watched by people like Ungor who want it to be expanded further to make it cheaper for countries to meet their greenhouse gas emission goals.

At Apec, it is often not the big pledges that are worth paying attention to – it’s the conversation.