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APEC ECONOMIC COMMITTEEFIRST PLENARY MEETING FOR 2011

5-6 March 2011

Washington DC, United States

CHAIR’S SUMMARY REPORT

The APEC Economic Committee (EC) held its first plenary meeting for 2011 on 5-6 March 2011 in Washington DC, United States. The meeting was chaired by Dr Takashi Omori of Japan, and attended by 20 APEC member economies (Australia; Brunei Darussalam; Canada; Chile; the People’s Republic of China; Hong Kong, China; Indonesia; Japan; the Republic of Korea; Malaysia; Mexico; New Zealand; Peru; the Philippines; the Russian Federation; Singapore; Chinese Taipei; Thailand; the United States of America; and Viet Nam). Papua New Guinea was not represented.

1. The APEC Senior Official from the United States (US), Chair of the Committee on Trade and Investment (CTI), Convener of the Competition Policy and Law Group (CPLG), the Senior Finance Officials’ Meeting (SFOM) Chair, Director of the APEC Policy Support Unit (PSU), the Lead Shepherd of the Human Resource Development Working Group (HRDWG) and a representative from the APEC Business Advisory Council (ABAC) attended various parts of the EC meeting to provide briefings. Other attendees included the APEC Secretariat Executive Director and the Secretary-General of the Pacific Economic Cooperation Council (PECC).

2. The EC plenary meeting was preceded by a number of EC-related activities, including two Workshops on “Advancing Good Corporate Governance by Promoting Utilisation of the OECD Principles of Corporate Governance”, which was held on 2 March 2011 and “Using Regulatory Impact Analysis to Improve Transparency and Effectiveness in the Rulemaking Process” held on 3-4 March 2011. Three Friends of the Chair groups (FotCs) meetings were held concurrently prior to the EC Plenary on the morning of 5 March 2011 (i.e. the FotCs on Competition Policy, Ease of Doing Business and Corporate Governance and Law).

Chair’s Opening Remarks and Introductions

3. EC Chair opened the first plenary meeting for the year and welcomed new FotC Coordinators and contributions by members in the meeting. EC Chair outlined the four proposed key objectives for the meeting, namely:

Review the updated FotC work plans and consider prospective activities thereof; Discuss what the EC can contribute to APEC’s 2011 priorities including ANSSR; Discuss how to measure progress on EoDB through the end of 2011; and Endorse the composition and publication schedule of the AEPR 2011 and discuss the themes

of the AEPR 2012 and beyond.

4. EC Chair thanked the FotC Coordinators and the CPLG Convenor for their excellent preparation for EC1. EC Chair then welcomed Ambassador Muhamad Noor, Executive Director of APEC Secretariat, to the EC1 meeting. In his remarks, Ambassador Muhamad Noor mentioned briefly three points:

In anticipation of the presentation by the US SOM on 2011 priorities, members should take the message from the SOM Chair’s office in the context of trying to ensure alignment between what was being done in various levels of APEC (Leaders, Senior Officials, Committees, subfora) so as to ensure effective outcome for 2011;

The APEC Secretariat was working hard to improve the project management processes as key implementation of decisions and key overall effectiveness of APEC; and

Efforts to improve and professionalise the Secretariat including the work related to project management was on-going in line with the APEC Secretariat 3 Year Strategic Plan tabled in 2010.

5. The US as the host for APEC 2011 welcomed APEC delegates to Washington DC and the first Senior Officials Meeting (SOM) for 2011. The US looked forward to accomplishing this year’s priorities and appreciated efforts of the Secretariat in preparing for the meeting.

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Adoption of the Agenda

6. The EC1 agenda (document no. 2011/SOM1/EC/001) was adopted, with agenda item 3, Remarks by US SOM, moved to Day 2 of the meeting.

SOM Chairs’ Remarks

7. US SOM (Mr Kurt Tong) welcomed members on behalf of the SOM Chair (Mr Michael Froman) and the US team. He noted the importance of the US hosting APEC this year. .

8. US SOM noted that 2010 was a good year with important accomplishments in Yokohama, in particular the outlining of the vision for the future of APEC and the Growth Strategy, which called for economies to work not only to address traditional trade and investment issues but also to make a seamless regional economy by closely cooperating in a more holistic fashion. US SOM added EC had impact on both of the 2010 accomplishments, especially in light of inclusive and balanced growth, which would feed into the framework of the ANSSR.

9. US SOM expressed that APEC 2011 was to show APEC could get stuff done and briefed EC on the three priorities for the year: i) strengthening regional economic integration and expanding trade; ii) promoting green growth; and iii) advancing regulatory cooperation and convergence. EC would play an important role, especially in the ANSSR and the regulatory cooperation and convergence theme. US SOM explained that the best way to approach work in the regulatory area was through addressing how economies could cooperate to achieve seamless regional economies. Noting the differences between economies, members should work together to resolve trade issues as well as future regulatory issues. The strong agenda received enthusiastic backing by the US President and gained a ground for active discussion in APEC. US SOM also emphasised the result-orientation of the themes and the need for / utility of greater cooperation between public and private sectors going forward. As such, EC was looked upon to closely collaborate with the Senior Officials’ process and provide intellectual support for that exercise to make it effective.

10. A number of economies including, Canada, Hong Kong, China and Russia sought clarifications from the US SOM on the role of EC with regards to the APEC Leaders’ Growth Strategy, in particular the relevance of EC’s work to green growth, collaboration within APEC in the growth areas, as well as the link between competition policy and liberalisation of trade. Regarding green growth, the HRDWG Lead Shepherd also noted that key elements could be through the advancement of human resource development and knowledge based economies.

11. In responding to the various queries and comments by members, the US SOM made the following points:

The SOM FotC on Green Growth would be looking at the process to push forward these activities relating to green growth. Even though the work on green growth did not directly fall under EC, EC members should also be aware of some of the work being undertaken on inefficient fossil fuel subsidies that encourage wasteful consumption. EC Chair was expected to participate in the SOM FotC on Green Growth, which could discuss what EC might possibly do to support the work in this area.

A number of green growth activities were taking place, not just in APEC, but in organisations such as the OECD, in 2011. From SOM Chair’s Office perspective, APEC could add value on specific things for which economies in the region could push forward actions rather than extensive deliberations and debate.

It could be a challenge to organise a range of activities in practical ways in line with desirable paths for growth in the region. Due to the difference among economies in terms of development status, it was particularly important that all economies saw these aspects as very crucial. Senior Officials would be discussing this in the SCE-COW policy dialogue on Growth Strategy, focusing on inclusive and sustainable growth.

Work on competition policy was important and EC and CPLG were expected to continue discussion on this element.

APEC New Strategy for Structural Reform (ANSSR) and APEC 2011 Priorities

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12. EC Chair outlined the discussion on ANSSR and APEC 2011 Priorities, which included discussion on how to implement ANSSR in EC’s activities and where EC could contribute in wider ANSSR framework. Short discussion papers on ANSSR to be used at the coming SOM ANSSR FotC had been distributed a few days prior to the meeting by the US, which served as another input to the discussion on the topic.

13. EC Chair’s Assistant (Mr Tadashi Yokoyama) briefed the meeting on the Chair’s paper (document no. 2011/SOM1/EC/004). Mr Yokoyama elaborated that the paper was prepared to present some issues for discussion on how EC could contribute to the ANSSR agenda towards 2015. At EC, the discussion was divided into two parts; the first was on how to implement ANSSR in EC’s activities with the horizontal approach in its five reformulated work streams succeeding the LAISR priorities. The second part was on EC’s contribution to the wider ANSSR framework. Under the ANSSR, each economy was expected to make its own plan setting forth priorities for structural reform in relevant areas as well as objectives, policies and approaches to measure progress toward the objectives by 2015. SOM took the primary responsibility of this process with cooperation from all relevant fora, including EC. Discussion points prescribed in the paper had been prepared based on the information available at the time.

14. The US was invited to lead the discussion and presented the basic outline of the ANSSR (document no. 2011/SOM1/EC/034). Acknowledging that EC had a rich history of promoting structural reform, the US noted that the goal of reform was to contribute to better efficiency of markets in accordance with Leaders’ call for all economies to raise the bar in efforts for achieving strong, sustainable, and balanced growth. The US outlined three key elements of the ANSSR: i) identifying priorities and setting forth plans; ii) encouraging reform; and iii) providing capacity building support. A series of events to help economies prepare their plans was presented, in which the US encouraged participation from economies, particularly developing members. Activities being planned included:

The SOM FotC on ANSSR. The first meeting was to be held on 10 March, which would discuss how member economies could build ANSSR plans, including capacity-building activities engaging relevant fora and subfora, identifying potential elements of ANSSR plans, and seeking early movers to develop draft plans by SOM3 to serve as examples to others;

A symposium on ANSSR was planned to be held during SOM2 in Big Sky, Montana. The introductory symposium would promote discussion on ANSSR priorities and implementation among Senior Officials and structural reform practitioners. The US acknowledged Australia for contributing significantly to the work;

A residential training course scheduled to be held in August in Singapore, which was also an Australian-led initiative; and

A workshop on approaches to assess the progress of structural reform work which was expected to be held in September in the margins of SOM3 meeting in San Francisco, US.

