10th GBDe Summit, 31 October, 2008, San Francisco, USA - Remarks by Ambassador Juan C. Capuñay

10th GBDe Summit
31 October, 2008
San Francisco, United States of America

 Remarks by Ambassador Juan C. Capuñay
Executive Director - APEC Secretariat, Singapore

I would like to extend my thanks to Takashi Enomoto, GBDe Overall Chair in 2008 and Senior Executive Vice President, NTT Data Corporation for his kind invitation to share with you some of the ways in which APEC is promoting e-commerce as a tool for trade and investment.

The nature and goals of APEC are economically motivated. A healthy economy leads naturally to the ability of governments to address social and other circumstances. This has defined the way that decisions are made and the way that actions toward that goal are carried out. You may have deduced that the private sector is critical to APEC - both as a source of information as well as the entity through which policy is translated into action.

This summit is an invaluable forum for industry to communicate its views on critical e-commerce-related issues through dialogue with organizations such as APEC. The concerns of the private sector are an unparalleled source of information to governments, and this topic is connected to the implementation of almost every activity as online and electronic transaction becomes a normative way of life.

Ultimately, the private community plays a significant role in shaping the development of practical policy solutions. And this enables the region as a whole to deal with cross-border issues associated with the growth of electronic commerce.

Founded in 1989, APEC was established as a means to promote sustainable economic growth through trade and investment liberalization and facilitation throughout the Asia-Pacific region.

Faithful to its original goal, APEC has experienced tremendous gains since its formation. It now includes 21 members and is home to both developed and developing economies in the Americas and Asia. Members account for half of world trade, 41 percent of world population and 55 percent of world GDP.

Its achievements have been remarkable and have been driven mostly by market forces. From 1994-2004, 195 million new jobs were created in the region including 174 million in lower-income economies, leading to the reduction of poverty by one third. The cost of business transactions has been reduced by 5 percent, which has contributed to an increase in exports by 113 percent and foreign direct investment by 210 percent.

This is not to say that the road has been smooth. The 1997 financial crisis left an indelible mark on businesses and individuals alike. Nonetheless, in retrospect, it might be observed as a time of restructuring, adapting to a new reality.

Over the long-term, APEC grew stronger and more dynamic. Its purchasing power parity tripled. It's GDP has exceeded the global average. Trade with the rest of the world has risen from US$ 3 trillion to over US$ 13 trillion in 2006; exports from US$1.5 trillion to US$ 6.5 trillion and tariffs decreased by an average of 11 percent. Intra-APEC merchandise trade has more than doubled and 15 of APEC's 21 members rank among the top 40 exporting nations.

It seems that, again, the world is at a critical juncture. The world's financial system continues to be influenced by recent dramatic fluctuations in world stock markets as a result of the failure of what was once thought to be indestructible financial institutions. Combine this with the instability of what was traditionally a stable currency; the consequences of climate change which can be seen throughout the world; the impact on the energy market by the dramatic increase in the price of oil; upcoming elections in the region that could have a significant impact on future political dynamics; and the break down of the Doha negotiations and we have a perilous economic situation that puts our international economic system and social stability in a very volatile situation.

Similarly to 1997, uncertain conditions might be leveraged as an opportunity for positive change. Indeed, one of the most notable developments is the increasing interdependence among world economies. In this respect, APEC is uniquely positioned to respond to challenges, drawing from a range of social, economic and historical contexts.

APEC has observed the ability of electronic commerce to facilitate trade, expand business opportunities, reduce costs, increase efficiency and facilitate the greater participation of small business in global commerce. And each of these contributes to APEC's Bogor Goals of free and open trade. To that end, APEC has implemented a number of e-commerce initiatives.

One of the first formal programs was the establishment of APEC's Electronic Commerce Steering Group (ECSG), which has been instrumental in the transition to paperless offices and has establishing a basic code of conduct to ensure data privacy.

APEC economies have been working toward a Cross-Border Paperless Trading Environment to be fully implemented across the region by 2020. Many economies have established their own action plans, outlining the steps they will take to reduce or eliminate customs, cross-border trade administration and other documents relevant to international sea, air and land transport. As a means to prevent impediments to trade across APEC member economies, the APEC Privacy Framework promotes privacy protection and to encourage the uninhibited flow of information. These complementary achievements form an excellent example of how APEC is able to shape the cross-border trading environment. By enabling businesses to venture into new arenas while also establishing protective measures, business capacity is strengthened in a very practical sense.

The flow of information is an enabling factor only inasmuch as it is enabling and is not seen to be destructive. The success of e-commerce depends on the confidence of consumers; guidelines must be respected as a means to upholding ethics and dispelling fear.

As a way to build trust in e-commerce, economies have been assisted to implement APEC's voluntary Consumer Protection Guidelines for the Online Environment. These address international cooperation, education and awareness, private sector leadership, on-line advertising and marketing, and the resolution of consumer disputes.

