Draft as of 25 April 2018

ASIA-PACIFIC ECONOMIC COOPERATION FIRST SENIOR OFFICIALS’ MEETING

Port Moresby, Papua New Guinea, 8 – 9 March 2018

SUMMARY CONCLUSIONS

The First Senior Officials’ Meeting (SOM1) convened in Port Moresby City on 8 – 9 March 2018. Senior Officials, or their representatives, from all 21 member economies Australia; Brunei Darussalam; Canada;

Chile; the People’s Republic of China; Hong Kong, China; Indonesia; Japan; Republic of Korea; Malaysia; Mexico; New Zealand; Papua New Guinea; Peru; the Republic of the Philippines; Russia; Singapore; Chinese

Taipei; Thailand; the United States; and Viet Nam participated in the meeting. The Chairs of the Budget and Management Committee (BMC), Committee on Trade and Investment (CTI), Economic Committee (EC), SOM

Steering Committee on ECOTECH (SCE), Senior Finance Officials’ Meeting (SFOM), APEC Business Advisory

Council (ABAC); the APEC Secretariat Executive Director; and the representatives of the Association of the Southeast Asian Nations (ASEAN) Secretariat, the Pacific Economic Cooperation Council (PECC), and the

Pacific Islands Forum (PIF) were also present.

1. OPENING SESSION

The SOM Chair welcomed all Senior Officials and delegates to the First Senior Officials Meeting (SOM1). He reported that a number of workshops, conferences and meetings of APEC fora with rich exchanges among

member economies had taken place before SOM1. He looked forward to the fruitful discussions among Senior Officials, as well as to the reports by the Committees on the work progress carried out under the

APEC 2018 theme of “Harnessing Inclusive Opportunities, Embracing the Digital Future”. He called for the

continued supports from all members in dealing with pressing matters, progressing existing projects, and identifying future inclusive opportunities to meet the shared aspiration. He acknowledged the leadership of

the past hosts and collective effort of 21 member economies to make APEC a successful forum. He invited members to make this an interactive and dynamic meeting.

At the SOM Chair’s invitation for comments on the meeting agenda, China advised that it would present a paper on digital economy capacity building for inclusive development at agenda 4 for SOM’s information,

a paper on urbanisation cooperation at agenda 5 for SOM’s consideration, and a paper on catalysing inclusive

opportunities and digital future through education coopearation at agenda 5 for SOM’s information.

The meeting took note of the comments by China.

2. SETTING THE SCENE FOR POLICY DIRECTION AND ORGANISATIONAL ARRANGEMENTS

FOR APEC 2018

2.1. APEC 2018’s Theme and Priorities, and Outcomes of ISOM

The SOM Chair recalled the 2018 theme “Harnessing Inclusive Opportunities, Embracing the Digital Future” which aimed to bring forward APEC’s discussion on global and regional economic integration (REI) and to

ensure that no one is left behind given emerging challenges. This theme would also bring to the discussion

on how APEC would configure beyond 2020 to benefit its members and provide them equal opportunities to collectively work towards growth. The SOM Chair outlined three priorities of APEC 2018: (i) Improving Digital

Connectivity, Deepening Regional Economic Integration; (ii) Promoting Inclusive and Sustainable Growth; and

(iii) Strengthening Inclusive Economic Growth through Structural Reform. He recalled that at the Informal Senior Officials’ Meeting (ISOM) in December 2017, member economies had shown their endorsement of the

2018 theme and priorities, and their consensus in driving APEC work including the APEC post-2020 vision.

During their interventions throughout the meeting, member economies thanked Papua New Guinea for the

warm hospitality and hosting of APEC year. They commended great organisation of SOM1 and Related

Meetings. They expressed full support for Papua New Guinea’s leadership, including the theme and priorities, and looked forward to working together for a successful APEC year. Senior Officials also expressed their

deepest condolences to Papua New Guinea and its people for the losses cause by the recent earthquake, which was then appreciated by Papua New Guinea.

2.2. Report by the SFOM Chair

The Chair of the Senior Finance Officials Meeting presented to Senior Officials on the 2018 work plan of the

Finance Ministers Process (FMP), including key priorities in 2018 (2018/SOM1/029), which was in line with the Cebu Action Plan and APEC’s third priority. There are four main priorities: (i) Infrastructure development

and financing; (ii) Advancing financial inclusion; (iii) Fostering International Tax Cooperation and

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Transparency; and (iv) Implementing Cebu Action Plan. In addition, the FMP would also work on the Disaster Risk Financing and Insurance (DRFI) an the Strategy for Modernisation of the FMP. The Finance and Central

Bank Deputies Meeting (FCBDM) would be held in Stanley Hotel, Port Moresby on 15 – 16 March 2018.

Japan, Chile and Korea took the floor to comment on the APEC 2018’s theme and priorities and to thank the SFOM Chair for the updates.

Japan emphasized that APEC should continue pursuing high level of liberalisation and appropriate rule making with a view to attaining the Bogor Goals and the future realisation of the Free Trade Area of the

Asia – Pacific (FTAAP). It noted that the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) was signed in San Tiago on the same day. Japan would continue the work on

connectivity, including quality infrastructure. It acknowledged the importance of the digital economy and had submitted some new proposals to the CTI. Regarding the FMP’s work, Japan called for closer SOM – SFOM

interaction and informed that its government was planning to submit the Base Erosion Profit Shifting (BEPS)

related convention to its cabinet.

Chile noted that the signing of the CPTPP confirmed its commitment to open trade and investment and

economic integration. It strongly supported Papua New Guinea’s focus on inclusive and sustainable economic growth and called for concrete actions that could generate more inclusive trade liberalisation and equitable

distribution of the benefits of open trade. It supported the work on financial inclusion.

Korea supported the APEC 2018 theme and priorities which ensured some continuity in APEC work, and

emphasized to identify value added initiatives .

Senior Officials noted the SFOM Chair’s report as well as the theme and priorities for 2018 of the FMP.

2.3. Report by the ABAC Chair

The ABAC Chair presented the report to Senior Officials on the first ABAC meeting (ABAC1) which took place in Auckland, New Zealand from 1 – 4 February 2018 (2018/SOM1/013). He thanked Senior Officials for

attending ABAC1 and the SOM – ABAC Dialogue which was important to aligning the official – business agendas. He recalled the ABAC’s 2018 theme was “Digitisation and Innovation – Advancing Social Harmony”

with the five priorities: (i) Accelerating REI; (ii) Sustaining, developing and deepening inclusive growth opportunities; (iii) Creating opportunities for MSMEs to prosper; (iv) Strengthening financial systems to

secure stable growth, investment and inclusiveness; (v) Breaking barriers to enrich society by advancing

technology. He also presented on the work plans of five ABAC working groups, and introduced the new Digital Innovation Working Group (DIWG) which was in charge of developing business’s perspectives on

frontier digital and innovation challenges, measures to encourage social-led new emerging technology and innovation, and digital transformative impacts on economic sectors. ABAC agenda continued being aligned

and supportive to APEC core work and priorities including REI, services, internet and digital economy, sustainable and inclusive growth.

The ABAC Chair highlighted the importance of the ABAC – SOM Dialogue and the Small Group Meeting on APEC post-2020 vision held during ABAC1. ABAC strongly supported the business – government partnership

in APEC, and maintained the strong interest in APEC core values of trade and investment liberalisation and

REI. The ABAC Chair was of the view that APEC post-2020 agenda would centralise on digitalisation and technology, their challenges and opportunities to the region’s inclusive growth and prosperity. He highlighted

the critical importance of frictionless movement of data on trade and services, and of the governments’ sensitivity to the needs of the private sector in the development of the digital roadmap.

Senior Officials thanked the ABAC Chair for the updates and thanked New Zealand for hosting the ABAC 1.

New Zealand was pleased to welcome Senior Officials and ABAC members to Auckland for the ABAC1

Meeting. It thanked ABAC for welcoming Senior Officials to its working groups to strengthen the collaboration between the two processes, and commended the new interactive format of the ABAC – SOM Dialogue. It

noted from the ABAC meetings of the business sector’s interest in the digitisation of the economy, in

business social responsibility for inclusion agenda, as well as in APEC’s future direction and their engagement in this process. It welcomed the discussion on women and leadership in business, and encouraged ABAC to

continue making a strong feature of this discussion.

Chinese Taipei invited members to the Digital Innovation Forum to be held by ABAC in Taipei in July 2018.

Australia noted that the theme on the digital future presented an opportunity for APEC to focus its policy efforts in economic transformation issues. It emphasized Senior Officials’ responsibility in encouraging

businesses to provide frank perspectives on various development and economy issues, and in ensuring the collaboration to remove or reduce barriers for trade and economic engagement.

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Japan valued ABAC’s active inputs particularly in digital issues. It looked forward to working with ABAC in carrying out the study on businesses engaging digital trade, which would be conducted by the APEC Policy

Support Unit (PSU). Japan would host ABAC2 meeting in Tokyo this April.

Chile commended the establishment of the new ABAC DIWG. It shared the view that digital was important especially in view of the APEC post-2020 vision. It commended ABAC’s inputs into the ASCR implementation

matrix. Chile would work with the private sector when developing work agenda for the common priorities for its hosting year 2019, such as energy, digital and women empowerment.

Thailand noted that ABAC priorities were well in line with those of APEC and commended the SOM – ABAC dialogue. It hoped that this Dialogue would be held regularly, even more than annually. It was interested in

working with ABAC in helping MSMEs in to enhance their competitiveness and to enter the GVCs.

The Philippines thanked other economies for the support for the Cebu Action Plan and the check point to be

conducted in 2018. It commended the ABAC – SOM Dialogue with in-depth perspectives on inclusive growth,

free and open trade, and REI, as well as the break out interactive sessions. The Philippines thanked New Zealand for organising the SOM Retreat to discuss post-2020 vision process. It noted from the meeting the

urgent needs for the business and government to work together to create new narrative on globalisation and inclusive growth, and to institute new dialogues with the labour forces and their presentatives. It appreciated

initiatives of the private sector through ABAC, such as MSMEs, ODR, stocktake on the Boracay Action Agenda. It looked forward to further collaboration with ABAC especially on digital innovation and post-2020 vision.

The United States noted the significant potential for APEC to work with ABAC to ensure collaboration and complementarity of the work in areas of common concerns such as women economic empowerment, MSMEs,

cross-border trade, dealing with emerging technology, and digital trade.