Other preliminary ideas being discussed included: Making use of practical tools developed by EC through a web-based toolkit which could make

these references readily available for economies to access. EC had compiled a lot of documents and tools, such as AEPR 2006 on structural reform, PSU’s 2009 Handbook for Voluntary Reviews of Institutional Frameworks and Processes for Structural Reform and others;

Identifying a consistent approach to present plans, including consideration of utility in developing common elements of ANSSR plans across economies. Even though the forms and mechanism are up to economies, it would be helpful to provide some structure in terms of reporting the overall process to facilitate compilation; and

Developing a survey to help economies identify structural reform priorities under ANSSR, which might be of interest for the Policy Support Unit (PSU) to work on, based on the voluntary review mechanisms available.

15. The US concluded by reiterating the anticipation of a strong role for EC in the ANSSR agenda and calling for work to be taken forward for 2011 and beyond, and hoped that members would participate strongly, including submissions of possible project proposals for funding through EC.

16. Australia outlined its contribution and progress relating to the ANSSR initiative. It welcomed Leaders’ endorsement of ANSSR in Yokohama and believed that greater focus by APEC on structural reform was vital to sustain regional prosperity. As announced by Australian Prime Minister in November last year, Australia would be contributing AUD 3 million on the structural reform initiative

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focusing on activities to be undertaken by economies to boost productivity and growth, which would support the implementation of ANSSR. The main component of the initiative called the “Australia-APEC Partnership for Economic Reform Fund”, which made AUD 2.5 million available over 3 years, was for economies to identify their priorities and design appropriate measures to address and implement the priorities. The other component was the series of symposium, training course and workshop that Australia was going to develop as indicated by the US in its lead presentation. These activities would support economies in preparing their structural reform plans under ANSSR as well as assisting developing economies to draft proposals applying for the fund. Details on the fund were being worked out, and it was expected that the fund be managed by the APEC Secretariat.

17. EC Chair thanked Australia for its contribution and brief outline of the activities. EC Chair suggested the following ideas on the exercise regarding ANSSR priorities and how EC could contribute:

Soon after an economy decides on priority areas, EC members were requested to inform relevant FotCs if those priority areas included EC-related issues (according to the US’s discussion paper, economies might express their priorities in advance of EC2);

If an economy was considering possibility of including EC issues in its priority areas, the economy was welcomed to inform EC through the relevant FotCs on a provisional basis, retaining the freedom to withdraw the notice later on. Such information would provide EC with an opportunity for further discussion on its contribution to ANSSR; and

Based on expressions of possible priorities from members, EC at its next EC2 Plenary would discuss how best EC could assist the efforts of economies over the coming years to realise the stated objectives.

18. EC Chair’s Assistant (Ms Akane Nagahisa) then briefed members on the naming of the post-LAISR structural reform activities to be undertaken after 2010, which had been proposed by EC Chair at EC2 in 2010. The result of the initial vote on the names nominated by members was presented in document no. 2011/SOM1/EC/005. On the naming exercise, EC Chair expressed hesitations on certain proposed names, in particular, “LAISR 2015”, as it might give an impression that EC’s work was not part of ANSSR, and explained that EC could give more consideration on the name selection prior to the second round of voting.

19. EC Chair then invited members to comment and give feedback on the following issues: How to implement ANSSR in EC activities; Where EC could contribute to the wider ANSSR framework and possible collaboration with

other fora; and The naming issue of the post-LAISR.

20. Indonesia stated peer learning was important and sought clarification on how to conduct peer learning and measure progress of the structural reform plans that were to be made on different priorities from economy to economy. Indonesia requested for guidance on this matter and was supportive of the outlined exercise suggested by EC Chair. It also pointed out a need for communication between the SOM FotC on ANSSR and EC, and anticipated that EC Chair’s participation at the SOM FotC would appropriately channel issues to be discussed and message from EC. EC Chair informed that he would be attending the SOM FotC on ANSSR and provide information to EC members on APEC-wide discussion and progress on ANSSR. Also responding to Indonesia’s questions and suggestions, the US commented that EC Chair’s attendance at the SOM FotC on ANSSR would provide an important link between SOM’s oversight on structural reform efforts and the work of EC. The US would brief Senior Officials on elements being discussed at EC1 in preparation for the ANSSR discussion. Referring to the peer learning, it indicated the possibility of enough common elements in structural reform measures, even if economies were attempting structural reform on different subject matters, there would be enough similarities to carry the work forward.

21. New Zealand ’s views on structural reform were categorised in two different contexts; work succeeding LAISR, which was more of horizontal issues and dealt with by EC’s FotCs; and work in the ANSSR context which was more specific areas of interests. New Zealand supported work in both areas, however, it noted that EC’s contribution mostly was continuing to develop its own framework and tools, and then taking the ANSSR issues to see how EC’s work fit to contribute to ANSSR. The challenge lay in understanding ANSSR and ways to contribute. It was also important for people doing ANSSR to understand what EC did; a challenge in the communication between the two areas of work.

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Regarding the naming exercise, New Zealand preferred option number 2 (i.e. ECRASR) as a more appropriate title for the exercise.

22. EC Chair noted that with regards to preparing a document to report on EC’s progress in structural reform activities each year; there was a general support from members on the suggestion. Australia and the US expressed their support to the idea of preparing a high level document for this work. The US also indicated usefulness of the information for EC’s own purpose and also for the SOM FotC on ANSSR.

23. On the question regarding EC’s activities, the US expressed that the intention was for ANSSR to provide a measure of stability across years on SOM priorities. Regarding the discussion on how best to make use of existing tools, it indicated a preference for making them available on a website, such as the APEC Secretariat website. It also noted the importance of peer learning, peer reflection and sharing of information. The US would see how best to utilize the result.

24. EC Chair summarised the discussion on ANSSR agenda noting the following: General support for members on the preparation of a high level document by EC; Support on the three ideas as suggested by EC Chair with regards to the activities consistent

with ANSSR initiatives; On EC’s contribution, there was a proposal of a website presentation with minimal cost

involved. EC Chair would forward feedback to members after attending the SOM FotC meeting on ANSSR and provide further discussion points of what EC could undertake, bearing in mind the resource constraints.

On the naming issues, EC Chair noted the proposals by members and the need for extra time to consider a more concrete idea.

Decision/Action Point s EC supported the proposal to prepare a high level document every year on issues relating

to ANSSR implementation. EC broadly agreed to discuss at EC2 how best to assist economies to develop priorities, as

indicated in paragraph 18. EC agreed to hold the second voting for the name of EC’s post-LAISR activities, noting the

comments from economies on the first round outcome.

CPLG and “Friends of the Chair” (FotC) Work Plan s

25. The EC Chair invited the CPLG Convenor and FotC Coordinators to update members on respective work plans, including updates on their activities, progress and outcome of those activities.

Competition Policy and Law Group (CPLG)

26. CPLG Convenor (Mr Toru Aizeki of Japan Fair Trade Commission) presented to the meeting an update of the CPLG Work Plan (document no. 2011/SOM1/EC/008), highlighting four items in CPLG’s activities for 2011:

“APEC Training Course on Competition Policy in 2011” to be held in Malaysia in October. The training course would focus on “Effective Mechanism against Cartel Offences”;

Update on the website of “Competition Policy and Law Database”. CPLG Convenor expressed appreciation to Chinese Taipei for managing the database which served as portal on information among APEC member economies regarding updates and recent developments in competition law and policy;

Members’ reports and updates on development of competition policy and law in the CPLG meeting, where each economy would make a presentation; and

Dialogue with the private sector including ABAC. The CPLG would hold the second roundtable discussion with ABAC during CPLG meeting on 7 March 2011, which would focus on the theme of Procedural Importance to Competition Proceedings.

CPLG Convenor also briefed members on the following projects proposed by Russia that had been submitted to BMC project approval Session 1:

Survey on Information Exchange on Competition in APEC region; Measures of Competition Development in APEC; and

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Analysis of Facilitating Competition and Countering Anticompetitive Practices in Seaports in the APEC Region.

The outcome of Session 1 would be announced after BMC meeting on 7 March.

27. CPLG Convenor sought members’ endorsement of the CPLG Work Plan and Collective Action Plan (document no. 2011/SOM1/EC/009 and 2011/SOM1/EC/010), which received no comments from members and were deemed endorsed by EC.

28. Russia presented an update of the aforementioned “Measures of Competition Development in APEC” proposal. Russia cited appreciation to co-sponsoring economies for this project (Indonesia, Mexico and Chile) and informed that discussions were under way on the implementation of the project. The estimated budget had been reduced from USD 204,000 to USD 147,000, with USD 98,000 being sought from APEC funding, with which Russia assured that the quality of the project would not be jeopardised. Russia also informed members that the other two of its project proposals intended to improve costs and add benefits to APEC as a whole. For a new project proposal, Russia indicated that it was planning to suggest a new project on electronic bidding in procurement procedures, since it had vast experience in that area. China had indicated its support for this proposal, and Russia was looking for another one economy to co-sponsor this project for submission to members for consideration in due course.

