CTI: Launch of APEC Supply Chain Connectivity Initiative

Mary Elizabeth Chelliah APEC CTI Chair 6 th APEC Transport Ministerial Meeting Industry Symposium Manila 27 April 2009

Establishment of the CTI

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In Seattle in 1993 Ministers adopted the Ministerial Declaration on an Asia Pacific Economic Cooperation Trade and Investment Framework which established the

Committee on Trade and Investment (CTI) In that declaration two key objectives were entrusted to the CTI i.e.

1.

Create a coherent APEC perspective and voice on global trade and investment issues and increase cooperation among Members on key issues. 2.

Pursue opportunities to liberalize and expand trade, facilitate a more open environment for investment and develop initiatives to improve the flow of goods, services, capital and technology within the region; consult on issues of importance in that context and develop consensus to expand and strengthen these flows within the region and globally, and to reduce and remove distortions which impede these flows in a manner consistent with applicable GATT principles .

Work of the CTI

Pursuant to that Declaration the CTI was instructed to look into the following : a) policy issues related to the evolving interrelationship of the APEC economies within the global economic environment; b) impediments and distortions which affect the movement of goods, services, investment and technology in the APEC region; c) reduction of transaction costs which affect the flow of trade and investment in the region; d) trade and investment policy issues evolving from the work of individual APEC Working Groups and activities; e) ways to enhance the contribution of the APEC business sector in evolution of trade policies, identification of barriers to trade within the region and possible solutions of mutual benefit to the region.

Work of the CTI

Since then, trade and investment liberalization and facilitation have become the cornerstones of APEC's identity and activities, and the Committee on Trade and Investment (CTI) is the coordinating body for all of APEC's work in these areas

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To do so the CTI currently oversees: nine sub-groups i.e. Business Mobility Group, Electronic Commerce Steering Group, Government Procurement Experts' Group, Group on Services, Intellectual Property Experts Group, Investment Experts Group, Market Access Group, Sub Committee on Customs Procedures, Sub-Committee on Standards Conformance; and three industry dialogues - Automotive Dialogue, Chemical Dialogue and Life Sciences Innovation Forum.

CTI and Trade Facilitation

• Cognisant of the dual mandate to remove the impediments and distortions which affect the movement of goods, services, investment and technology in the APEC region and to reduce transaction costs which affect the flow of trade and investment in the region CTI launched the first

Trade Facilitation Action Plan

in 2001

CTI and Trade Facilitation

• The Trade Facilitation Action Plan was part of the Shanghai Accord that Leader’s adopted in 2001 in which Leaders instructed Ministers to identify, by Ministerial Meeting in 2002, concrete actions and measures to implement the APEC Trade Facilitation Principles by 2006 in close partnership with the private sector. The

objective was to realize a significant reduction in the transaction costs by endeavoring to reduce them by 5% across the APEC region over the next 5 years.

From Trade Facilitation to Trade Logistics

Trade Facilitation Action Plan of 2001 was followed by a second Trade Facilitation Action plan adopted by Ministers in 2007 with the objective for a further reduction of 5% in reduction cost Majority of initiatives under both Action Plans confined to border issues eg customs facilitation, APEC travel card and facilitating the movement of goods via adoption of harmonized standards and MRAs Missing was facilitating the actual movement of the goods to and from the border i.e. issues of logistics

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Enhancing Cooperation in Trade Logistics

In 2008 CTI began to look into the

Importance of Trade Logistics in today’s globalised world

in the context of APEC’s REI agenda Acknowledged Impact of supply chain connectivity •

Need for logistics to keep up with growth in trade Reduction of cost and improving quality of logistics and transport systems improves international market access and leads directly to increased trade

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Trade and Logistics nexus often overlooked !

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Enhancing Cooperation among APEC economies

Need to determine what exactly was Trade Logistics

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Scope - Is it just a GATS issue ?

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Domestic logistics issues vs international logistics requirements

– Other possible players i.e. role of • E-commerce • Trade Facilitation/Customs initiatives • Transparency • Finance • Transit issues

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Explored Enhancing Cooperation In Trade Logistics

How essential is Cooperation in taking forward logistics in APEC

– The process of working or acting together which can be accomplished by both international and non international agents. In its simplest form it involves things working in harmony, side by side…. Alternative to working separately in competition.

– Yet it is the desire to compete with others that results in the common impetus that motivates individuals to organize into a group and cooperate with each other in order to form a stronger competitive force.