Korea welcomed ABAC’s restructuring to create the DIWG, and opined that digital economy was one of the most central issue. It recalled the fruitful discussion between public and business representatives on

regulatory framework on digital economy at ABAC1 and encouraged further inputs and discussion with ABAC.

Mexico commended the fruitful discussion at ABAC 1 and the SOM Retreat in Auckland. Sharing the priorities

of APEC and the host this year, Mexico looked forward to contribute to the deliverables of this APEC year. It informed that it was also working closely with ABAC Mexico.

Indonesia supported the 2018 theme and hoped to strengthen the engagement in the digital economy.

Malaysia noted the important work of APEC in bringing its member economies closer to deepen the REI. Malaysia noted that digital economy would continue to be Malaysia’s priority including in its APEC hosting

year 2020. It also highlighted the importance of improving connectivity and deepening REI. Malaysia acknowledged ABAC’s important contribution to APEC work, and encouraged engagement sessions as

opportunities for officials to understand and appreciate the needs of the business sector. It also valued inputs from industrial sector for APEC in charting its post-Bogor goals. As the APEC host in 2020, Malaysia

planned to have more engagement with ABAC when crafting the theme and priority areas. It looked forward to a fruitful ABAC3 meeting in Kuala Lumpur in July 2018.

China appreciated and welcome further contribution from the private sector and ABAC to important works in

APEC, including the FTAAP, digital economy, inclusive growth and connectivity.

Russia appreciated ABAC’s efforts in collaborating with APEC in implementing the priority work. It supported

the continuation of the ABAC – SOM Dialogue and the SOM retreat, and suggested, for consideration, to have ABAC1 back to back with SOM1 in the host economy.

The ABAC Chair was encouraged by the SOM’s support for the ABAC’s work program, and noted the good alignment between the work programs of ABAC and APEC in 2018, with focus on issues such as women

empowerment and inclusivity, among others. ABAC would continue to improve the quality of the ABAC – SOM Dialogue and would work closely with the ABAC Co-Chair from Chile to explore the possibility of more

regulary ABAC – SOM Dialogue.

Senior Officials noted the ABAC Chair’s report.

3. DEVELOPING THE APEC 2018 AGENDA: COMMITTEES’ WORK IN SUPPORT OF THE OVERALL PRIORITIES

2.4. Improving Connectivity, Deepening Regional Ecnomic Integration

2.4.1. Report by the CTI Chair

The CTI Chair reported on CTI’s work and outcomes of the first CTI Meeting (2018/SOM1/028), highlighting the following:

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- The CTI approved the amended terms of reference (TOR) for 8 CTI sub-fora and noted the Automotive Dialogue (AD), Electronic Commerce Steering Group (ECSG), and Intellectual Property Experts Group (IPEG) would further

discuss their TORs. As part of the work on Strengthening, Streamlining and Sharpening the CTI and Its Sub-fora,

the CTI would consider on how it could support Senior Officials in evaluating its sub-fora when the term is due. It noted some questions from members regarding governance of the subsidiary bodies of sub-fora.

- There was positive and constructive discussions on the support of the multilateral trading system (MTS) and the recent development in the WTO. Economies supported the discussion and progress at the 11th Ministerial

Conference (MC11) in such areas as e-commerce, women economic empowerment, MSMEs, and fisheries subsidy reforms, as well as in making progress in stalled initiatives such as the Environmental Goods Agreement

(EGS) and the expansion of the Information Technology Agreement (ITA). 20 out of 21 economies had notified the WTO of the former’s acceptance of the Trade Facilitation Agreement (TFA), and the remaining economy had

completed its domestic ratification procedure. The CTI had agreed or would continue discussing a number of

targeted capacity building projects to support economies in implementing the TFA.

- The 2018 Bogor Goals biennial review was underway. The three remaining economies were requested to submit

their Individual Action Plan (IAP) as soon as possible so that the review report could be drafted for discussion at CTI2 and SOM2.

- Progress was seen in moving forward the implementation of the agreed work programs under the Lima Declaration on FTAAP. Other draft work programs, including newly proposed ones, would be further discussed

intersessionally. The CTI members had initial discussion on the modality of drafting a progress report to the Leaders, with two options suggested by the CTI Chair – to have a CTI’s small drafting group, or to task an

independent body such as the PSU to conduct the work. The CTI Chair would further propose concrete ideas

intersessionally and consult with economies at CTI2.

- There were differences in views among economies on the possible enhancement of the ECSG’s mandate

and on the institutional settings to implement the Internet and Digital Economy (IDE) Roadmap. Members discussed the United States’ proposal on Building Blocks for Facilitating Digital Trade and agreed to

provide further comments intersessionally.

- There was good progress on other REI and trade facilitation, including the GVCs, MSMEs internationalisation,

services, Supply Chain Connectivity Framework Action Plan Phase II (SCFAP II). The CTI endorsed the work plans

of the Asia-Pacific Model E-Port Network (APMEN) and of the Green Supply Chain Network. The CTI also endorsed the TOR of the APEC Index to Measure the Regulatory Environment in Services Trade of APEC.

- The CTI’s policy discussion on advancing economic inclusion was an opportunity for members to share views on the challenges, existing domestic policies and how the Committee might use this work program to contribute to

the APEC Action Agenda on Advancing the Economic, Financial and Social Inclusion endorsed by the Leaders last year. Some specific proposals were tabled for consideration. Some economies emphasized that the Committee

should not lose sight of its core work.

- The CTI members expressed their interests in providing the Committee’s viewpoints on the importance of trade

and investment issues into the APEC Vision Group (AVG) process as appropriate.

2.4.2. GOS Convenor to update the meeting on ABAC’s feedback to the ASCR Consolidated Matrix

The Group on Services (GOS) Convenor reported on the progress of the ASCR implementation. The GOS endorsed the TORs for the APEC Index to Measure the Regulatory Environment in Services Trade of APEC,

and for Developing a Set of Non-binding Principles for Domestic Regulations of the Services Sector led by Korea. All sub-fora had started working on 18 actions identified in the ASCR implementation matrix, with

indicators to measure the progress. The GOS Convenor presented at ABAC1 on the ASCR work and subsequently received valuable inputs from ABAC, on which the GOS would review and provide responses for

discussion at ABAC2. The GOS Chair would also be attending ABAC2 to ensure an effective collaboration with

ABAC and identification of concrete actions.

Senior Officials thanked and commended the CTI Chair and the GOS Convenor for their leadership, and

appreciated the work done by the CTI and GOS. They expressed general support of APEC’s role to support the MTS. Some economies emphasized the need for APEC to send a strong message to fight against

protectionism. Economies called for continued efforts towards the achievement of the Bogor Goals, and considered the 2018 review as an opportunity to evaluate progress, identify areas that needs more efforts,

and contribute to the development of a post-2020 vision. Regarding FTAAP, a number of economies opined that the work to implement the Lima Declaration should help enhance economies’ readiness to realise a

comprehensive and high-level FTAAP. On services, economies commended the work to progress the ASCR

implementation, and expressed support for the development of APEC Index to Measure the Regulatory Environment in Services Trade of APEC, and the Non-binding Principles for Domestic Regulations of the

Services Sector.

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In addition, Senior Officials made the following main comments:

Peru reported on the Compendium of Methodologies for the SMEs internationalisation, and its new proposal

on improving Sanitary and Phytosanitary (SPS) notification of the WTO, which it hoped to be welcomed by

APEC Ministers. On FTAAP, Peru would work closely with other economies to fulfill the Lima Declaration. Peru welcomed the outcomes of the MC11, particularly on fisheries subsidy, and opined that APEC should

reaffirm support for the MTS and its improvement. It had notified five measures under category 8 of the TFA; established a multi-sectoral Commission on trade facilitation to enhance the internal coordination in foreign

trade and TFA implementation; developed a TFA Guide; and worked with business sector to raise awareness of the benefits of this agreement and identify possible actions to facilitate trade. It welcomed APEC’s effort to

monitor the TFA implementation and conduct capacity building activities including under the SCFAP II.

Chile viewed that APEC should focus on work towards the realisation of the FTAAP, digital trade and e-

commerce, including the implementation of the Internet and Digital Economy Roadmap, and connectivity. It

welcomed proposals in these areas such as the e-commerce regulation survey (Singapore), fostering an enabling policy and regulatory environment for data utilising business (Japan), enhancing regulatory

infrastructure for e-commerce (Viet Nam), cross-border e-commerce (Chinese Taipei), and digital economy capacity building for inclusive development (China). Chile shared that e-commerce could be one of the possible

priorities of its APEC hosting year 2019, including building infrastructure to enhance the availability and affordability of broadband, internet and ICT. Chile also encouraged further work on ODR and digital skills

improvement.

Canada called for APEC to reaffirm its commitment in resisting protectionism and supporting sustainable and

inclusive growth. To retain the momentum from the MC11, APEC needed to keep working on key issues such

as e-commerce, MSMEs’ participation in the global trade, and women empowerment. Canada stood ready to engage with other members to discuss ways to improving the functioning and effectiveness of the WTO,

including the disputes settlement, transparency and development. It encouraged further work in the WTO on domestic supports for agriculture and discipline to harmful fisheries subsidies. Canada noted that the Bogor

Goals had laid the foundation for REI and welcomed the progress made so far, yet it stressed the need for APEC to further remove impediments to free trade and maintain focus on capacity building. Canada

supported APEC work towards the eventual FTAAP and called for more effective collaboration among all

members. In this regard, it reinforced its commitment to the comprehensive approach to NGeTI issues through launching a new Development Finance Institute to support women economic empowerment, climate

change mitigation and adaptation in developing countries. Canada viewed that as digital transformation did not take place at a same pace across member economies, companies and households, APEC needed to play

a role as an incubator for solutions to bridge the digital divide and not leave the most vulnerables behind. It underlined the need for APEC to nurture the future-ready work force, putting in place the right settings for

digital infrastructure, skills and education, life-long adaptable learning and region-wide digital-friendly regulations. In this regard, Canada commended the ABAC – Marshall school study for useful information.

Canada congratulated Singapore for becoming the latest member of the APEC Cross-Border Privacy Rules

(CBPR) system and encouraged others to join. Canada called for members to reconfirm the commitment to deepening the REI, and welcomed all regional free trade undertakings as pathways to a FTAAP. It noted that

the CPTPP was an example of APEC working on REI, as the Agreement was initially an APEC pathfinder initiative, and looked forward to bringing the agreement into force.