Decision/Action Point s CPLG Work Plan and Collective Action Plan was endorsed by EC. Russia would forward a new project proposal on electronic bidding in procurement

procedures and seek for co-sponsoring economies for the project.

Competition Policy

29. Australia , as Coordinator for the Competition Policy FotC, welcomed start-up members of the FotC (Brunei, Japan, Korea, Mexico, New Zealand, Peru, Chinese Taipei and the US) to its first FotC meeting held prior to the EC plenary. It also welcomed other interested economies to join the group. The FotC played an important role in considering how government policy could facilitate competition to improve the economic outcome and wellbeing of community.

30. Briefing the meeting on the outcome of the FotC meeting, Australia noted that the discussion at the FotC meeting was based on the draft document which had been circulated earlier to the FotC members (document no. 2011/SOM1/EC/011). The paper, drafted by Australia, outlined three main suggestions for advancing the work on competition policy reform, namely:

Competitive neutrality; Taking forward the research by the PSU on “The Impacts and Benefits of Structural Reforms in

the Transport, Energy and Telecommunications Sectors in APEC Economies”; and Utilization of Australia’s contribution to the ANSSR initiative as noted earlier under Agenda 4.

Australia also highlighted some of the main points presented in the document: Structural reform encompasses policy changes to improve economic efficiency, or broadly

spoken, improvements to competition framework, regulatory systems and governance structures;

It was necessary to build and sustain the case for structural reform in order to gain support from the public; and

Structural reform could generate significant benefits as indicated by an independent government body’s assessment on Australia’s reform work.

As to taking forward the work by PSU which had been published in January 2011, it was noted that an infrastructure sector was an important indicator of economic growth, and that economic policies needed to take into account policy objectives for broader policy concerns. The sectors identified in the study could be further explored by economies’ picking up a small number of sectors and inviting a couple or more economies to share their experiences in trying to improve competition in those sectors. This could be a valuable exercise and give a positive qualitative explanation that economies could reflect on.

31. New Zealand thanked Australia for the document on competition policy work stream. New Zealand was interested in the ideas presented, in particular the concept of competitive neutrality ,

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which had not been included in its structural reform frameworks. However, the economy was doing reasonably well in terms of achieving competitive neutrality. New   Zealand also welcomed further work on competitive neutrality and proposed that it might be an ideal topic for a policy discussion at a future EC meeting.

32. EC Chair briefly summarised the discussion on competition policy noting the two main ideas of competitive neutrality and taking the work forward on the PSU study, while acknowledging the APEC structural reform initiative which had been already discussed under Agenda 4.

Decision/Action Point EC would consider competitive neutrality as a future policy discussion topic.

Corporate Law and Governance (CLG)

33. EC Chair noted to members that no economies had positively expressed intention to volunteer as the FotC Coordinator for Corporate Law and Governance (CLG). In the absence of a coordinator for this group, EC Chair requested Mr Rory McLeod, EC Vice Chair from New Zealand, to take the acting role of the CLG Coordinator temporarily until a permanent Coordinator was found. EC Chair encouraged members to take serious consideration on the open invitation for the CLG FotC Coordinator role.

34. New Zealand briefed on the FotC meeting which had been attended by Hong Kong, China , Korea, Chinese Taipei, Thailand, the US and Vietnam. The meeting had discussed three main matters: i) outcome of the Corporate Governance Workshop conducted on 2 March 2011; ii) possible future work of the FotC noting the absence of a permanent Coordinator; and iii) nomination for the CLG Coordinator.

Workshop on "Advancing Good Corporate Governance by Promoting Utilization of the OECD Principles of Corporate Governance”

35. The US provided a report on the outcome of the Workshop on "Advancing Good Corporate Governance by Promoting Utilization of the OECD Principles of Corporate Governance” held on 3 March 2011. The successful Workshop was attended by 14 APEC members, academic experts, representatives from various organisations such as the OECD, and private sector practitioners in the field of corporate governance. The workshop was built on the body of work that OECD had done in the field as well as an in-depth look into the 2010 AEPR that focused on corporate governance, through a study panel exercise and sharing of economies’ experiences in domestic corporate governance. On steps to take forward with respect to this area, the US welcomed ideas and participation from members.

Future work for CLG FotC

36. In terms of future work, New Zealand proposed to carry forward the lessons learnt from the workshop and suggested that willing FotC participants develop the outline of future work.

37. New Zealand noted that, with no permanent volunteer to lead the work of the FotC, the discussion of possible work for the FotC had rather been in general terms. New Zealand informed of Chinese Taipei’s suggestion to work on structural reform in relation to the global financial crisis, which would draw out key corporate governance themes in the G20 statement and assess how APEC economies could work in this area. As APEC had a healthy mix of G20 members and non-members, some useful synergies might be drawn. New Zealand also reported that Viet Nam had suggested further work on areas relating to SMEs, through sharing experience and information on corporate governance mechanism and law. As SMEs grew, challenges in terms of regulatory convergence and globalisation would be inevitable for SMEs. Another suggestion by Viet Nam was to explore possible work on corporate social responsibility (CSR) as an emerging key issue. Viet Nam noted that corporations were focusing on key areas such as pollution, standards, quality of products etc, and that there was recognition of work already being done. It was suggested for the FotC to see where things stood in this area and identify possible work to move forward.

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38. Russia acknowledged that the suggestions by the FotC were interesting. It also suggested that the FotC could seek synergy with competition law projects and put more focus on transparency, as sometimes corporate governance was not transparent in some jurisdictions and it was not easy to establish effective control over a particular company for the purpose of competition policy enforcement.

39. EC Chair observed that there were a number of interesting ideas, and that these were worth exploring, despite the absence of permanent FotC Coordinator for the group.

Ease of Doing Business (EoDB)

40. EC Chair reminded those economies who might wish to participate in EoDB exercise to contact either Champion Economies of their interested areas, the US (as the EoDB FotC Coordinator) or the EC Chair’s Office to start off preliminary discussion. EC Chair also noted that more in-depth discussion on measures of the EoDB progress and an intermediate report to stocktake the progress would be held during the Policy Dialogue on Day 2.

41. The US was invited to present the outcome of the FotC meeting held earlier in that morning. The US made general points that the EoDB was an important effort, and that its procedures and working methods could potentially be replicated more broadly across other areas with heavy focus on capacity building and tailoring recommendations for individual economy needs. The meeting of the FotC had been attended by 15-16 economies; the high attendance was an indication of a wide interest in EoDB programmes among members of EC. The FotC members discussed the draft Work Plan (document no. 2011/SOM1/EC/014) and a number of matters such as how EoDB projects had been working so far and where to go next in and after Phase II of the EoDB Action Plan including diagnostic programmes. Amendments to the draft Work Plan were discussed at the FotC meeting, thus a revision would be recirculated to the FotC members and then to the entire EC after EC1.

42. Phase I of the EoDB Action Plan had gone well, and Phase II activities are being initiated. The US praised Indonesia for vigorously participating in the technical assistance and capacity building of Phase II programmes.

Various economies provided updates on EoDB Phase I and II activities that were either completed or being implemented.

Workshop on Trading Across Borders

43. Singapore reported on the outcome of the 2-day workshop which had been held in Sendai on 18-19 September 2010. The workshop was co-organised by Singapore and Hong Kong, China, the Champion Economies for Trading Across Borders. About 90 participants from coordinating agencies overseeing economic reforms related to Trading Across Borders attended the workshop. The objective of the workshop was to share experiences among economies which had successfully implemented the reform in the area. Based on the feedback received, the workshop was deemed successful. The report of the workshop was document no. 2011/SOM1/EC/016, and detailed materials were uploaded in the AIMP as a reference to members.

Workshop on Reforming the Regulatory System for Dealing with Construction Permits

44. Singapore reported to EC the outcome of the workshop which had been held in Singapore on 18-22 October 2010. The 5-day workshop had been attended by 34 participants from 12 APEC economies. Indonesia, in particular, was commended for having sent 12 participants to the workshop. The workshop had aimed to promote awareness about effective reforms that had been carried out. The report of the workshop was available as document no. 2011/SOM1/EC/015. Overall feedback from the participants indicated that the workshop was a success.

45. For Phase II activities on Dealing with Construction Permits, Singapore also noted that several economies had indicated interest to take part in the activities. Singapore was currently developing Phase II capacity building programmes, which would involve customised diagnostics for selected APEC member economies. Singapore would work closely with interested economies to understand their needs as it develops the Phase II programmes.

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Workshop on Enforcing Contracts

46. Indonesia reported on Phase II work with regards to Enforcing Contracts conducted with Korea. A visit by Korean experts to Indonesia had been arranged on 24-27 January 2011. A workshop had been held in Jakarta on 26 January, which had been coordinated by Korea and Indonesia, with the funding from Korea and in-kind support from Indonesia. Workshop was deemed very successful with participation of around 80 prominent officials from the Indonesian ministries and agencies as well as academia. Indonesia expressed its appreciation to Korea for its contribution towards this workshop and noted its serious attention to assist Indonesia in this field. During the visit, Korean delegates had also visited some agencies in Jakarta to gain first-hand understanding of Indonesia’s problems and explore Phase II diagnostic research. Further activities were currently being planned between the law offices and scholars of the two economies.