Similarly, the APEC Cyber Security Strategy includes a package of measures to protect business and consumers from cyber crime, and to strengthen consumer trust in the use of e-commerce.

Recent initiatives adopted to promote consumer trust and business confidence in cross border data flows includes the APEC Privacy Framework and the APEC Data Pathfinder and its work plan which was launched this year. Ultimately, the Pathfinder will reduce compliance costs, provide consumers with effective remedies, allow regulators to operate efficiently, and minimize regulatory burdens.

In addition to these very targeted projects and goals, APEC encourages the public sector to form partnerships with the private sector. In fact, it has been through collaboration with the private sector that APEC goals have been most effectively achieved. The private sector stimulates competition, encourages innovation and directs the evolution of new technology.

In 2000, Leaders committed to enable the people of urban, provincial and rural communities in every economy to have individual or community-based access to information and services offered via the Internet by 2010. Putting their words into deed, APEC adopted the e-APEC Strategy, outlining the transformation of the digital divide into a digital dividend.

By 2005, internet use had reached over 44 percent in some APEC economies and Leaders recognised the evolution of a knowledge-based economy as an unparalleled opportunity to minimize disparity among developed and developing economies. With a view to liberalization across the APEC region, the Telecommunications and Information (TEL) Working Group adopted Effective Compliance Enforcement Principals. At the same time, APEC economies implemented the Mutual Recognition Agreement on Conformity Assessment, facilitating the free flow of telecommunications equipment within the region. Collaboration with the private sector might be considered a fundamental contributing factor in the proliferation of internet access.

To date, Internet rates throughout the region have tripled since Leaders first asserted their goal. Building on this success, the goal post has changed and Leaders expect to have achieved universal access to broadband by 2015.

Not only are new technologies fundamental to economic progress, they can serve as an entry point for small and medium size business owners to penetrate the global market place. This is the challenge to which all APEC economies must rise in shaping 21st century society, and enabling individuals to benefit from the new opportunities available to them.

This is a most exciting time in terms of global change; and through technological developments, many doors are newly opened. One striking example is that of small and medium enterprises. In the APEC region, SMEs account for over 90 percent of all businesses and employ as much as 60 percent of the work force. SMEs are of critical importance to APEC: employment opportunities lead to community stability. The freedom of small businesses stimulates innovation and competition and their flexibility allows them to quickly accommodate market demands. Moreover, stable, confident communities facilitate the flow of capital and contribute to a healthy macro-economic environment. In fact, encouraging the entry of smaller players into the global market is a precursor to long-term sustainable development.

Nonetheless, SMEs presently account for only 30 - 35 percent of exports. The fact is incongruous. But it points to the fact that there exist many potential gains to be had once smaller businesses are enabled to enter into the global marketplace.

APEC has asserted to fulfill this need through various forms of capacity building. One of the most important of these is the ADOC.

The APEC Digital Opportunity Centre Programme was established in 2004, as a way to help marginalised groups to navigate the internet and thereby expand their realm of opportunities. More specifically, the centres allow students to "think big" and transcend perceived border boundaries. Technology may well have once been a comparative advantage. But in the context of globalization, technology is a competitive advantage among 21st century citizens. Today, there are a total of 27 learning centres across Chile, Peru, Viet Nam, the Republic of Indonesia, the Philippines, Papua New Guinea and Thailand.

These sorts of initiatives are complimented by protective measures - ethical and protective standards that are shared by APEC economies. In fact, for APEC, the knowledge-based economy has served as a catalyst, demanding a commitment to streamlining and refining the measures already in place.

Technology is not the only defining factor in the precarious and transformative times we are currently experiencing. At the same time, challenges do not necessarily lead to failure and, conversely, no great achievement is made without first addressing a challenge.

In spite of the infamous Asian financial crisis in 1997 and 98 and in spite of blows including the Asian tsunami, the Bali Bombings, SARS and bird flu, APEC's per capita GDP growth has exceeded the world average; purchasing power has tripled since its inception in 1989; exports have more than quadrupled and trade with the rest of the world ahs increased by an average of 8 percent per year.

APEC's success has largely been attributed to good policy-making. Indeed, affecting policy is APEC's core function. However, policy is only effective to the extent that it is put into practice. And this extends far beyond parliamentary walls.

Governments are able to construct frameworks, but successful actions demand multilateral efforts. Only through the mutual efforts of government, the private sector, international financial institutions and civil society does sustainable development become a reality.

As APEC asserts to influence governmental and regulatory bodies, it is the actions taken by the private sector which ultimately determine their outcome.

For many, the road ahead is daunting. But we believe that with the right partners and the right tools, the opportunities and challenges inherent in the new digital reality will serve as springboards for innovation, creativity and competition. Connectivity means that there are no limits. Connectivity is a very real form of liberalisation and this, we believe, is the precursor to economic stability and indeed to prosperity.