Australia would like to see momentum towards a future high quality FTAAP and noted that in some respects this would be taken forward with the signing of the CPTPP, the progress of the Pacific Alliance membership

and the ambitious RCEP. In the APEC space, Australia promoted work to improve the capacity of developing economies to prepare for an eventual FTAAP negotiation, such as the APEC Investment Policy Capacity

Building workshop funded by Australia to be held in December. Australia noted the serious challenges to the

MTS’s standing and operations from the support level for existing rules and the threat of the sense of protectionism. In this context, it opined that APEC’s mandate and principles must prevail, particularly its

consensus model, cooperation spirit, effective communications with the public, capacity building, resistance to protectionist as well as reiteration of the value of the globally agreed trade rules. Australia launched a

foreign policy whitepaper with a core feature of retention and support for the effective WTO Dispute Settlement system. It took an active role at the WTO in progressing discussions on contemporary challenges,

for instance a possible negotiation on e-commerce and multilateral e-commerce rules in the near future. APEC could play a valuable role in a process to update the global trade rules to ensure they would be able to

deal with contemporary trade issues. Australia also encouraged WTO members to implement the TFA.

Australia was commited to advancing the ASCR implementation and allocated a two-million-dollar fund to assist developing economies in implementing the Roadmap and other domestic services policy reforms. In

2018, Australia would be holding targeted capacity building activities including a services symposium, a workshop on recognition of professional qualification, and a seminar on the telecommunications sector.

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The Philippines underscored APEC’s crucial roles in support of a rule-based, free, open, fair, transparent and inclusive MTS. It supported the full implementation of the TFA, thus it remained committed to the

development of the APEC Trade Repository to promote and support consistency with the TFA implementation

and new trade-related information. The Philippines called for redoubling of efforts to achieve the Bogor Goals, and submission of 2018 IAP, as well as facilitating an enabling and conducive environment for the

businesses and investment. The Philippines underscored the implementation of the Lima Declaration through progressing the agreed work programs and reaching consensus on new proposals. The Philippines

and Malaysia were committed to complete the work program on MSMEs in which a survey on MSMEs and MNC related provisions in RTAs/ FTAs would be conducted. It opined that discussions on e-commerce,

internet and digital economy, connectivity and inclusion were crucial for the development of a vision beyond 2020. It emphasized the need for an effective cross-border privacy enforcement and reminded members to

consider the issue of data localisation carefully to ensure that digital trade would not be costly. It announced

its participation in APEC Cross-Border Privacy Enforcement Arrangement and was taking steps to formally join the APEC CBPR system. The Philippines echoed the importance of the services sector to growth and

development of an economy, and expressed support for the ASCR implementation, particularly on individual reforms.

Viet Nam underlined its strong support for the MTS and would make efforts in implementing the TFA, including through APEC cooperation in regulatory coherence and harmonisation, and building coordination

mechanism among customs authorities. It suggested to hold regular consultations among public and private sector on TFA implementation. It thanked Korea for the leadership in drafting the third phase of the Capacity

Building Needs Initiative (CBNI) and would be willing to lead some areas under the third phase. Viet Nam

reported that it held the APEC Public-Private Dialogue (PPD) on Services with focus on distribution, logistics and transportation services in 2017, and would hold another PPD on structural reform in logistics services on

19 – 20 April in Ha Noi. It welcomed other initiatives to carry forward the ASCR.

Hong Kong, China urged economies to firm up resources to tackle unfinished businesses towards the Bogor

Goals. It noted that with globalised supply chains and e-commerce, removing behind-the-border barriers should be a priority in pursuing free and open trade. It looked forward to constructive dialogues on the

eventual realisation of the FTAAP. It would be implementing the work program on tariffs and stood ready to

support other endorsed work program, which would enhance members’ capacity and readiness towards an early realisation of the FTAAP. Hong Kong, China was of the view that a strong rules-based MTS was the

cornerstone of the global economy that provides stability for international trade and drives economic growth. It reiterated the unwavering commitment to the MTS/WTO and would work with other WTO members to

strengthen the WTO’s functioning, effectiveness and credibility including its dispute settlement. It underlined the benefits of the full implementation of the TFA and encouraged members to promptly make the required

transparency notification of the TFA. Services remained a priority for Hong Kong, China and it looked forward to the negotiations on domestic regulation.

Thailand attached great importance to the 2018 Bogor Goals review and would work closely with others to

develop the post-2020 vision. Thailand underlined the importance of the implementation of the endorsed work programs on tariffs, NTMs, ROO, investment and MSMEs under the Lima Declaration; and would work

with other economies on new topics for mutual benefits, enhanced inclusiveness and towards the realisation of a FTAAP. Thailand continued supporting the MTS and advancing the negotiation to facilitate its smooth

functioning, as well as the full implementation of the TFA. In this connection, it supported APEC survey on the implementation of Article 3 of the TFA, and the initiative on improvement of SPS certification under the

WTO.

Chinese Taipei considered that 2018 review of the Bogor Goals important and thanked the PSU for drafting

the review report. It submitted a non-paper “Contributions to the development of a work program on

services trade” and planned to hold a seminar on digital economy and services. Chinese Taipei urged economies to continue discussing issues related to the FTAAP, and reported that it co-sponsored the work

plan on digital trade and e-commerce proposed by Japan. Chinese Taipei supported the rules-based MTS and the stable development of the WTO. It noted some APEC initiatives that would contribute to relevant work in

the WTO such as the discussion on building blocks to facilitate digital trade and the Boracay Action Agenda to Globalise MSMEs (BAA). It also presented the Online-to-Offline (O2O) initiative. Chinese Taipei

encouraged remaining APEC members to participate in the ITA, and would be willing to cooperate in trade facilitation issues such as automated cargo clearance and single window system. Chinese Taipei attached

importance to APEC’ roles in promoting services liberalisation and would nominate appropriate

representatives to the drafting group for non-binding principles for domestic regulations of the services sector, and in the technical group to work on the APEC Index to measure the regulatory environment in

services trade.

Mexico was pleased with the conclusion of CPTPP and would be willing to share its implementation plan as

part of the sharing information mechanism established in APEC. Mexico reiterated the instruction by the

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APEC Leaders on supporting the MTS and working towards the improvement of the WTO functioning and the effective and timely implementation of the WTO rules. It was of the view that the MC11 presented a

commitment to engage in future work and to reflect on how to respond to the challenges faced by new areas

in trade negotiation. In this sense, Mexico expressed willingness to explore new approaches for both negotiation and regulation issues. Mexico had provided inputs for the Compendium on SMEs

Internationalisation and looked forward to its finalisation. It also reported that the OECD Ministerial Meeting on SMEs was held after 14 years, which injected new dynamism to this issue.

China welcomed the progress on implementing the Bogor Goals and had submitted its IAP report. It would work with other economies to further promote free and open trade and investment, and fight against

protectionism so as to deliver the Leaders’ commitment. It noted tangible outcomes of the APMEN and Green Supply Chain. China acknowledged concrete steps in advancing the FTAAP process including finalising the

work programs or proposals in priority areas identified by the Lima Declaration, launching the third phase of

the CBNI, and sharing new progress in regional FTAs. It opined that at the current stage, APEC should focus on tariffs, NTMs, services, investment, ROO and MSMEs of which the work programs had been agreed, and

preparing a progress report to the Leaders in November. It expected further discussion on advancing the FTAAP in longer term after 2018. China welcomed the initial implementation of the Internet and Digital

Economy Roadmap, encouraged the ECSG’s active participation in implementing the Roadmap within its mandate together with other fora and sub-fora. It expected further instruction from Senior Officials on a

mechanism arrangement for future work, which should reflect the diversity of APEC economies and domestic laws and regulations. China and Papua New Guinea submitted a proposal of a Framework of promoting

commercial inclusion, which focuses on promoting commercial activities that contribute to economic inclusion.

It would revise the draft proposal to reflect the discussion at CTI1 and hoped to work with members.

Russia welcomed the outcomes of the CTI’s policy dialogue on economic inclusion and commented that CTI

work could be helpful in advancing economic inclusion and addressing existing drawbacks. Russia underlined that a systematic approach in the digital agenda was necessary and new initiatives should be value added

and substantive. Russia thanked Mexico for supporting its concept note on intellectual property rights (IPRs) protection in the digital content trade, and appreciated comments on its concept note on enhancing trade

policies transparency in APEC. Russia emphasized the importance of this year’s review of the Bogor Goals. It

reported on some trade facilitation work done in the Eurasian Economic Union. Russia opined that work towards the eventual realisation of the FTAAP should be undertaken under key priority areas as identified in

the Lima Declaration and at the same time, members should also be open to other ideas. Russia held the position that APEC should continue to maintain and further extending support to the MTS, firmly oppose

trade protectionism in all of its form, support on-going work of in the WTO and other international organisations in monitoring protectionism. It was the common interest in maintaining the WTO’s central roles

in the global economy and international trade, upholding its principles of transparency, predictability and non-discrimination while making necessary adaptation to improve its effectiveness. APEC could further

support the MTS through exchanging opinions, sharing best practices and implementing the TFA. Russia

welcomed APEC’s effort in improving the competitiveness of the services sector and the growth of services trade through an open, equitable and predictable environment, and expressed its readiness to contribute to

the implementation of the ASCR.

Japan was of the view that the work on FTAAP should also respond to NGeTI. It reiterated APEC Leaders

commitment in supporting the MTS and fighting against protectionism. Regarding APEC’s post-2020 vision, Japan would work with other members to ensure APEC continues sending strong message to support the

MTS. On services, it realised the increasing importance of trade in services and would continue supporting the implementation of the ASCR.

Malaysia reaffirmed its commitment to the MTS/WTO. As a founding member of the WTO, WTO remained a

top priority of Malaysia. It was encouraged by the outcomes of the MC11, including in fisheries subsidy, MSMEs and e-commerce. It was of the view that APEC would be a contributor to the rules-based, open,

transparent, inclusive and fair trading system. Regarding FTAAP, it opined that members should be open to traditional and non-traditional areas to be included in the future FTAAP.