Seminar on Getting Credit for Small and Medium Enterprises

47. Japan reported on the Seminar on Getting Credit for Small and Medium Enterprises held on 21 September 2010 in the margins of SOM3 meeting in Sendai, Japan, with approximately 100 participants. Attendees included government officials as well as experts in financial sectors including the World Bank. Discussions, among others, involved strengthening legal framework and improvement of credit information. Ideas expressed by participants included: the difficulties for SMEs in getting credit since generally SMEs had no estates/properties as collaterals; a need for tailor-made approach to address the situation since credit information system and regulations were being developed by respective economies; the importance of information sharing and best practices among economies; and significance of good coordination among economies and relevant agencies for successful reform. During the Seminar, group discussions were also conducted which contributed to improving understanding among participants on these issues.

48. For Phase II, Japan informed that it was working with Thailand on a tailor-made project on related themes.

Seminar on the First Steps of Successful Reform in Doing Business

49. Chinese Taipei reported on the outcome of the Seminar which was held in Taipei on 5-6 October 2010 (document no. 2011/SOM1/EC/018). In response to APEC EoDB Action Plan, the seminar was held to address the first steps of reform in the three priority areas – Starting a Business, Getting Credit and Dealing with Construction Permits. The seminar was targeted to share best practices of Chinese Taipei as well as other APEC members to facilitate reform, which could complement other EoDB seminars and workshops and might possibly encourage further dialogues among Champion Economies. The Seminar included participants from 14 economies (Brunei, Hong Kong, China, Indonesia, Japan, Malaysia, Mexico, New Zealand, Peru, Russia, Singapore, Chinese Taipei, Thailand, the US and Viet Nam) and approximately 100 attendees. Reviewing the three areas, lessons learnt from the Seminar included among others:

Core issue was not raising rankings of the World Bank EoDB index, but making real progress in business environment;

As to Starting a Business, economic growth came primarily from private activities, and the government’s role was to create a good business environment;

The process of starting a business was improved by simplification of regulations, as illustrated from New Zealand’s example of its effort to utilise a website for such purpose;

While digitization was mentioned, reform must be carried out to achieve objectives; The establishment of one-stop centres, particularly one-stop online service centres, was

preferred by economies; When services were made available online, document processing and transparency would be

improved; In respect to Getting Credit, it should be explored to enable SMEs to use various company

assets as collateral for better corporate financing; and High level commitment from both public and private sectors could ensure success, as

observed in experience of a special taskforce set up by Malaysia.

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50. EC Chair also reported on his findings during his attendance at the workshop in Taipei, which was, in addition to the practice of sharing experiences as discussed, human aspect was also important. In Champion Economies, there were key persons and officials who played pivotal roles in carrying out the improvements or reform.

Updates on Starting a Business

51. With regards to Starting a Business, EC members were also briefed on the progress made after the Phase I seminar held in Hiroshima last year by the US and New Zealand. The seminar had generated activities and good discussion, and since then, a Phase II diagnostic programme was completed for Indonesia, on which a full report was produced (document no. 2011/SOM1/EC/020). Currently, the US and New Zealand were working on the Phase II diagnostic with Peru , and technical experts would be visiting Peru. The US also reported that some discussions were currently held with other economies for Phase II. Indonesia noted that the process of the Phase II had been very encouraging where Indonesian could exchange views with experts sent by the team. The results of the exercise were shared with other agencies to be used as a reference in selected areas. Some samples of this report were also shared with other organisations, such as the World Bank. Peru noted that it had made improvements in the Doing Business ranking last year, particularly in the area of Starting a Business. Peru volunteered to participate in the Phase II programme in anticipation of improving its policies in relevant areas.

52. In conclusion, t he US emphasised that additional expressions of interests from economies in joining the FotC and Phase II programmes were welcomed. The US thanked all economies which have reported and worked hard on activities conducted. It added that the issues of assessing progress of EoDB Action Plan would be further discussed in the Policy Dialogue on the 2nd day of the plenary.

Public Sector Governance (PSG)

53. Chinese Taipei , as Coordinator for the Public Sector Governance FotC, presented its work plan for consideration (document no. 2011/SOM1/EC/021). The FotC membership was initiated with 8 start-up members including Indonesia, Korea, New Zealand, Chinese Taipei, Thailand, the US and Viet Nam. The Philippines had indicated interest to join the FotC in its meeting held in the morning. C hinese T aipei welcomed additional members who were interested to join the FotC and contribute with comments and feedback to its work.

54. Taking from the discussion in EC2 2010, PSG FotC had selected 5 priority themes to focus, which were closely related to the high level principles of PSG set up in the 2007 AEPR, i.e.:

Strengthening public administration for the future; Improving the quality of public service; Leveraging ICTs to strengthen public sector governance; Enhancing fiscal transparency and public accountability; and Strengthening trust, integrity and ethics.

Chinese Taipei invited members to indicate their interests in hosting seminars, workshops, roundtable discussions or any activities on the five priority themes so that further coordination and arrangements would be made. In relation to this, Chinese Taipei informed its intention to propose and organise a roundtable discussion at EC2 in September 2011, focusing on the topic of improving public sector transparency, good practices and reform experiences. The draft proposal would be circulated to members for comments. Chinese Taipei also thanked members for their contributions and suggestions on the draft work plan. It also noted New Zealand’s suggestion to invite the Anti-Corruption and Transparency Experts Working Group (ACTWG) to run activities jointly on the theme of strengthening trust, integrity and ethics, which would be further explored by the FotC.

55. Canada was invited to report on the progress of the draft paper on “Good Practice Guide for Public Sector Governance” (document no. 2011/SOM1/EC/022). The work had been initiated as a 2008-2010 task for the PSG FotC in the LAISR Forward Work Programme. The paper had been drafted by Canada along the line with the work completed by the PSG FotC as well as international best practices. The document should help economies deal with various aspects of any public sector institutions, governments and state-owned enterprises. Notably in the paper, Canada introduced 6 new principles of good public sector governance, i.e.: i) rule of law; ii) transparency/openness; iii)

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accountability; iv) public sector ethics and probity; v) stewardship; and vi) leadership. The paper had been shared with EC members for review and comments prior to EC1, however, none was received. To allow for another opportunity for members to comment and submit their feedback, the draft would be re-circulated to members. Chinese Taipei welcomed the draft paper and expressed its appreciation to economies’ collaboration on this work. It would forward a written comment to Canada on the draft paper.

Decision/Action Points Chinese Taipei would draft a proposal of a roundtable discussion on improving public sector

transparency, good practices and reform experiences to be held at EC2 in September 2011. Members were welcomed to submit comments on Canada’s paper on “Good Practice Guide

for Public Sector Governance”, which would be re-circulated and was targeted for endorsement intersessionally.

Regulatory Reform

56. Japan , as Coordinator for the Regulatory Reform FotC, presented its work plan and future direction of the FotC (document no. 2011/SOM1/EC/023a). Japan expressed appreciation and gave credit to Australia who had led the FotC for the past 5 years and coordinated the group’s work. Australia’s valuable contributions included its work on the Good Practice Guide on Regulatory Reform, APEC-OECD Integrated Checklist on Regulatory Reform, the Benchmarking Survey and so forth.

57. Reflecting on activities in the past, Japan noted that activities organised were using horizontal perspectives since membership of the group was diversified rather than confined to experts in specific sectors, and that the horizontal approach would remain as the main method for future work. On the other hand, Japan explained that the group would like to introduce some new elements taking the APEC Leaders’ Growth Strategy and ANSSR into consideration. With the difficulties in focusing on specific sectors, a ‘semi-sectoral’ approach could be explored. As such, the group had extracted 3 possible areas to focus, i.e.: i) improving business environment for SMEs; ii) promoting sustainable growth; and iii) promoting innovation. The group intended to identify regulations that could impede or promote these activities and was willing to concentrate resources so that best practices could be shared among economies. Examples of activities to be planned/explored by the FotC, among others were:

Sharing the best practice of simplification of administrative procedures and transparency, while formulating a checklist for the simplification of procedures;

Exploring the possibility of analysing the good regulation which would contribute to investments on green-related industries and others; and

Investigating regulatory policies that promote innovation and entrepreneurship, particularly for SMEs.

Support from PSU would be needed to conduct these activities.

58. There was also a plan to hold a policy dialogue inviting private sectors and experts at EC2. Topic/theme for the policy dialogue would be tailored towards private sector interests. There was also a suggestion to organise joint sessions with other relevant fora such as HRDWG or SMEWG for Inclusive Growth and ISTWG for Innovative Growth.

Various economies updated the progress on the relevant areas under the RR:

APEC-OECD Integrated Checklist on Regulatory Reform

59. Six economies had conducted self-assessment using the Checklist up to the point. Economies were encouraged to apply the Checklist as this would be a valuable contribution to the regulatory cooperation and convergence agenda for 2011.

