Asia-Pacific Economic Cooperation (APEC) can adapt to complex trading environments since the organization is a purely voluntary and flexible pact, said executive director Alan Bollard in a recent interview with Xinhua.
APEC, with less than half of the world's population, accounts for more than half of the world's GDP, the economist noted ahead of the organization's next summit to be held shortly in Da Nang, Vietnam.
Grouping 21 different economies together and joining them up around the Pacific rim, APEC has advantages over some legally binding institutional arrangements. If they disagree on something, then a pathfinder group of economies can try to work things out, noted the executive director.
By bringing together the world's top two economies, namely the United States and China, and some other much smaller ones, APEC can take advantage of what different economies can do best, he said, pointing out the fact that the bloc has helped drive economic growth and improve living standards in the region.
According to Bollard, while all 21 members have demonstrated leadership in one way or another, China has shown strong leadership in APEC on a whole range of initiatives.
China outlined a connectivity blueprint for APEC when hosting a summit in 2014. Moreover, Beijing has made good progress on avoiding the middle-income trap, expanding domestic demand as a growth driver as well as on developing a green economy and supply-chain development.
Bollard said that APEC is highly interested in the China-proposed Belt & Road Initiative, which in his words is about investment in projects and development of infrastructure and would play a role in enhancing connectivity in the region.
Connectivity is one of the four priorities Vietnam has outlined for the upcoming APEC summit on food security and climate change.
"We need to be very careful about any effects of big climatic events, given the fact the majority of APEC population live very close to the coastal and river deltas and very subject to climatic changes," said Bollard.
Moreover, there's a lot of food waste due to inadequate transport or storage facilities, and poor connectivity.
Concerning priority topics involving modernizing small and medium-sized enterprises (SMEs) through the digital economy, the executive director noted that China and the United States have set examples in that direction, with China now leading in mobile-based e-commerce and the United States on laptop-based e-commerce.
"Most of our businesses are small businesses. Most of them cannot get into the international or regional economic growth drivers at all, but e-commerce opens this up," he said, stressing that revitalizing SMEs through e-commerce has got the potential to "help develop a revolution in APEC."
In addition, many supply chains are now making it possible to guarantee quality, finance, payments and market access for small businesses, he said.
Acknowledging that too many different initiatives are underway for the time being, the so-called Spaghetti Bowl effect -- in which free trade agreements take precedence over global, multilateral rules of trade -- would be there for some time, but APEC would like to see "some improved recipes for cooking the noodles."
He expects to see work continue in the forthcoming summit on identifying the bottlenecks around potential realization of a Free Trade Area of the Asia-Pacific.
As for the Bogor Goals, set in Indonesia in 1994 to achieve free and open trade amongst developed economies by 2010 and developing economies by 2020, he admitted that advancements have been good in some areas and slower in others.
While 2020 is fast approaching, Bollard said APEC would decide whether or not to work toward achieving the Bogor Goals after 2020 or look for a new direction.