Indonesia commended the CTI’s policy discussion on inclusive and suggested the CTI consider this issue as a regular agenda. On Bogor Goals, Indonesia underlined that some areas would still need to be addressed

based on the 2016 review including tariff, NTMs, investment etc. Regarding FTAAP, Indonesia was pleased with the progress in caryring out the Lima Declaration with a comprehensive approach, which should allow

bringing into discussion any other issues as long as it takes into consideration the development level of all

members and has capacity building as crutial element. Indonesia supported an open, rules-based, transparent, non-discriminatory, inclusive and development friendly MTS. It supported the initiative on export

subsidies work plan and improving SPS notification. APEC could also play a role in moving forward agriculture trade reform under the WTO. Indonesia welcomed the progress in the ASCR implementation.

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The United States reiterated APEC’s goal of attaining free and open trade and investment, and its principles of a non-binding, consensus-based that allowed it to discuss difficult and sensitive issues and help create a

path forward. APEC should maintain its ambition of a leadership role in the global trading system. The

United States was pleased with the initial steps in advancing the digital trade through the development of the building blocks to facilitate digital trade, and planned to hold another trade policy dialogue during SOM 2. It

expressed concerns that some work on digital trade might be delayed due to process matter. The United States thanked Korea for its leadership in the services work. The United States opined that the WTO TFA

implementation remained a priority and APEC should focus its efforts on areas where it could make contribution to the WTO such as e-commerce, fishery subsidy, trade facilitation and ensuring the

implementation of existing transparency obligations. The United States acknowledged the importance of the WTO; however, it was concerned that the WTO was unable to effectively address cases of violation of WTO

commitments, thereby undermining true market competition and negatively impact economic growth. The

United States looked forward to working with economies to support APEC’s contribution, beyond simple pledges, to the WTO and combatting unfair practices. On implementation of the Lima Declaration on FTAAP,

the United States underscored capacity building for economies to be able to participate in a high standard, comprehensive regional trade agreement. In this regard, it echoed the view to keep it open for other issues

to be addressed in the FTAAP. Sensitivity of the issues to be addressed should not prevent APEC from addressing important issues such as State-Own Enterprises (SOEs), e-commerce and digital issues. The

United States was of the view that the progress report to Leaders at the end of 2018 should include progress in exploring new issues under FTAAP. The United States was encouraged by Papua New Guinea’s leadership

on advancing some issues related to the digital economy and other areas of priority.

Papua New Guinea thanked the PSU for conducting the review of the Bogor Goals, and encouraged members to continue making efforts in outstanding areas. It thanked members for providing information on their

export subsidy programs. Papua New Guinea had submitted the instrument of acceptance of the TFA to the WTO. It also submitted to APEC two proposals for a Trade Policy Dialogue (TPD) on the TFA categories B

and C implementation, which could be held at the margins of SOM3 2018; and for a TPD on rules of origin and its application to agriculture and fishery in various FTAs. Papua New Guinea thanked Korea for the work

on services and would participate in it. It also supported and co-sponsored Australia’s proposal of a seminar

on meeting the challenges in the telecommunications industry in the digital age. It thanked members for supporting its proposals for a joint CTI – GOS public policy dialogue on cross-border e-commerce in services,

and for a symposium on maximising the benefits of FTAs/RTAs within the domestic markets, which was scheduled to take place at SOM3.

Brunei Darussalam was of the view that the principles for domestic regulations of the services sector should be kept non-binding bearing in mind the various development levels of the services sector in APEC

economies. It was moving forward with domestic reforms and was ranked by the World Bank as the most improved economy in EODB for three consecutive years. Brunei Darussalam’s participation in bilateral and

pluri-lateral agreement such as the CPTPP and RCEP was strategic in nature to enhance its competitiveness

in services and other areas. Brunei supported the development of the APEC Index to Measure the Regulatory Environment in Services Trade of APEC and noted that ASEAN was also looking into developing its own

indexes.

Singapore strongly support the CTI’s priority areas and the GOS’s efforts. Singapore encouraged APEC to

press on the efforts to deliver agreed FTAAP work programs and reiterated that the areas identified in the Lima Declaration needed not be exhaustive. It thanked members for supporting its work in the ROO work

program including its joint proposals with New Zealand on updating the APEC 2007 model measures on ROO. It was encouraged by Papua New Guinea’s proposal relating to ROO for fishery and agriculture. Singapore

continued to affirm and support the WTO roles as a rules-based MTS which fosters trade, and consequently

growth and job creation, through liberalisation packages, and serves as a housekeeping mechanism. It hoped that APEC, with its pragmatic and constructive way, could advance the work in and support for the

MTS. Singapore encouraged continued efforts in implementing the ASCR; called for members’ participation in the development of the APEC Services Trade Restrictiveness Index (STRI) while reminded not to reinvent the

wheel. It thanked Korea for the proposal of a Technical Group to develop the APEC Index and would nominate representative.

Korea encouraged more interactive discussion among member economies on each specific item. Korea was of the view that the MC11 had a deplorable outcome with few agreements. It called for members to jointly

cope with the rising tariff war. Korea believed in the supremacy of the MTS, but it could also be flexible with

the new approach proposed by one economy of plurilateral negotiation among like-minded countries on a set of new issues. Despite the new wave of trade disputes, it called for members to achieve the Bogor Goals and

looked forward to the consolidated work by the PSU on the IAPs. Korea noted the importance of the services sector and encouraged more significant progress. It would take a leading role on domestic regulations and

services index work, but noted that APEC had not touched on the main parts of services negotiation.

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New Zealand underlined the importance of the 2018 review of the Bogor Goals, and called for further efforts toward achieving the goals. It was encouraged with the progress of the services work and invited economies’

further effort and cooperation particularly in addressing sensitive issues. Regarding the FTAAP and MTS, New

Zealand urged members to apply collective collaboration and utilised APEC’s strength as an incubator of ideas. In this regard, it suggested that economies which still had difficulty with some particular issues might

choose not to participate but let others explore the issues. Despite necessary improvements for the MTS, which would ultimately require members’ political will, New Zealand noted the progress in and benefits for

many parts of the world thanks to the MTS. It also opined that the MTS also played an important, systemic role in achieving inclusive growth.

PECC hoped to continued working with APEC on the services agenda, including organising a TPD on cross-border e-commerce in services with Papua New Guinea. PECC noted SCE’s mandate to oversee the ASCR

implementation, thus suggested the SCE to discuss this at its meetings. While pointing out a positive outlook

for the regional economy with the highest growth rate since the bounce back of the global financial crisis, PECC also highlighted concerns of the rising protectionism. It was of the view that APEC could have value

added in improving the operation of the MTS/WTO. PECC informed that its next Meeting would be held with the theme “Global Disorder, the need for new regional architecture and business models” in Jakarta in May.

Senior Officials endorsed the CTI Chair’s report and noted the updates from the GOS Convenor. They noted the discussion on the review of Bogor Goals and the post-2020 agenda; on the way forward in deepening the

REI, including the progress towards the eventual realisation of an FTAAP; on how APEC can contribute to the MTS and the to TFA implementation progress; and on supporting the ASCR implementation.

2.4.3. Report by the SOM FOTC on Connectivity Chair

The SOM Chair reported that the SOM FOTC on Connectivity met on 5 March 2018. China, Japan, Malaysia, Chinese Taipei and Thailand provided updates on on-going projects and new proposals that would advance

APEC’s efforts to reach seamlessly and comprehensively connected and integrated APEC. The meeting called for economies to nominate potential case studies to be conducted by the PSU to identify the progress in

implementing the Connectivity Blueprint and to address the existing gaps. The meeting also exchanged ideas on potential review of the Roles and Functions of the SOM FOTC in line with the streamlining and

strengthening the APEC governance, on which the SOM Chair encouraged continued discussion to find

common ground. The Chair was inclined to propose a timeline for comments on this matter as the mid-term review approached.

Japan informed that it would upgrade APEC Guidebook on Quality Infrastructure. It had circulated the draft revised Guidebook in February to CTI representatives and looked forward to constructive cooperation. It was

also engaging peer review and capacity building for quality infrastructure initiatives for the Philippines and Viet Nam, and invited other economies to participate.

2.4.4. Report on the SOM Policy Dialogue on the Digital Economy and related initiatives

Papua New Guinea reported that the SOM Policy Dialogue on the Digital Economy was held on 7 March

under the theme “Building on the APEC Internet and Digital Economy Roadmap”. The Dialogue helped Papua

New Guinea take forward its theme “Harnessing Inclusive Opportunities, Embracing Digital Future” and aimed to address three objectives: (i) setting the scope and definition for the work on digital economy; (ii) discussing a governance arrangement for this work; and (iii) providing a platform which will support future hosts. The Dialogue highlighted the rapidly growth potential of the digital economy, its contributions to trade

and productivity in almost all key sectors including health and education. The Dialogue also pointed out a range of challenges, from providing adequate infrastructure and skills to ensuring that trade and regulatory

policies promote innovation and competition, and that digital technology promotes participation of women, small businesses and those from remote areas. The Dialogue appreciated the intervention by the APEC

Secretariat’s Executive Director on what APEC had been doing in this area; as well as comments by Senior

Officials on the significant challenges faced in governance of this work as the whole and in setting priorities for the future. In response to the Dialogue, Papua New Guinea intended to make a set of proposals on how

to take this work forward at SOM2 and would share with members in advance.

2.4.5. Next Steps to Take Forward the APEC Internet and Digital Economy Roadmap

The United States spoke on their proposal on Implementation Plan for the APEC Internet and Digital Economy Roadmap (2018/SOM1/002) (the IDE Roadmap). The United States also remained open to other

suggestions that could avoid additional organisational layer between Senior Officials and expert sub-fora, and utilise existing reporting mechanism to the maximum extent possible.

Senior Officials spoke to express appreciation to Papua New Guinea for organising the SOM Policy Dialogue

on the Digital Economy, and to the United States for its proposal. Senior Officials shared the need to identify an effective and efficient mechanism of proper level and capacity to implement the IDE Roadmap.

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In addition, Senior Officials also shared the following ideas:

Russia opined to set up a strictly centralised mechanism for monitoring, guiding and coordinating the work on

digital and internet economy, such as rationalisation or revival of the Ad Hoc Steering Group on Internet

Economy (AHSGIE), or creation of a Policy Partnership on Digital Economy which reports to Senior Officials or SCE.