Benchmarking Survey on Regulation

60. Japan noted that 12 economies had completed the survey, and remaining economies were encouraged to do the same. The next survey would be executed in 2015.

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Voluntary Review of Institutional Frameworks and Processes

61. EC Chair reminded that the Committee was still looking for volunteers to come forward for the review and also expressed willingness to address any difficulties that members might have in taking the review.

Workshop on “Using Regulatory Impact Analysis (RIA)

62. The US was invited to brief the meeting on the outcome of the workshop on “Using Regulatory Impact Analysis (RIA) to Improve the Transparency and Effectiveness in the Rulemaking Process” held on 3-4 March 2011. The workshop had been built on issues raised in the October 2009 EC Workshop on Improving Public Consultation in the Rulemaking Process held in Indonesia, which had examined public consultation and its strong linkage to improving transparency in rulemaking. The workshop had been attended by 90 participants from 20 APEC economies including regulators, academic and private sector experts, representatives from international organisations (such as OECD and the World Bank) as well as industries. Participants examined technical approaches and practical applications in utilising RIA and shared experiences of APEC member economies, which contained rich details and real world examples. There was a general agreement that gaining support from economy capitals could be challenging, as many economies struggle with it from time to time. Ways to gaining political commitment was also discussed. Suggestions from small-group breakout sessions during the workshop included:

Establishing mentor programmes for economies seeking introduction of RIA to be matched with those that have the expertise;

Outlining basic standard of quality and process of RIA; Conducting empirical study on the use of RIA in APEC economies; Implementing sector specific capacity building activities; and Producing a toolkit of RIA which could be helpful for newcomers.

63. The US also noted the relevance of the discussion at the workshop to the SCSC Conference on Good Regulatory Practices held on 1-2 March, which had provided compelling case for economies to adopt the RIA initiative. With regards to the SCSC Conference, EC Chair noted his observation that the topics discussed there had certain commonality with what was being discussed in EC, such as rule making, transparency, engaging stakeholders and so forth. As such, it was suggested that the Committee explore a possible scope of future collaboration with the SCSC.

64. Russia commented that the projects being proposed were very interesting, and could be of much use for broad areas of APEC economies. Russia suggested: i) looking into cost of regulation and relationship between regulation and competition; and ii) facilitating transparency of regulation by using advertisement on the Internet as exemplified in Russia’s experience in government procurement.

65. Korea , New Zealand, Indonesia expressed appreciation to the US for organising the RIA workshop. Korea noted that its participation in the workshop was helpful. Korea also found the benchmarking survey a good chance to check its current regulatory reform status and move forward. Korea informed EC that it had produced an English version of the brochure on Korea’s Regulatory Reform and invited economies to a copy for details. New Zealand thanked Japan for the work in the FotC and the US for the workshop on RIA and suggested if the FotC could look into ideas suggested, including investigation of cost of regulations as noted by Russia. Indonesia commented that RIA was important and welcomed those economies which had not implemented it yet to take on the initiative. Indonesia also suggested that the FotC continue with more focused and targeted seminars. For the purpose of promoting implementation of RIA, Indonesia queried whether the issue could be raised to Ministerial level as political will was very important. It also questioned importance of utilizing RIA versus Good Regulatory Practices (GRP).

66. The US thanked economies for their participation and remarks. Specific to Indonesia’s question on RIA and GRP use, the US informed that its experts thought of RIA as one essential element of GRP; GRP could be viewed as broader tools for economies to enhance/improve regulations, whereas RIA was an element of the broader area.

Decision/Action Points

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The RR FotC would develop the details of a proposed policy dialogue with private sector and experts as well as joint sessions with other fora such as HRDWG/SMEWG or ISTWG.

For all FotCs: FotC Coordinators would collect views from members and review the Work Plans to submit them to EC Chair by 18 March.

Policy Support Unit (PSU) Work Programme

67. The new Director of PSU (Dr Denis Hew) updated the meeting on the PSU work programme (document no. 2011/SOM1/EC/026). There were 9 projects completed in 2010 and 7 on-going projects for 2011. It was anticipated that the number of projects for PSU would increase after SOM 1, including providing support to Australia at the ANSSR Symposium and the Residential Training Course Workshop to be held in Singapore in mid-August. Work relevant to EC included the review of structural reform, whereby the “Handbook for the APEC Voluntary Reviews of Institutional Frameworks and Processes for Structural Reform” was completed in 2009, however there had been no volunteer to be part of the review as yet. PSU’s future work would include identifying key elements of structural reform. Also, a major report on impacts and benefits of structural reform in transport, energy and telecommunications sectors had been completed and distributed in January. The report included 14 case studies, and one of the main findings was recognition of the great potential in undertaking reform in the three major sectors concerned. This report and the case studies could be provided as reference materials to the upcoming ANSSR Symposium and Workshop. PSU Director noted that the team was committed to deliver high quality projects and willing to work with EC.

68. The US extended welcome to Dr Hew as the new Director for PSU and look forward to working with the PSU team. New Zealand enquired more information on the APEC-TPP analysis paper listed as the item no. PSU9 in the PSU Work Programme, a draft of which had been presented in a workshop held in Hong Kong, China on 25-26 Feb 2011. Noting that the paper would be useful for the teams engaged in the TPP negotiations, New Zealand urged that the analysis paper be distributed soon. In response to New Zealand, PSU (Mr Carlos Kuriyama, who oversaw the preparation of the report) informed that the paper was a work-in-progress on what was being done in APEC and mutual usefulness of the APEC work and TPP. Included in the paper were analyses on how APEC work could help with the current TPP negotiations, best practices of RTAs/FTAs, model measures, initiatives on non-binding principles and so forth. The paper would be published once it was finalised.

69. Relating to the policy discussion on regulatory cooperation and convergence, EC Chair asked PSU to explain possible works from PSU’s side on this particular initiative, which was duly noted by the PSU Director. The PSU was open to ideas to develop this further.

APEC Economic Policy Report (AEPR)

AEPR 2011

70. EC Chair recalled that EC had made a broad agreement to produce AEPR 2011 on the LAISR Stock-take Report, which was endorsed by Ministers in November 2011. EC Chair explained that since the current report was already more than 200 pages long, there might not be room for additional reports to be included as suggested at EC2 2010. The AEPR 2011 would be targeted to be published and tabled at SOM2/MRT, which was earlier than the usual publication during the Leaders’ Week. EC Chair’s office (Mr Tadashi Yokoyama) briefly explained the content of the AEPR 2011 (document no. 2011/SOM1/EC/017). He thanked members for comments and suggestions on the LAISR Stock-take Report received prior to its endorsement last year. The idea of adding other reports to the AEPR would not be viable due to budget constraints as well.

71. Indonesia expressed appreciation to EC Chair’s Office in incorporating inputs from member economies. It noted that there had been a lot of concerns and inputs raised on the drafts at EC2 2010, and those had been incorporated in the Report.

AEPR 2012 and Beyond

72. EC had discussed in its previous meetings how to organise topics for the future AEPRs; EC Chair reminded that one idea was to take FotC issues one by one, and another was to pick up current issues. With regards to AEPR 2012, EoDB was suggested as the theme for 2012.

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73. The US noted that there was a suggestion at EC2 in 2010 to consider a strong possibility of AEPR on EoDB since EoDB was a very rich programme that should yield a lot of interesting materials for broad range of economies. Mexico, Singapore, New Zealand, China were supportive of the US proposal on AEPR 2012 and considered this as good timing and a good document to build momentum for EoDB efforts. Indonesia informed that it had no particular concern on going along with the suggestion. However, it noted that since the issue of Doing Business might be sensitive to some members, the preparation or drafting of the report should be undertaken to avoid rankings as in the World Bank EoDB reports, since the EC’s intention in the work was not on rankings but encouraging and making improvements in the underlying business environment. China supported Indonesia’s idea that ranking might not be a good idea. The US viewed this as an exercise to which a number of economies would contribute, and stated that EC was to be sensitive to issues some economies might have. New Zealand noted the need to be cautious of materials to be interpreted as ranking, if any, as the World Bank EoDB methodology might be crude to be applied to relatively small number of economies as APEC. An AEPR on EoDB would give a chance for APEC economies to set out an approach to EoDB and improvements they made and could be interesting material for business and others. This view was also supported by Singapore, echoing that indicators should not be mechanically applied for presenting advancements of individual economies, but that assessments should be made on APEC as a whole. Emphasis should also be directed to qualitative aspects of initiatives that economies were embarking on. Australia sought clarification on whether the previous AEPRs have assigned any rankings, and commented that if not, it would be difficult to introduce it this time.

74. EC Chair also drew attention to the Chapter 3 of AEPRs which covered member economies’ collated experiences and suggested to discuss this further. Relating to this, China requested that, since it had missed the opportunity to submit its input in the previous AEPR, a template of Chapter 3 be presented earlier so that preparations could be undertaken with enough lead time. The US stated that structure and format of Chapter 3 could be flexible according to the collected responses and information. It suggested producing proposals intersessionally on the structure of AEPR 2012 for consideration in advance of EC2.