Enhancing Cooperation among APEC economies

• 4 main conditions for cooperation to develop – Overlap in desires – Chance of future encounters with the same entity – Memory of past encounters – Value associated with future outcomes • Do these exists within APEC ?

Enhancing Cooperation among APEC economies

YES

• Common desire for regional economic integration • Growing trade and economic linkages amongst the 21 APEC economies raises importance of trade logistics for the APEC economies • Almost 20 years of cooperation to fall back on

But ….

• Would greater collaboration and cooperation amongst APEC economies on trade logistics can result in benefits for all • Would some economies still prefer to “go their own way…”

Enhancing Cooperation among APEC economies

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Examples of current forms of APEC cooperation

– Awareness raising via seminars, workshops, presentation of best practices – Existing APEC initiatives for economies to tap on and evolve • E.g. Trade Facilitation Action Plan I and II • Implementation of APEC 8 Options for more competitive air services • Paperless trading to enhance border competitiveness

Enhancing Cooperation among APEC economies

Realized that more was needed ?

• Current trade logistics buzzword amongst business is supply chain

connectivity

– is APEC geared to meet this ?

– On GATS front – key elements are transport services, warehousing, distribution, information management – Efficiency in these areas can be enhanced through technical assistance and training but do they own their own promote connectivity ? – How important are linkages in today’s world of trade logistics- can we afford to let goods lie idle for long waiting for their delivery to the market ?

– Fast to market crucial for today’s business

Enhancing Cooperation among APEC economies

• In today’s business world, Logistic requirements are more onerous , business seek short transit times, reliable delivery schedules, careful handling of goods in cold storage chains, certification of product quality and security from theft • World Bank study in 2002 showed that APEC countries differed substantially in the quality of their logistics and trade facilitation across a broad range of measures, the differences were related to trade performance and concluded that substantial growth in trade within the APEC block could be accomplished by bringing lagging countries up to median performance levels.

Enhancing Cooperation among APEC economies

• APEC has limitations in addressing some of the impediments e.g. infrastructure but we can still take the first steps forward by enhancing existing initiatives i.e. – Internal coordination and awareness of all the initiatives that APEC has to offer as the first step of learning curve e.g. usage of RFID to minimize theft of goods – APEC to look towards ways in which capacity building can be geared towards reduce costs

implementation

of existing initiatives e.g. implementation of Single Window under TFAP 2 will boost time to delivery of goods,

Enhancing Cooperation among APEC economies

• What next ?

• Have our network of FTAs amongst APEC economies enhanced logistic supply chains – can APEC build upon this ?

• What can APEC do under the new mandate of Regional Economic Integration to enhance competitiveness of the whole logistics supply chain ?

• What do we need to do to ensure that logistics services are able to support increasing trade growth

Elements of Trade Logistics work

• To better understand the issues that had to be examined, at CTI 1 this year a Trade Policy Dialogue on Trade Logistics was held with the Economic Committee • Realized that problem not limited to traditional trade and investment related issues as impediment to efficient logistics flow also due to behind the border regulatory barriers • To be truly seamless need to address all the issues that relate to movement of a good from the time it leaves factory to time it reaches consumer

Launch of SCI

• As issues not limited to trade logistics per se identified initiative to be related to the who supply chain and resulted at end of CTI 1 with launch of APEC’s Supply Chain connectivity Initiative • Will cut across ALL APEC fora not just limited to CTI or the Economic committee – eg many elements of Transport working group are relevant to SCI

Elements of SCI

SCI to be carried out in 3 phases [MCP]

M

apping of all ongoing initiatives (a) within APEC family to avoid duplication (b) Taking place in other fora eg ASEAN Logistics roadmap, World Bank Performance Logistics Indicator etc Identify C hoke points that SCI should address as part of the SCI work plan

P

riorities the work plan into phases

SCI current state of play

• CTI and EC currently engaging in M apping exercise – work lead by CTI Friends of the Chair will submit work to CTI before CTI 2 meeting • Singapore and Australia holding joint SCI symposium on 16 -17 May in Singapore key objective of which is to help identify the choke points. Involved ABAC survey for this symposium

Next steps

• At CTI 2 to commence work on identifying key choke points impeding seamless flow of goods and services within APEC region • CTI 3 – work plan for phase 1 of SCI in addressing the key choke points identified • Suggested timeline is for work-plan/framework to be endorsed by AMM 09- envisage first phase of work to be completed by 2013

THANK YOU