Chinese Taipei called for a pragmatic implementation of the IDE Roadmap. It noted that APEC would need to work on bridging the digital divide in terms of physical infrastructure, digital literacy and governance

regarding cyber security, data protection and other regulatory approaches. APEC also needed to identify a improvement baseline in digital economy measurement. Chinese Taipei appreciated the United States’

initiative in promoting the CBPR system, and announced that it would join the CBPR.

The Philippines looked forward to working with member economies on capacity building for infrastructure

development and to the updated Guidebook on Quality Infrastructure Investment and Development. It

viewed the United States’ proposal as a good start and would submit comments intersessionally, noting that no new mechanism should be created and the work would be undertaken by the existing structure. It noted

that the implementation should take into account the views of business, academia as well as consumer groups.

Japan opined that the implementation of the IDE Roadmap should be in line with the streamlining of APEC sub-fora, and thus supported the United States’ proposal.

New Zealand acknowledged the great work done by the AHSGIE in producing the IDE Roadmap. It noted that the IDE Roadmap implementation would be bottom-up approach and undertaken by expert sub-fora,

and coordinated by a sub-fora accountable to SOM, rather than by a small group of SOM themselves. It

commended the model in which the GOS was given the coordinating and reporting roles for the ASCR. In this regard, it considered the United States’s proposal, or re-purpose the ECSG possible ideas to explore further.

Given the importance of this work, it called for members to get on with this and hoped for some progress by SOM 2.

Malaysia noted that digital and internet economy would be important in the coming time, including for Malaysia during its hosting year 2020. Malaysia would be open to discussing both the United States’ proposal

and other possible mechanism which, in Malaysia’s view, would be responsible not only for implementing and

monitoring the IDE Roadmap but also for keeping the breath of the development in the internet and digital economy issues and institutionalising relevant industrial engagement and consultation. In addition, trade

being APEC’s focus, it suggested APEC members to ensure continuous momentum and synergies in progressing the internet and digital economy in the region. Malaysia commended the APEC Secretariat for

the stocktake of initiatives relevant to the key focus areas of the IDE Roadmap.

Viet Nam supported the work on internet and digital economy, recalling that the Internet and Digital

Economy Roadmap and the Cross-Border E-Commerce Facilitation Framework were two among important outputs of the APEC Viet Nam year 2017. It suggested Senior Officials to take into account inputs from ECSG

and TELWG on the implementation of these work areas. Regarding the E-Commerce Framework, Viet Nam

would carry out a project which would include a study on the regulatory environment for e-commerce and a workshop to disseminate the findings of the study.

China presented its Concept Note on Digital Economy Capacity Building for Inclusive Development, and looked forward to working with member economies to strengthen the capacity on digital economy and bridge

the digital divide. While finding some common grounds in the United States’s proposal, China did not think that the ECSG and TELWG would be able to take the responsibility of overall coordination and

implementation of the IDE Roadmap. China suggested a SOM-level mechanism to help Senior Officials exercise their responsibility of coordination and oversight over the IDE Roadmap implementation and

periodical reporting to Ministers as they were tasked in the Roadmap. China was open to discuss various

options, such as renewing the AHSGIE; creating a permanent SOM-level forum, particularly in view of the post-2020 vision; utilising sub-fora with bottom-up approach, in which SCE could play a role; and creating a

Friend of the Chair group.

Mexico commended that the Dialogue on Digital Economy had given a comprehensive outlook on how APEC

had been addressing this issue and possible pathways ahead. It attached great importance to the development of the digital economy as a contribution to inclusive growth and diversification of the economy.

It welcomed the United States’ proposal in principle; yet it was still under consultation with other domestic agencies.

Australia supported connectivity agenda, including the supply chain connectivity and the ASCR. Australia

looked forward to developing an enabling environment for digital trade with robust engagement with the private sector, and opportunities of capacity building. It reiterated its support to the Cross-Border E-

Commerce Facilitation Framework which addressed emerging issues such as cross-border data flow,

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consumer protection, cyber security; as well as to the TPD on Digital Trade and the building block approach led by the United States. It opined that the digital trade, e-commerce and cross border data flow issues could

be taken forward under a modernised ECSG, and hoped to avoid setting up another arrangement in this

space. It viewed that the report template refered to in the United States’s proposal could be used as vehicle for reporting.

Thailand shared that digital economy was among its top priority. It had launched a long-term plan “Digital Thailand” to encourage all sectors to enjoy the advantage of digital technology. It was of the view that APEC

needed to put more effort in strengthening the digital infrastructure, literacy and skills. Thailand and TELWG members would submit to Senior Officials the Framework on Cyber Security later this year. Thailand was

open to having TELWG-ECSG working together or reviving the AHSGIE or creating a new group to oversee the implementation of the IDE Roadmap.

Chile opined that APEC should take advantage of the expert groups to develop an action plan to implement

the Roadmap. It supported having TELWG meeting at SOM1 2019 to foster collaboration in this topic.

PECC shared a finding from its survey that showed a strong emphasis on data protection and privacy as well

as digital infrastructure. It was of the view that APEC should be at the forefront of the establishment of norms and rules for the development of the digital economy, and create a model of the internet economy

that can be emulated for the rest of the world.

Korea had reservation with the proliferation of APEC fora, thus did not support the revival or restoration of

the AHSGIE. Korea could go along with the United States’ proposal which supported the decentralisation and cross-fora collaboration across existing fora. As the next chair of TELWG, Korea will promote collaboration

with ECSG. It required more time to consider China’s proposal and discuss it thoroughly.

Peru supported the United States’s proposal. Peru agreed with the importance of the HRD activities in closing the digital gap, and encouraged economies to take into account the proposal by China.

The United States looked forward to continuing the discussions and working with Papua New Guinea on the outcomes of the Dialogue.

Senior Officials noted the report of the FOTC on Connectivity and proposed that member economies send written comments on the governance issues to the SOM Chair by 2 April 2018. Senior Officials noted the

outcomes of the SOM High Level Policy Dialogue on Digital Economy as well as suggestions and comments

on the United States’ proposal, and encouraged flexibility and willingness to explore options to take this forward. They also noted relevant initiatives around the floor, including those from China and Thailand.

2.5. Promoting Sustainable and Inclusive Growth

2.5.1. Report by the SCE Chair

The SCE Chair reported on SCE1 and SCE-Committee of the Whole (SCE-COW) deliberations. The SCE endorsed and recommended for SOM approval, the revised TORs of fifteen SCE sub-fora, together with its

own revised TOR, which aligned with governance requirements approved by SOM in 2017. The SCE approved its own Work Plan for 2018, and Strategic Plans of the Counter-Terrorism Working Group (CTWG) and the

Experts Group on Illegal Logging and Associated Trade (EGILAT). The SCE endorsed in principle a proposal

by Papua New Guinea to hold a policy dialogue on Harnessing Growth in the Resources Sector, while noting comments of members. The SCE noted a presentation from Russia on Bridging the Gap in Economic

Development and Integration of Remote Areas for Sustainable Growth in the APEC Region.

The SCE-COW did not approve the work plans of its seventeen sub-fora, taking into account a view that

there was insufficient clarity as to which work plans had been endorsed at the sub-fora level. The SCE agreed to have all work plans which have been endorsed at the sub-fora level circulated inter-sessionally for

approval by the SCE. The SCE-COW took note of the interventions of convenors and representatives of the SCE sub-fora which highlighted key fora deliverables and cross-fora collaboration. Economies congratulated

the SCE Chair on streamlining the SCE-COW format and rendering deliberations more efficient and

meaningful. A number of economies expressed the wish that such streamlining be carried over to 2019.

Senior Officials thanked the SCE Chair for her Report and made the following interventions:

The Philippines would coordinate with economies on the annual stocktake and 2020 mid-term review of the Boracay Action Agenda (BAA). It encouraged member economies to continue implementing the BAA. The

Philippines would collaborate with Papua New Guinea to hold the policy dialogue in sharing best practices for internationalisation and competitiveness of MSMEs at margins of the 47th SMEWG meeting. It would host the

APEC project on Enhancing the Competitiveness of Women-led MSMEs in the Garments and Textile Sectors through Innovation and Entrepreneurship in April, and encouraged members to send relevant participants. It

would work closely with the SCE Chair in promoting the ECOTECH and capacity building work in APEC.

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Canada reported on the completion of a Mining Task Force (MTF)’s project on mine closures, which produced a checklist based on international guidelines and standards, and noted that APEC working groups can

stimulate private-public collaboration on sustainability issues. Canada also noted the commonalities among

the agendas of APEC and the G7 and G20.

Japan would make a contribution of USD100,000 to the Women and the Economy sub-fund. It had been

working with economies to address comments regarding the Guidebook for Development of Sustainable Cities, which had been endorsed by the Energy Working Group (EWG) and Policy Partnership on Science,

Technology and Innovation (PPSTI). Japan would seek inter-sessional endorsement of the guidebook from Seniof Officials.

Chinese Taipei reported on its projects on sustainable and inclusive growth, including on green energy finance and social action in the digital age.

Russia welcomed the proposal from Papua New Guinea on growth in the resources sector and indicated its

willingness to support Japan’s initiative on women in leadership. Russia reported on its plans to follow-up on the SCE-led Policy Dialogue on the development and integration of remote areas, including through a study

to be conducted by the PSU.

Viet Nam recalled that the APEC Action Agenda on Advancing Economic, Financial and Social Inclusion in the

APEC Region contemplated two initiatives for each of the economic, financial and social inclusion areas on 2018. In this vein, it would be proposing projects on skills in the digital age and on gender.

Mexico planned to propose a project on the circular economy, which addressed environmental issues and job creation, and offered to share its experiences with Japan in connection with the proposed Guidebook for

Development of Sustainable Cities.

Australia noted that sustainable and inclusive growth was reflected in its Foreign Policy White Paper. It indicated its support for Papua New Guinea’s initiative on growth in the resources sector; and looked forward

to the PSU’s study on remote areas. Australia would co-sponsor China’s Initiative on Urbanisation Cooperation.

Hong Kong, China indicated its support for China’s Initiative on Urbanisation Cooperation.

China noted its support for Papua New Guinea’s initiative on growth in the resources sector, pursuant to a

step-by-step approach. China introduced its Initiative on Urbanisation Cooperation, which was intended to

implement the Ningbo Initiative commitment to build a cooperative network and knowledge sharing platform regarding sustainable cities. It would seek inter-sessional endorsement for the initiative, as a forum is

planned for June or July this year. China also introduced, for information, a paper concerning education cooperation.