75. EC Chair summarised the discussion noting the agreement from members for AEPR 2012 to focus on EoDB with a Chapter 3-type part having participation of as many economies as possible. EC Chair also stated that EC should emphasise that, although the EoDB exercise was taking advantage of the available indicators, ranking was not the objective but making real progress was.

76. For AEPR 2013 and beyond, New Zealand indicated preference for reports to be produced based on key FotC areas. One way would be to try and assess which FotC area was particularly rich in work. Suggestions included assessing the next AEPR theme in a year’s time. Australia broadly supported New Zealand’s suggestion and proposed that EC revisit this issue in the next meeting so as a preliminary discussion would avail members to decide in 12 months’ time.

Decision/Action Points EC members agreed to publish AEPR 2011 on LAISR stock-take as endorsed by Ministers in

November 2010 in time for SOM2/MRT with no additional chapter/sections. EC members agreed that the theme of AEPR 2012 would be on EoDB with the details to be

discussed. The US would forward a suggested structure of the report for members’ consideration intersessionally.

EC members would reconsider topics of AEPR 2013 and beyond at EC2, bearing in mind the suggestion to take up a key FotC area for each year.

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Policy Discussion I – Regulatory Cooperation and Convergence

77. EC Chair briefed members of the outline of the policy discussion on regulatory cooperation and convergence (document no. 2011/SOM1/EC/032), which would be an informal exchange of views among members deliberating on: i) economic benefits of regulatory cooperation and convergence; and ii) possible contributions by the EC to the 2011 process.

78. New Zealand was invited to give a lead presentation on the topic. New Zealand expressed its strong support for the theme on regulatory cooperation and convergence and illustrated the elements of the theme, i.e. why the theme was important, what was happening in other areas and what APEC could contribute to the theme. As a background, New Zealand noted that global trade and economic integration had augmented the importance of the theme. It also pointed out the uprising growth of global supply chains through elements such as offshoring of production, outsourcing of input provision, insourcing of services and niche marketing using web based tools, tended to occur between close neighbours and involve flows of investment, knowledge and skills. Asia-Pacific economies had provided support to promote this trend. As production and distribution process as well as demands of business and consumers changed, business sought regulatory environments that were fair, consistent, competitive, support of innovation and involving lower compliance costs. Consumers were also increasingly demanding that health, safety and environmental standards on supply of goods and services be met, which led to complex regulations involving greater costs for governments. Many economies were beginning to struggle to maintain the whole spectrum of required regulations. As such the theme was timely and important. It was noted that the concept was already well understood by APEC, and that a good collection of materials had been produced on this topic, such as APEC Principles to Promote Competition and Regulatory Reform, APEC Good Practice Guide on Regulatory Reform and APEC-OECD Integrated Checklist on Regulatory Reform.

79. New Zealand also briefed members on how the theme of regulatory cooperation and convergence had been handled in other areas, in particular citing the example of the TPP negotiation. It was noted that in TPP, a number of horizontal issues were being discussed including regulatory coherence, an issue which New Zealand saw as the most important of all the horizontal issues since it could integrate trade and regulatory elements of regional economic integration seeking binding commitments that provide certainty for the future. TPP could act as a platform for technical cooperation to make commitments be met. Risks associated with inclusion of the issue in the TPP negotiation were also noted. Another example of regulatory coordination between New Zealand and Australia was cited, which had seen significant development on regulatory cooperation and convergence towards realizing a single economic market over 25-30 years.

80. New Zealand concluded by noting the core role for EC and APEC was to support current regional and domestic efforts to achieve regulatory cooperation and convergence, and also suggested working closely with CTI/SCSC, taking into account their different mandates. Generally, structural reform is closely related to regulatory cooperation and convergence, and thus all the areas EC was looking into (competition policy, regulatory reform, corporate law and governance, public sector governance and the EoDB) are relevant to the theme.

81. Members generally agreed with New Zealand’s presentation points. Australia noted that: i) regulation was essentially about removing impediments rather than directly increasing incentives for economic growth; ii) it was fundamental to try to improve quality of regulations and processes, rather than targeting removing regulations from a particular sector; and iii) it was crucial to gain and sustain political support in this area. Australia also noted that through its experience with New Zealand, starting with small areas, prioritisation and setting principles were important, and developing such agenda across APEC would be more challenging and require a longer term compared to between Australia/NZ, since APEC economies were much more diverse. The US also agreed with Australia and New Zealand’s presentation noting that RIA, done well with robust public involvement in the rule making process, could positively contribute to regulatory cost reduction as well as growth and innovation. In other words, GRP would give governments a crucial tool to build cases for a successful regulatory programme, which would help gain and sustain political support. The importance of engaging the private sector was also emphasised. In terms of quality improvements vs. attempts to eliminate arbitrary regulations, the US stated that it depended on circumstances and the state of regulation in each economy.

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82. ABAC noted the importance of dialogue with business communities on these issues and strongly supported this agenda. ABAC was thinking of how ABAC could effectively be engaged in specifics of regulatory reform, particularly in product areas, on which the RIA workshop had provided ABAC with guidance. Responding to ABAC, Australia informed that, in trying to undertake regulatory reform, a challenge was often that government officials did not have good idea of specific impacts that regulations had on businesses. Use of RIA was helpful to avoid such situations.

83. Regarding the meaning of regulatory ‘convergence’, there were questions from economies (China, Indonesia, Korea, Hong Kong, China and Malaysia ) on the exact meaning of the word used in this context and in what sectors it was pursued. China appreciated the views shared and welcomed the idea of regulatory convergence and coherence. It noted that for China, the core benefit for such work would be cost cutting for trade and foreign direct investment. However, China was also concerned about the balance between convergence and diversity. Due to great diversity of economies in APEC, China noted that this could be a problem, particularly if economies with more developed regulatory systems were leading the work, it could create a monopoly. Concern was also expressed on the word ‘convergence’ itself as it might suggest conflicting meanings to some economies. As such, while welcoming the idea of this theme, China commented that special consideration should be given to each economy’s individual needs. Indonesia noted that the information sharing from Australia and New Zealand was helpful as a guide for members. As APEC was unlike Australia/New Zealand, there would be more matters to be addressed in this area, with some members still struggling to get political support for regulatory reform. Indonesia also shared the same concern with China with regards to the term ‘convergence’, as it might mean that economies would need to harmonise every regulation. Malaysia agreed with the views of China, Indonesia and Korea on the term ‘convergence’, as in APEC, with its diverse economies, it was difficult to obtain convergence. ‘Coherence’ in terms of standards might be possible, however, internal regulations in each economy differed. Malaysia also suggested perhaps APEC should look into areas such as transparency. Hong Kong, China noted that as a generic term, promoting regional cooperation and coherence that helps trade and investment would perhaps be something good to support. Hong Kong, China also echoed concerns raised by some members regarding the term ‘convergence’ and requested for more details on the specific sectors covered. Hong Kong, China suggested that it might also be useful to know what had been discussed in other fora, and whether any specific areas were already brought up or on the table for collaboration. Russia, on the other hand, viewed that the term ‘convergence’ was reasonable and a practical approach.

84. Mexico noted the importance to gain support from stakeholders, including sectors which would be impacted with the regulatory changes. Regarding the tools already developed by EC, Mexico commented that implementation of those tools could be facilitated rather than creating more documents through EC’s discussions. Canada noted positive experiences through its work with some economies in this area. Canada also requested additional clarifications with regards to SOM agenda, specifically on early signs and indication for the ‘APEC regulatory cooperation plan’ which would be discussed by Senior Officials. Japan agreed to the significance of the issue in efforts on REI and the importance of engaging various stakeholders. Noting its relevance to the on-going TPP negotiation and various cautious views shared on this issue, Japan suggested continuing to consult with PSU and other economies since the regional cooperation and convergence was worth considering as a tangible outcome for this year.

85. Responding to various comments from members, the US explained that there tended to be misconceptions of the term "convergence," and that it did not denote harmonisation but related to improving outcomes of regulation with focus on avoiding unnecessary barriers to trade, which would eventually reduce costs for producers and consumers as well as realize better economic growth. New Zealand also concurred with the US’s explanation on ‘regulatory convergence’ and clarified that it was not referring to ‘regulatory harmonization’.

86. EC Chair thanked all members for their interventions and briefly summarised the discussion, noting the shared recognition that it was an important agenda. EC agreed to discuss what EC could do on this issue intersessionally. Based on the US paper that was forthcoming for SOM, EC Chair asked FotC Coordinators to provide their initial ideas; suggestions from members were also welcomed. EC Chair ended the discussion with a note on hope that some concrete ideas over the course of this year could be developed.

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Policy Discussion II - Ease of Doing Business

87. The US was invited to lead the discussion on EoDB. Presentation from the US covered discussions on the next steps on EoDB programmes (document no. 2011/SOM1/EC/033 and 2011/SOM1/EC/025). The US noted that APEC had completed a series of Phase I seminars/workshops and currently was advancing Phase II activities, and that progress was evident in the latest World Bank EoDB report. The discussion would be based on three areas, i.e.: how to i) advance Phase II activities and encourage participation; ii) assess progress toward the interim target; and iii) set the stage for a longer term success through 2015 and beyond.

