WITH the arrival of 2018 fast approaching, comes renewed optimism for Asia-Pacific economies and their trade linkages that will determine the durability of the region’s growth turnaround.
The leaders of the world’s largest and most dynamic trading corridor, joined by Prime Minister Datuk Seri Najib Razak and newcomers, including United States President Donald Trump, provided an end-of-year boost during their annual Asia-Pacific Economic Cooperation leaders’ meeting in Danang, Vietnam.
Together, these 21 leaders took important steps toward aligning their ideas for making trade between Apec economies work better in the common pursuit of growth and job creation back home.
To this end, they agreed to better position people and businesses across the Asia-Pacific to navigate complex shifts in the regional and global landscapes, building on the half century of progress achieved through cooperation between Apec economies that is well-suited for today’s new realities.
For all the stakes, Apec, which Malaysia helped to found in 1989, has, over the years, lived up to its name as a cooperative forum for tough economic issues. It is enabled by its enduring focus on voluntary, non-legally binding policy prescriptions for easing trade bottlenecks, like tariffs, administrative red tape at borders and mismatching standards that raise costs for businesses and consumers.
So, where do things stand at the dawn of the new year? On the bright side, after three decades of proactive efforts by Apec economies to improve their connectivity and trade-driven growth, we have seen a billion people lifted out of poverty in places like China, Mexico, Thailand and Vietnam, and into the ranks of the middle class.
This breakthrough is translating into vast new market opportunities driven by surging demand for goods like cars, high-end cosmetics and meat, and, increasingly, services such as higher education, financial services, preventive healthcare, travel and tourism that reflect decidedly middle class lifestyles and tastes.
The potential to take advantage of these emerging growth drivers extends to workers,
businesses and a new generation of digitally empowered entrepreneurs in a newly industrialised economy such as Malaysia, Apec’s 2020 chair, and in advanced economies too, whether they are very large, like Japan and the US, relatively small, like New Zealand and Singapore, or somewhere in between, like Australia, Canada and South Korea.
These trends are today powering exports and a return to growth in the region, as reflected in the latest forecasts in Malaysia and around Apec, and the global economy along with it. Yet, challenges in the global trading environment and to the institutions that support it put this momentum at risk.
The swell of populist misgivings towards globalisation in some areas has brought genuine questions about the fairness of trade and who benefits from it into greater focus.
New, bigger and more sweeping trade agreements, such as the Trans-Pacific Partnership and Regional Comprehensive Economic Partnership, are the subject of correspondingly heavy scrutiny by proponents and detractors.
The rules of trade, as governed by the World Trade Organisation, intended to keep markets open and trade buoyant, are showing signs of stress over dispute resolutions and modernisation requirements.
The rapid pace of technological change has raised concerns about automation replacing workers, like those on assembly lines, at banks and airport check-in desks and behind the wheel. And e-commerce and big data have revised skills demand and the meaning of security in one fell swoop.
In an inextricably interconnected world, these are challenges that we all face. But, they are clearly proving hard for the trading landscape and the institutions around the world that underpin it to handle.
Apec’s leaders have positioned the region to lead the way forward in dealing with these issues, helped by the flexibility and room for innovation, say, in digitally driven trade, start-up promotion, and even adjustment schemes and safety nets, made possible by the loose cooperation between them and their economies. Inroads in such areas in 2018 would make a real difference for Malaysia and the region.
The writer is executive director of the Asia-Pacific Economic Cooperation (Apec) Secretariat