Singapore noted that urbanisation was a priority for Singapore; and indicated that a digital library would be preferable to a bricks and mortar centre, as a suggestion for China’s urbanisation initiative.

Chile noted that the participation women in an economy is a driver for growth. Chile mentioned the gender inclusion guidelines of the Policy-Partnership on Women and the Economy (PPWE).

The United States recalled its support for the Women and the Economy sub-fund, and thanked Japan for

supporting the sub-fund. It recalled the Healthy Women, Healthy Economy initiatives which it had led.

Papua New Guinea indicated that it will co-sponsor China’s Initiative on Urbanisation Cooperation; and

supported further work regarding the remote areas initiative.

Korea noted the importance of inclusive trade and recalled the Pathfinder Inclusive Trade Initiative.

Peru and Indonesia noted the importance of food security.

Senior Officials endorsed the SCE Chair’s report. They noted initiatives to implement the APEC Growth Strategy

and initiatives that promote Gender Inclusion and Women’s Economic Empowerment; the Guidebook for Development of Sustainable Cities; the work on Bridging Gap in Economic Development and Integration of

Remote Areas for Sustainable Growth in the APEC Region; work on Innovation Development; the next steps

in implementing the Boracay Action Agenda (BAA), and the 2018 Stocktake and the Mid-term review of progress. Senior Officials also noted the next steps on implementing the Action Agenda on Advancing

Economic, Financial, and Social Inclusion and the Framework on Human Resource Development in the Digital Age and noted China’s proposal on Urbanization Cooperation and on Catalysing Inclusive Opportunities and

Digital Future thorugh Education Cooperation

2.6. Strengthening Inclusive Growth through Structural Reforms

2.6.1. Report by the EC Chair

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The EC Chair presented his report on the first EC Meeting (EC1) that took place on 5 – 6 March and related meetings, including the Joint EC-HRDWG Policy Dialogue on 2017 AEPR Recommendations. In its work in

2018, the EC planed to contribute to the implementation of the APEC Host Economy’s priorities by continuing

the RAASR implementation as well as focusing on digital economy, sustainable economic growth and inclusion.

- On structural reform, the EC would work with the PSU to prepare a RAASR mid-term review, which would be presented to the High-Level Structural Reform Officials’ Meeting (HLSROM) in August; work on

the 2018 APEC Economic Policy Report (AEPR) on Structural Reform and Infrastructure and sharing best practices (11th Conference on Good Regulatory Practices in August, EODB work etc.).

- On the digital economy, the EC held a plenary discussion on this subject as well as three policy dialogues (on EODB, Open Government and Public E-Services), which also largely focused on digital

issues. AEPRs also provided recommendations on developing digital economy – 2017 AEPR on Human

Capital Developments touched upon digital skills training, 2018 AEPR will have an annex on digital infrastructure. Papua New Guinea proposed to dedicate 2019 AEPR to the topic of Structural Reform

and the Digital Economy. A number of EC projects also deal with digital issues.

- On inclusion, the EC seeks to mainstream inclusion in the structural reform work. 2017, 2018 and 2019

AEPRs all can facilitate closing the digital divide. The EC would continue its work together with the HRDWG on the implementation of 2017 AEPR recommendations; support the implementation of the

Action Agenda on Economic, Financial and Social Inclusion; and explore ways to produce a policy framework on structural reform and inclusive growth with the view of presenting a draft of this

document to HLSROM in August.

The EC Chair also reported to Senior Officials on the outcomes of the Joint EC-HRDWG Policy Dialogue, which produced the “10 Big Ideas” on implementation of 2017 AEPR Recommendations and on deepening

EC-HRDWG cooperation. EC1 also had a policy discussion on EoDB and noted that the PSU would finalise its assessment of Second APEC EoDB Action Plan (2016-2018) by EC1 2019. The Core Team of volunteer EC

members led by New Zealand was progressing with its work on 2018 AEPR on Structural Reform and Infrastructure. The PSU study’s ToR, Individual Economy Report Questionnaire and the Statement of

Principles for the AEPR were endorsed at EC1. The EC was also pursuing cross-fora collaboration with

HRDWG, FMP, CTI and other APEC fora as well as international organizations such as HCCH, UNCITRAL, UNIDROIT, World Bank and OECD. The EC Chair sought Senior Officials’ consideration of his report.

Senior Officials congratulated the EC Chair for the successful EC1 meeting and commended his efforts to move the work forward. They acknowledged the importance of the APEC’s work on structural reform, and

looked forward to the RAASR mid-term review as well as the HLSROM. They expressed appreciation to New Zealand for leading the 2018 AEPR work, and supported Papua New Guinea’s proposal for “structural reform

and the digital economy” as topic of the 2019 AEPR. Senior Officials also emphasized the importance of the EoDB work led by the United States and expressed their determindation to achieve the goal of 10%

improvement by 2018.

Chile underlined the importance of EC’s work on infrastructure-related issues. In this regard, it noted that the 2018 AEPR would go in line with the implementation of the IDE Roadmap. As it planned to include digital

economy issues in its host year’s priorities, Chile supported the proposed topic of the 2019 AEPR on Structural Reform and the Digital Economy.

Viet Nam elaborated on the importance of the structural reform for modernizing economy and welcomed dialogue between EC and other fora. It would continue to contribute to the RAASR implementation as the

convenor of the EC FotC on Corporate Law Governance and as a member of 2018 AEPR Core Team.

Mexico reported on the 11th Conference on Good Regulatory Practices and the Capacity Building Online

Program on Better Regulation. It invited economies to participate in the Workshop on Secure Transactions

(21-22 March 2018, Mexico City).

Chinese Taipei commended the contribution of the Joint EC-HRDWG Policy Dialogue to promoting inclusion.

Russia supported the proposed topic “structural reform and the digital economy” of the 2019 AEPR, and encouraged cross-fora collaboration between EC and TELWG. Russia reported on the outcomes of the Policy

Discussion on Public E-Services held at margins of at EC1. It emphasized the importance of further collaboration between EC and HRDWG on human capital development.

Canada encouraged further attention to the inclusion aspects of structural reform work. Canada thanked New Zealand and Australia for coordinating and providing funding for the 2018 AEPR, and noted that the

proposed topic “structural reform and the digital economy” for 2019 AEPR could also contribute to

strengthening inclusiveness of economic growth. Canada co-sponsored the EC initiatives on good regulatory practices and online dispute resolution; and tabled a paper on the gender-based analysis for budgeting.

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Australia welcomed the recommendations of the 2017 AEPR on structural reform and human capital development. It informed that it would provide funding for the 2018 AEPR and welcomed cooperation

between the EC and FMP on this report.

Hong Kong, China underlined the need for the structural reform work to address the challenges and opportunities of the digital economy. It worked with other economies to promote the online dispute

resolution initiatives in support of MSMEs.

Thailand reported on the outcomes of the Policy Discussions on Open Government at margins of EC1.

The United States emphasized the importance of the EoDB and confirmed its intention to contribute to this work through capacity building with the view to achieve the goal of 10% improvement by 2018. The United

States supported the work on the 2018 AEPR, noting the crucial role of high-quality and sustainable infrastructure for a healthy growth and positive development of the region.

Malaysia congratulated Papua New Guinea on the preparations for the HLSROM. It invited member

economies to participate in a workshop on public consultation initiatives in June in Kuala Lumpur.

New Zealand elaborated on the drafting of 2018 AEPR and congratulated the EC Chair on the Joint EC-

HRDWG Policy dialogue as a successful follow-up from 2017 AEPR.

Papua New Guinea highlighted that the EC work contributed to the Host Economy’s priority of Strengthening

Economic Growth through Structural Reform. It reported that the HLSROM, to be held back-to-back with the EC2 meeting, would consider the conclusions of the RAASR Mid-Term Review. It commended on the

successful Joint EC-HRDWG Policy Dialogue and notef the ideas produced during the meeting. It also commended the fellow members of the 2018 AEPR Core Team for their work and thanked members for

supporting its proposal for “structural reform and the digital economy” to be topic for the 2019 AEPR.

Korea informed that it had submitted its RAASR Individual Action Plan. Korea contributed to the EoDB work as one of the champion economies in the area of enforcing contracts. It welcomed mainstreaming inclusion

into the structural reform work, including the EC Chair’s proposal of a policy framework on structural reform and inclusive growth.

China attached significant importance to the 2018 AEPR. As an active contributor to infrastructure development in the region, China looked forward to sharing its experience through AEPR. It welcomed the

development of the paper on structural reform and inclusive growth, and noted that it strongly supported

high-quality growth through strengthening the structural reforms and would continue participating actively in relevant work.

The Philippines considered the “10 Big Ideas” an important guidance for the policy-makers and a reference for areas of further cooperation. It attached great importance to the EoDB work as part of the inclusive

growth agenda, in particular concerning MSMEs’ participation in the global market. It thanked the APEC Secretariat for providing the cross-cutting issues maps.

Japan noted that as a promoter of infrastructure development, it looked forward to contributing to the 2018 AEPR by sharing its experience and best practices, such as in application of a long-term value for money

perspective.

Peru supported the implementation of RAASR through the Individual Action Plans and encouraged economies to propose projects under the RAASR sub-fund. It was of the view that the work on structural reform with

relation to the human capital development should be continued to better respond to the challenges of the technological disruptions. Peru supported the EC – FMP cooperation in conducting the 2018 AEPR, and

looked forward to contributing to the report.

The EC Chair thanked Senior Officials for their support. He informed that the EC would undertake a number

of intersessional activities in the lead-up to EC2 and the HLSROM, and encouraged active participation by member economies.

Senior officials endorsed the EC Chair’s report. They noted the progress of the implementation of the RAASR

and the 2nd APEC EODB Action Plan, as well as the work on the 2018 AEPR.