88. As for advancing Phase II activities, the US encouraged more economies to participate as it was a critical time to make progress with an interim assessment due this year. Some activities completed and ongoing were presented. The US also stated that the EoDB was not a one-size-fits-all exercise so that Phase II consisted of customized programmes for economies’ needs in the five EoDB areas. Regarding “Starting a Business”, the diagnostic analysis on Indonesia had been completed and Peru’s diagnostic visit and report would be undertaken soon. Ideas for furthering progress presented at the EoDB FotC meeting on the previous day were revisited:

Arranging for expert consultants who have conducted Phase II diagnosis to address broader economies, possibly for experts to come and address EC2. This could give economies perspectives;

Setting up small group sessions to facilitate network and information sharing; Expanding the proposed web-based toolkit for structural reform so that economies could use

for self-learning, and posting relevant information onto the website; and Arranging for specific training and seminars on how the World Bank composed its rankings on

the EODB indicators.

89. Assessing the interim progress under the EoDB Action Plan would be major work for EC in 2011. The US explained in-depth about the measurement tools proposed (quantitative and qualitative measures). The idea for the measurements was basically to showcase improvements made by APEC, not for ranking purposes.

90. The US also briefly explained its suggestion on follow-up work after the interim assessment and Phase II activities, including how to achieve longer-term success toward the 2015 aspirational target. Suggestion included consideration of the next steps, i.e. how APEC could assist volunteering economies with the implementation of recommendations made through diagnostic activities. It was also proposed to conduct a stock-take workshop specifically on Phase II programmes, either at EC2 in 2011 or EC1 in 2012, to share best practices and lessons learned, with a view to improve the framework and operation of future EoDB programmes. The workshop could explore interests in new areas of EoDB beyond the current five priorities, and could support development of the AEPR on EoDB in 2012. The US and Champion Economies were willing to respond to requests for information on Phase II structure/arrangement and provide answers on the specifics of respective programmes.

91. Indonesia informed that it would seek assistance from the US as the Chair of EoDB FotC and other EC colleagues for carrying EoDB work forward. Indonesia suggested conducting regular focus group discussions or meetings with the World Bank to gain guidance on the ranking methodology and ways to reforms. In responding to Indonesia on the discussion with the World Bank, the US noted that EC made a start at the discussion in Hiroshima in 2010 when the World Bank officials came to help set up Phase 1 seminar, and was willing to pursue it further. Regarding how to move on past Phase II, it would need to be considered thoroughly in terms of what sort of capacity building would be needed to implement recommendations produced by Phase II. Chinese Taipei thanked the US and Champion Economies for their efforts and contributions. For Phase II, it suggested for Champion Economies to setting up an advisory window mechanism for member economies to consult. Chinese Taipei domestically faced pressure from the private sector to improve doing business environment. Chinese Taipei also stated that it had completed a self-voluntary review, and “Chinese Taipei Doing Business Reform” reports had been prepared for the World Bank; it was willing to share with Indonesia how this had been organised. Chinese Taipei also agreed with the suggestion to have a stock-take workshop and proposed to explore new areas of EoDB priority areas such as “protecting investors”. On the suggestion to set up an advisory window mechanism, Indonesia supported the idea.

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92. New Zealand noted that it was keen to help other economies on the Starting a Business area and provide for additional support. The workshop suggested for EC1 next year would be timely since EC could draw on the results in drafting the 2012 AEPR on EoDB. New Zealand was also interested to hear more on cross-fora collaboration proposals. On the measurement issue, it noted that there would not be a perfect way of doing it and emphasised that qualitative assessment would be quite important. Thailand agreed on the Phase II stocktake workshop and sought for more clarification on how to use the World Bank EoDB indicators in measuring the 25% improvement target, commenting that a reasonable measure and approach needed to be employed. Australia suggested that the interim report should include emphasis on qualitative measures, and that the report could also include challenges for officials referring to key issues. With regards to measurements, caveat should be made on the quantitative results. Australia viewed the suggestion to organise a stock-take workshop as a good idea, on which EC could make a decision later in the year bearing in mind other priorities. It also commended the cross-fora collaboration work. Peru commented that a caveat for Phase III was not all economies might have gone through Phase II, and that there were potential needs for financial resources. On the measurements, it suggested employing most simple and direct ways, noting that perhaps PSU could assist in this regard. Singapore expressed its willingness to respond to queries relating to programmes that it was undertaking. On assessing progress towards the interim target, it agreed that both qualitative and quantitative measures were important for giving holistic and realistic views. Singapore stated it was comfortable to use the unweighted simple average, however, it cautioned that the measurement was prone to outliers, and adjustments may have to be made. On implementing Phase II recommendations, Singapore queried whether there would be APEC funds available for such programmes.

93. The US thanked all economies for all the comments and summarised the discussion: Suggestion for setting up an advisory window was a possibility, while it was almost a duty for

Champion Economies and the US as the EoDB FotC Coordinator to address queries from economies or direct them to appropriate contacts;

Considerable support on holding a stock-take workshop and considering possible topics; Support for preparing a report by the end of the year on the interim target, which ought to

include qualitative assessment and not to rely solely on quantitative measures, noting the suggestions to make measurements as simple and direct as possible and put a caveat on results of the measurements;

Caution on the mathematical limit of 25% improvements; Suggestion for including ABAC (businesses) in coordination work; Suggestion for considering economies not undertaking the Phase II programmes; and Suggestion for seeking support from PSU, which would need consideration by PSU Board.

The US also encouraged economies interested to participate in Phase II to contact the FotC Coordinator or Champion Economies either directly or through the Secretariat.

Update on Fora Work Programmes

Committee on Trade and Investment

94. CTI Chair (Ms Monica Contreras) provided a brief overview of key priorities that CTI would be addressing for this year. CTI Chair informed EC of its work programme for 2011 which covered the following three key elements:

Strengthening regional economic integration and expanding trade. In addition the CTI would discuss how to make the IAP and IAP peer review process more effective and less cumbersome in monitoring progress towards the Bogor Goals.

With regards to green growth, CTI Chair informed that the CTI would have a broad agenda on this topic. Contribution of CTI would be in relation to EGS, advancing three areas; i) environmental services; ii) non-tariff barriers related to EGS; and iii) environmental technologies.

Expanding regulatory cooperation and coherence by strengthening implementation of good regulatory practices; and improving regulatory cooperation. Noting that EC had been briefed by SCSC on the outcomes of the Good Regulatory Practices conference, regulatory cooperation could be one area in which EC and CTI could collaborate. CTI would await further instructions from Senior Officials on this agenda.

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95. Thailand and China queried on green growth measures that CTI covered and details of the discussions on FTAAP at CTI respectively. In her reply to these questions, CTI Chair noted that part of the ongoing work on green growth would include further work on case studies on economies’ domestic EGS markets. Last year, a case study on EGS for Malaysia was concluded. For 2011, CTI would be conducting case studies analyses for Mexico, Viet Nam and Chile. With regards to FTAAP, the CTI Chair noted that Leaders had tasked the CTI to contribute to FTAAP by identifying, shaping and addressing next generation trade and investment issues for the FTA.

Senior Finance Officials ’ Meeting (SFOM)

96. SFOM Chair (Mr Michael Kaplan) presented an update on recent Finance Ministers’ Process (FMP) activities. The Finance Deputies’ Meeting (FDM) had been held in San Francisco, United States on 22 February 2011, which had been well represented by APEC economies. It had been organised differently than ordinary, one level up from the Senior Financial Officials, to highlight what Finance Ministers and APEC as a whole would be interested in. Main discussions at the meeting had included:

Economic outlook with presentations one of which was by IMF on the global economy; Finance ministries’ role in monetary policy and the growth issues in general such as economic

restructuring, capital flows and volatility issues; and Sharing information on rebalancing issues including a presentation by IMF, with a particular

focus on investment.

97. The FMP agenda also included consideration of what APEC could have value added to infrastructure issues. A special workshop on financial inclusion, attended by over 90 participants, was also conducted in San Francisco in the margins of the FDM. The workshop was launched by Finance Ministers in their meeting in Kyoto in 2010. The next SFOM meeting would be in June in Washington, DC; immediately followed by a finance conference to be co-hosted with the World Bank. Two more meetings on financial inclusion would be held, one to be in Asia. The agenda would include elements of G2P (government to persons payment), leadership issues, sharing of experiences and technical issues and targeted to include participants from the Finance Ministries, Central Banks, regulators and so forth. FMP Chair informed that the final FDM would be held on the 9th of November, and FMM on the 10th in Honolulu, in the margins of Leaders’ Week.