3. LOOKING FORWARD

3.1. Next steps to prepare for the APEC post-2020 Vision

The SOM Chair commended Peru and Viet Nam for initiating the work on the APEC post-2020 vision. In moving the work forward, Papua New Guinea would be holding inaugural meetings of the SOM Steering

Group on Post-2020 Vision (SSG) and the APEC Vision Group (AVG). He called for members’ cooperation to meet the agreed timeline and milestones of the process, including the AVG launch and its first meeting at

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margins of SOM2, a the Multi Stakeholder Dialogue at margins of SOM3, and a final report to be delivered by the AVG at CSOM 2019. He underscored the importance of the SSG and its mandate to ensure timeline is

adhered to and activities are effectively carried out for the delivery of the report at CSOM 2019. He reported

on the outcomes of the SSG meeting (2018/SOM1/035) which was held on 6 March to discuss chairing and administrative arrangement based on the issues for consideration paper that had been shared with Senior

Officials in advance.

Senior Officials thanked the SOM Chair and Papua New Guinea for pushing forward the post-2020 vision

process. Member economies reiterated Senior Officials’ oversight of the work and expressed their readiness in working with each other in this critical work. They made the following comments:

China raised some concerns on the procedure and confusion. It recalled the arrangement agreed at CSOM 2017 that Senior Officials had the oversight of the post-2020 vision process, and economies could decide the

level of support given to their respective AVG members. Hence China was of the view that Senior Officials

should be invited to attend SSG meetings, and economies should be allowed to decide their delegation to the AVG meetings. It also suggested that the SSG Chair should be from the host economy of each respective

year.

Viet Nam welcomed the substantive discussion and recommendations at the first SSG meeting, as well as

Chile and New Zealand co-leadership for the SSG. Viet Nam had selected its AVG representative. It urged the SSG and APEC Secretariat to work hard to prepare for the first AVG meeting, which in its view, should focus

on substantive matters. SOM should have frequent interaction between the AVG to ensure that its inputs would be sufficient for SOM.

Chile thanked the Secretariat and Papua New Guinea for drafting the paper. It counted on the SSG’s

facilitation and assistance to Senior Officials to oversee the process including the AVG’s work. It commented that the SSG co-chair should be identified as Senior Officials from co-chair economies rather than specific

individuals. As co-chair of the SSG, Chile welcome comments from all members on the SSG’s report and recommendations. At its second intervention, Chile supported Canada’s comment to include assistants for the

AVG members.

Russia shared its observation that except for troika mechanism, APEC had never created a body of a limited

number of member economies. It was of the view that all Senior Officials should involve in discussing and

deciding relevant procedure and arrangement for this important work, including at SSG and AVG meetings. It reiterated its support for having a transparent environment, and did not support any arrangements that limit

or infringe Senior Officials’ right. It requested to delete the second sentence of point 9 of the Summary Report. It sought clarification on what form of Secretariat that supports the SSG.

Canada sought clarification regarding the “substitutes” of the AVG members and viewed that substitute members might not be suitable for such important mechanism like the AVG. It also suggested that AVG

members should have supporting officials, who should also attend AVG meetings. Canada announced its AVG member.

Indonesia noted that it would need more time to respond. It reiterated the need to maintain the AVG’s

autonomy to ensure their independence in providing recommendations to Senior Officials. Yet, it opined that Senior Officials should attend AVG meetings as observers. Indonesia informed that it had identified its AV

representative.

The Philippines shared some concerns about the procedure and underlined that the focus should be on

facilitating and proceeding with the AVG. It shared the view that SSG should be chaired by the host economy for each year, and economies should decide who they send to AVG meetings as support for their respective

AVG members. It encouraged an open process for selecting the AVG chair, and expected that AVG members would work closely with SOM. It reiterated that SOM, rather than the SSG, should oversee the AVG, and

suggested to let the AVG, rather than the SSG, to decide attendants of AVG meetings; and reminded that

this SSG paper should be guidelines for the SSG and not supersede the previously adopted paper. The Philippines supported the APEC Secretariat’s proposal for some budget for the AVG’s activities.

Malaysia supported the establishment of the SSG and AVG, and looked forward to launching the AVG. It underlined the importance of this process for Malaysia, given its hosting role in 2020 when the Leaders

would announce the new direction of APEC. It informed that its Senior Official had been nominated as AVG member.

Peru recalled that Senior Officials endorsed the proposal on a comprehensive process to develop the APEC post-2020 vision, including the establishment of the SSG and AVG. It commended that the SSG’s

recommendations suggested a clear division of labour between the AVG and SSG, and were in line with the

principle that Senior Officials would make final decision on substantive issues.

Chinese Taipei echoed the view that Senior Officials should be invited to listen to the deliberation of the SSG.

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Mexico announced its nomination to the AVG. It echoed other members that for transparency purpose, all APEC members should have the right to observe subsequent meetings of the SSG and the AVG. Mexico

anticipated that AVG members would require some assistance which would likely be provided by the

respective SOM team; thus recommended that the SOM team be present during those meetings.

Australia echoed the comments from Peru. It highlighted the need to have close interactions among Senior

Officials, AVG and SSG, and hoped to move towards discussion on substance given the tight timeline. It was looking for a suitable candidate to nominate to the AVG.

Papua New Guinea echoed Peru’s comments and reiterated that the SSG would only make recommendations to SOM. Papua New Guinea was in the process to make nomination of its AVG representative. It requested

members’ cooperation to move this forward.

The United States welcomed report and comments from Papua New Guinea, Peru, Australia and Canada. It

supported the SSG report and looked forward to the start of the AVG and to discussing the AVG report.

New Zealand reiterated that the SSG welcomed comments from all Senior Officials and would reflect on them. It recalled that Senior Officials agreed to establish the SSG last year. It viewied that the troika

mechanism for the SSG chair would increase the work load for the host economy and the disruption due to chair rotation. It emphasized nothing in the SSG recommendations was designed to eliminate SOM’s

oversight and participation. It noted that all the AVG nominations so far were male.

Korea supported the current SSG membership. Regarding the AVG, it preferred independent activity of the

group to allow them to have constructive yet provocative opinions.

Japan agreed that AVG meeting should work on substantive issues at its first meeting. However, it

anticipated that procedure and operational questions might as well be raised by AVG members. It expected a

brief high-level recommendations on the directions for APEC from the AVG; and suggested Senior Officials to identify questions to be addressed in the AVG report and roles of participating members.

Singapore informed that it had nominated its AVG representative. It recalled that the SSG was an expanded troika mechanism in order to ensure continuity. It echoed the view expressed by Korea and was thankful to

SSG members for doing extra work in processing issues before presenting to SOM, without which the conversation at SOM on this issue would require more time. It encouraged members to exercise flexibility as

those process issues are not fundamentally contentious.

Hong Kong, China suggested more transparency on how Senior Officials could be involved and called for improvement in the process which would help add credibility and consensus building. It shared Canada’s

comments.

PECC had established a task force led by Malaysia and New Zealand to discuss APEC’s post-2020 vision. It

had done a survey of stakeholders to get a baseline of views of key issues looking ahead to the 2020, whose findings and recommendations would be discussed at the task force’s meeting in Kuala Lumpur in late March.

PECC aimed to generate some innovative suggestions that come beyond the immediate circle of those coming to APEC meetings. PECC also informed that its next Standing Committee Meeting, to be held in

Jakarta in May, would be another opportunity to get some thoughts about the future of the region.

ASEAN raised its interest in attending and contributing to the SSG meetings as observer to sharing its experience. It noted that the ASEAN Economic Community would have a mid-term review also in 2020.

APEC Secretariat Executive Director recalled that the paper endorsed by Senior Officials at CSOM 2017 had set out the roles of Senior officials, SSG and AVG. The SSG’s roles were to support the AVG setting and to

take any decision requirements back to SOM. He noted comments and varios views from member economies on the SSG leadership, the substitutes of the AVG members, and how closely Senior Officials should

supervise the AVG. He suggested that the SSG would reflect those comments and send a revised paper to Senior Officials. He clarified that the APEC Secretariat would be assisting the SSG and AVG, in response to

Russia’s question.

The SOM Chair noted the comments from economies which would be taken into account. He called for members’ commitment to keep the timeline for the AVG nomination and its initial meeting at margins of

SOM2. He invited all economies to provide written comments on the SSG’s report by 23 March to the SOM Chair and APEC Secretariat, with a view to refine the paper and have a clear guidance for the AVG regarding

its relations, functional and operational issues, and to help the AVG with its Chair selection.

3.2. APEC Principles for Drafting Ministerial and Leaders Statements

Papua New Guinea presented their paper on APEC Principles for Drafting of Ministerial and Leaders’ Statements (2018/SOM1/031). It recalled the discussion at ISOM which noted positive appetite for some the

principles such as respecting the host, cooperation, mutual understanding, voluntary participation, inclusivity,

transparency and consensus-based outcomes. Senior Officials also expressed their support towards future

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hosts in assisting them in finalising the statements in a timely manner. Based on that discussion, Papua New Guinea submitted this proposal for Senior Officials’ consideration and endorsement before SOM 2.

Senior Officials thanked Papua New Guinea for the proposal. There was some general support for most of

the proposed principles. Senior Officials made the following remarks:

The United States would provide comments interessionally. It supported short concise, outward and forward

facing statements that highlights the main accomplishments and representative initiatives of the year; not to repeat what have been agreed in sectoral Ministerial statements, previous statements, or get into the

project-level details. It was of the view that the statements were opportunities to communicate APEC’s vision and should not be bogged down with APEC process. It encouraged early circulation of drafts and submissions

of comments, and aiming at issuance of consensus statement.

Chile supported the proposal and underlined to avoid negotiation.

China recalled the tradition that APEC statements reflected continuity, consensus and had been extentive. It

noted that the work of sub-fora needed to be acknowledged. It opined that Chair’s statement would be the last resource as it might send negative message and decrease the momentum of APEC. China raised concern

on two proposals, namely the Chair may refuse inclusion of new language and that the Chair may lock down languages that that been agreed to in past statements, which was, in its view, beyond SOM’s mandate.

Mexico took note of the proposal, particularly the early circulation of the drafts and maximum respect to the host economy’s leadership. To ensure the successful delivery of emails on draft statements, it suggested to

have a limited contact list of those who would directly work on the statements as some email system did not support massive recipient list. It suggested that the principles be endorsed in time and put in place for the

drafting of the MRT Statement.

Japan would provide comments intersessionally. It recognised the importance of chair’s leadership and the APEC Secretariat’s support in providing agreed texts of past statements and relevant sub-fora documents, as

well as guidance for timeline. It noted that while repeating previously agreed texts would sometimes be an efficient way to reach consensus, that would run the risk of delivering backward looking or obsolete message.