APEC Business Advisory Council (ABAC)

98. ABAC representative (Mr David Dodwell of ABAC Hong Kong, China) briefed on updates in ABAC, noting that ABAC aimed: i) to identify and enhance how ABAC linked with APEC, i.e. to be clearer about what APEC’s priorities were and focus ABAC’s activities on them; ii) to develop action plans, advocacy plans and strategies focusing on key priorities that different working groups in ABAC were working on; and iii) to monitoring progress in ABAC’s work. ABAC was supportive of EC to progress structural reform relating to LAISR and ANSSR and noted that those initiatives were crucial to attain/sustain growth. Agenda for ABAC covered many different subject areas. ABAC rep drew EC’s attention to: i) ABAC’s recommendations to Finance Ministers in September 2010 (document no. 2011/SOM1/EC/030); and ii) outcome of the finance and economic discussion at the ABAC meeting held in Guangzhou in February. It was also noted that while ABAC was supportive of the introduction of IFRS in general, business communities were anxious that it should be implemented in a way that reflected market conditions of the region and avoided negative impacts on economic activities, particularly in areas relating to the Growth Strategy. In this regard, ABAC submitted a letter of proposal to international regulators (IASP and FASP) to change least accounting standards expressing concerns about how SME could have access to financing. The 2nd ABAC meeting would be in Seoul, Korea in April, the 3rd in Lima, Peru in August and the final during Leaders’ Week in Honolulu in November.

99. New Zealand queried on the communication with the IFRS regulators and point of access in APEC on this issue, seeking opinion whether EC could have a role. ABAC responded that the issues was highly technical, and the direct communications with the regulators indicated absence of close collaboration with APEC, however, perhaps ABAC should also work with APEC in getting the message across.

Pacific Economic Cooperation Council (PECC)

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100. PECC Secretary General (Mr Eduardo Pedrosa) briefed EC on the work PECC was undertaking, including the following:

Report on ‘State of the Region’; Project on examining mid and long term structural employment in Asia Pacific; Continuing work on social resilience looking at social safety nets in the region; Work with ADB Bank Institute on understanding service supply chains; and Annual survey of opinion leaders (business, government and academia).

PECC also noted relevant work to the 2011 APEC agenda including a conference on services trade to be held in Hong Kong, China in June 2011, which might be of a particular interest to EC as some papers were developed on regulatory policies on services, having implications for regulatory convergence.

Human Resource Development Working Group (HRDWG)

101. EC Chair invited the new HR D WG Chair (Prof. YoungHwan Kim) to brief EC on HRDWG’s work stream. In his presentation (document no. 2011/SOM1/EC/028), HRDWG Chair illustrated the work stream for the group for 2011 and urged further collaborative work with EC. EC Chair noted the possibility of collaboration with HRDWG on ANSSR-related activities. ABAC also expressed an increasing concern about developing labour shortages and mobility issues and stressed the importance of undertaking detailed scales mapping across APEC economies which would give insights into areas or problems in the region.

CTI Sub-Committee on Standards and Conformance (SCSC)

102. The EC Chair invited SCSC representative (Mr Alex Hunt) to brief EC on the outcome of the 6th Conference on Good Regulatory Practice held on 1-2 March 2011 in Washington D.C. (document no. 2011/SOM1/EC/013rev1). EC members were informed of the outcome of the Conference led by the US and co-sponsored by Chile, Japan, Malaysia, New Zealand, Peru and Singapore. It brought together experts from governments, business, and international organizations to discuss critical regulatory issues that APEC was facing and possible work for promoting a regulatory environment conducive to trade, investment and job creation in the region. The GRP Conference and RIA workshop signalled the importance of regulatory cooperation in 2011 priorities. Highlights from the Conference include acknowledgements that GRP had produced significant economic and social benefits, and that regulatory cooperation could effectively advance greater alignment of technical requirements and build the capacity of regulatory institutions to efficiently and effectively address policy goals. However, significant challenges to greater implementation of GRP were also recognized. Main outcome and recommendations from the Conference included:

A greater understanding/utilization of GRP was called for to facilitate compliance with the TBT Agreement and other international obligations;

No one-size-fits-all. Economies were unique and at different stages in applying the GRP; and Political support was critical in undertaking GRP programmes in economies.

Other Business

Project Management Update

103. Head of the Project Management Unit (PMU) (Ms Evelyn Loh), briefed members on project management developments (document no. 2011/SOM1/EC/006), including the details of project submission procedure for 2011, multi-year projects and updates of the new “Guidebook on APEC Project Process”, especially regarding the approval process of concept notes submitted by fora. A change in the Guidebook was explained that, in the process of concept notes (CNs) endorsement, only fora was required to approve and endorse CNs in advance of submissions to BMC project approval sessions, not necessarily the Committee. As for EC and CPLG, given the fact that the Competition Policy FotC and CPLG activities were of common issues and closely related, EC Chair was of the view that retaining the current practice for CPLG’s CNs to be approved by both CPLG and EC was reasonable. CPLG Convenor supported EC Chair’s suggestion to retain the current process.

104. EC Chair and China enquired on the multi-year project application process and the criteria on external stakeholders respectively. PMU explained that the application would be led by a single forum

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during the BMC project approval sessions, but with clear evidence of engagement of other groups in the work. External stakeholders’ engagement could mean different organisations’ involvement, including participation of outside groups such as businesses (ABAC or industry bodies), regional or multilateral organisations working on specific sectors and international financial institutions, and was envisaged to be an on-going participation/mutual feedback throughout a project. Their involvement could give alternative perspectives based on relevant work they were undertaking, leverage on work they would do and avoid duplication.

Decision/Action P oint EC agreed to retain its process of approving all CPLG CNs prior to submission to BMC.

Review of the Economic Committee Terms of Establishment (T o E)

105. EC Chair reminded members that a review to Terms of Establishment (ToE) (document no. 2011/SOM1/EC/035) was necessary to be conducted every two years. Members which had specific ideas on the changes to the ToE were requested to submit their comments and suggestions to EC Chair’s Office or the Secretariat.

Decision/Action Point Members were invited to submit any comments/amendments on the ToE to EC Chair’s

Office and the Secretariat by the end of April (before SOM2 meeting).

Nomination and selection process of EC Chair and Vice Chair for 2012-2013

106. The APEC Secretariat Program me Director (Ms Zaireen Omar) recalled that extension of Dr Omori’s term as the EC Chair would expire at the end of 2011. She briefed members on the processes and timeframes for the nomination and appointment of a new EC Chair for 2012-2013 succeeding Dr Takashi Omori and a new EC Vice-Chair succeeding Ms Huda Bahwares of Indonesia (document no. 2011/SOM1/EC/036).

Decision/Actions Point Members took note of the relevant deadlines for nominations for EC Chair and EC Vice

Chair as prescribed in the document.

APEC Secretariat Key Development Report

107. The APEC Secretariat Program me Director (Ms Zaireen Omar) outlined some of the key points in the APEC Secretariat Report on Key Developments (document no. 2011/SOM1/EC/037) including the highlight of APEC Japan 2010, AEPR 2010 and the appointment of the new PSU Director, Dr Denis Hew.

108. EC members were also reminded of the internal deadline for Session 2 BMC project cycle for EC on 30 March 2011. Members were to forward CNs to the Secretariat before the stipulated deadline.

109. The APEC Secretariat noted that the EC contacts list had been circulated as part of the EC1 meeting documents. Members were asked to provide any updates on the EC contacts list for their respective economies to ensure the contact list was updated.

Communications

110. APEC Secretariat Director of Communications (CPAU) (Mr Michael Chapnick) provided an update of the Secretariat’s communications and outreach activities, as well as the emphasis on the need for better communications and more outreach activities from fora both internally within APEC and externally to other audiences. CPAU Director also briefed members on what CPAU could do to help bring attention to the work of this group.

111. EC Chair mentioned the concept of making what EC had completed accessible for wider audience and queried on possible web-based toolkit idea. In regard to the toolkit, members were informed that the APEC website template was available for reference, however individual websites

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would need to be self-maintained. Indonesia suggested that the APEC Secretariat provide copies of the “APEC-OECD Integrated Checklist on Regulatory Reform” and the “PSU Handbook on Voluntary Review” to EC members for easy reference. ABAC noted the value of communicating APEC’s message towards stakeholders and urged members to make use of the communication strategy so that EC’s work would be further diffused to relevant stakeholders.

Document Classification list

112. EC members accepted the EC1 document classification list (document no. 2011/SOM1/EC/000).

EC Chair’s Presentation Materials for SOM1

113. EC Chair’s Office (Mr Tadashi Yokoyama) presented a draft EC Chair’s presentation material which was prepared for various other meetings including CTI, CPLG and SOM1. EC members were asked to submit comments on the presentation materials to EC Chair’s Office by end of the day so that comments could be duly reflected in time.

Next Meeting

114. EC Chair announced that the next meeting of EC would be in the margins of SOM3 which would be held in San Francisco in September.

Concluding Remarks

115. EC Chair informed in his concluding remarks that the “homework” for EC members would be prepared as a “to-do list” and be circulated shortly after the meeting. A summary record would be circulated for comments and endorsement by members. EC Chair thanked members for their valuable contributions to the discussion in the first meeting of the year and adjourned the meeting.

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