Japan urged members to refrain from adding items outside of APEC without justifiable relevance to APEC activities. It called for forward looking and ambitious approach even for new issues to be addressed by

Leaders or Ministers, as a way to show political support. Members should also set some criteria for initiatives

to be mentioned in the statements and those should come to SOM’s consideration. It suggested further thoughts on how to differentiate between Leaders Declaration and Ministerial Statements. Japan found it

helpful to carry out the drafting of Leaders Declaration and Ministerial Statement simultaneously as were done in Viet Nam. It placed great importance on the AMM Statements as a chance to address various issues

faced by APEC members while the MRT focuses on trade and investment, and other sectoral Ministerial Meetings are not held annually. Noting that this year MRT was scheduled right after SOM 2, Japan was

concerned if there would be sufficient time for MRT statement drafting.

Canada welcomed and supported the proposed principles. It recalled that some Leaders in Lima made

comments about the need to exercise disciplines in this process. It urged members to exercise domestic

disciplines when addressing pressure from line agencies. It would share these guidelines, once they were finalised, with domestic departments. It looked forward to receiving the MRT draft statement in early April.

New Zealand commended APEC for achieving a shorter Leaders Declaration in 2017, despite the difficult process. It recalled that was achieved thanked to the discipline of not referring to all documents and

initiatives but focusing on newly announced and relevant ones where there were discussions under them; and sharing of comments to all in advance which helped members understand the discussion lines of each

other. It also suggested members to be disciplined in introducing domestic consideration into the statements in a way that did not reflect and correlate to the conversation in APEC. It extended full support to the Chair

and would take the Chair’s guidance in how he wanted to handle the statements.

Australia was confident that the drafting process would be well managed by the SOM Chair with good judgement and support by member economies. It supported the proposed drafting principles. Australia

expected that APEC statements would continue to pursue strong languages about trade liberalisation, references to free and open market and the rules-based MTS as APEC’s ongoing commitment to those

principles was important to its members.

Chinese Taipei emphasized the principles of inclusiveness, fairness and transparency. It supported the idea

of referring back to the past APEC statements as a guide, with APEC Secretariat encouraged to assist with the agreed languages. It also suggested that the drafting of the AMM Statement and Leaders Declaration

begins as soon as possible following SOM3. It fully supported the Chair’s leadership.

Korea would study this proposal carefully but favourably, and submit comments intersessionally. It opined that the option of Chair’s Statement could be used if necessary. It also discouraged the inclusion of

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economy-specific priorities or interests which aimed to satisfy domestic audiences rather than for the whole region. It highlighted the need for a short and strong message.

The Philippines noted that the proposal expressed certain well known procedures and principles of taking

into account the APEC context, the collegiality and cooperation among APEC members. It agreed with the Chair’s discretion and extended support to the Chair during the drafting process. It looked forward to

building on the achievement from Da Nang.

SOM Chair invited members to submit intersessional comments by 30 March.

4. BUDGET AND MANAGEMENT ISSUES

4.1. Report by the BMC Chair

The BMC Chair presented her report on outcomes of the first meeting of the Committee, which was held on 4

March 2018 (2018/SOM1/015). The BMC approved its 2018 work plan, including APEC funding position,

budgetary and related processes of the Secretariat, and project management reforms. The BMC would oversee the implementation of the outcomes from the BMC Small Working Group on SCE Capacity Building

Policy. The BMC noted the progress of the Secretariat’s process modernisation. Given different views from members, the BMC noted the Secretariat’s proposal for an annual financial support of up to S$100,000 per

year to the APEC Vision Group for 2018 and 2019. It approved the Secretariat’s computation of the aspirational target for voluntary untied project funding for 2018 at US$4.4 million, and noted China’s

committed and Japan’s planned contributions in 2018. The BMC agreed to allocate US$1,114,500 from the Secretariat Account reserve to the General Project Account to maintain the level of untied funding for

projects in 2018. APEC project funding available in 2018 was expected to reach US$13.6 million, of which

about 60% is tied to specific sub-funds and 40% is untied funding. The BMC noted the Project Management Unit (PMU) Update Report and Report on Projects Extension. Given no consensus, the BMC noted the

Secretariat’s recommendations on governance improvement for APEC sub-fora and subsidiary bodies. Furthermore, some economies volunteered to form an informal core email team to discuss intersessionally on

how to advance work on APEC streamlining and governance improvement. The BMC endorsed, intersessionally, a revised Terms of Reference, which includes a quorum of 14 attending economies. The

second BMC meeting would be held at the margins of SOM3. The BMC invited Senior Officials to approve the

2018 aspirational target for untied voluntary contribution at US$4.4 million; and to approve the revised TOR of BMC.

Canada thanked the BMC Chair and the Secretariat for the report outlining the progress on the governance improvement of APEC Sub-fora and subsidiary bodies. It underlined that the proliferation of APEC sub-fora

and subsidiary bodies had made it difficult for many economies to participate meaningfully and focus on APEC’s core agenda. It opined that organisational review and reboot after 30 years of APEC should inevitably

be part of the future vision of APEC beyond 2020. Canada welcomed the formation of the core group on governance and looked forward to its recommendations at SOM 3 and to moving governance reform forward.

Papua New Guinea thanked the BMC Chair for report and looked forward to contribute as the Committee’s

Vice Chair. It supported the governance improvement work, particularly the quorum requirement for sub-fora and subsidiary bodies and the development of an APEC taxonomy.

The Philippines supported the funding for the AVG, and the creation of the BMC core team on governance.

Senior Officials noted the report by the BMC Chair; approved the 2018 aspirational target for untied

voluntary contributions for APEC project funding at US$4.4 million; and approved the revised TOR of the BMC.

4.2. APEC Secretariat’s 2018 Operational Plan

The APEC Secretariat Executive Director (ED) presented the APEC Secretariat’s 2018 Operational Plan

(2018/SOM1/004). The Operational Plan listed out how Secretariat assisted members in aligning fora’s work

with the goals set out by Leaders and with the priorities of the host economy. He noted the cross-cutting nature of many initiatives in APEC which was illustrated in the Cross-Cutting Issues Maps. The Operational

Plan also outlined the work of each unit and operation area in the APEC Secretariat, including PMU, PSU, Communications, IT, Finance, Administration, capacity building and quality management. He noted the

pessimism about meeting the contribution target for untied project funds. The PSU continued considering possible backroom integration with the Secretariat. This year, the Secretariat also serviced Senior Officials

and member economies on the post-2020 vision exercise, which included assisting the SSG and the AVG. It would assist Senior Officials in the recruitment of the new ED. In this regard, the ED updated that the

application for the ED post would be open until end of March, thereafter the Secretariat would prepare a long

list of candidates for review by the SOM Small Working Group on ED recruitment. Regarding collaboration with other international organisation, the ED informed that he had met with the new ASEAN Secretary-

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General to discuss the possible synergies between ASEAN and APEC. The ED sought Senior Officials’ endorsement of the Secretariat’s 2018 Operational Plan.

There being no comment, Senior Officials endorsed the APEC Secretariat’s 2018 Operational Plan.

4.3. Governance Improvement for a More Effective APEC

The APEC Secretariat ED reported the progress on the Governance Improvement for APEC Sub-fora and

Subsidiary Bodies (2018/SOM1/034). He reported that 23 sub-fora under the CTI, EC and SCE had reflected in their TORs a sunset clause of 4 years and a quorum requirement of 14 attending economies. The High-

Level Policy Dialogue on Agricultural Biotechnology (HLPDAB) and the Policy Partnership on Food Security (PPFS), who report directly to Senior Officials, tabled their revised TORs (2018/SOM1/007 and

2018/SOM1/010 respectively) for Senior Officials’ endorsement. The ED reported that given no consensus was reached on the Secretariat’s suggestion that SOM-level FOTCs have a two-year period of mandate, the

current default position held for those FOTC: (i) that FOTC would be established at the discretion of the Chair,

and (ii) that FOTC would automatically dissolve upon the expiration of the Chair’s term unless the incoming Chair explicitly requested a continuation. The BMC informal core group may discuss this further. The ED

sought approval for the Secretariat’s paper, and the two revised TOR of the HLPDAB and PPFS.

Senior Officials thanked the ED for his report and expressed support for the work on governance

improvement and streamlining for effectiveness of APEC sub-fora.

Chile highly commended the efforts to improve the management of SCE and SCE-COW and, as future host, it

would focus on fostering practical and smooth way in streamlining APEC processes. It opined that substantive agenda and governance should be addressed in parallel and as part of the APEC’s post-2020

vision, which would require commitment by all member economies.

Japan endorsed the revised TORs of the HLPDAB and the PPFS. Regarding FOTC, it was open to any idea. It recalled the ED’s explanation, at the SCE1 Meeting, of the concept of ”quorum” in APEC that failing to meet

quorum would not automatically terminate a meeting or invalidate decisions taken therein, and that decision points were typically circulated to the wider group via email.

China noted that to meet the objective of improving APEC’s effectiveness, the governance reform process might involve reducing, streamlining as well as establishing relevant bodies, as appropriate. It encouraged

members to accommodate each other’s needs and make decision based on consensus. It also viewed that

the implementation should take a step-by-step approach with time for evaluation of the real impacts, take into account different nature of all APEC sub-fora, and be monitored and oversighted by Senior Officials.

The United States appreciated Canada’s comments as well as Australia’s effort in reinstating governance rules. It reminded that this work was driven by the principles of transparency, accountability and sustainable

use of resources, and opined that all permanent groups should be under some level of oversight from Senior Officials, which could somewhat be realised by the sunset and quorum clauses. It agreed with Japan’s

clarification on the meaning of quorum in APEC governance context.

Australia was pleased to see the efforts of sub-fora in considering sunset and quorum reform. It opined that

despite the complexity involved in the governance process, it reiterated the need for a reduction of the

proliferation of APEC sub-fora and called for the pro-activeness of members.

Senior Officials noted the progress of the Governance Improvement for APEC Sub-fora and Subsidiary Bodies,

and endorsed the report presented by the APEC Secretariat ED as well as the revised TORs of the High-Level Policy Dialogue on Agricultural Biotechnology and the Policy Partnership on Food Security.

4.4. Report by the PSU Board Chair

The PSU Board Chair reported to Senior Officials with focus on two issues:

- PSU Governance Arrangements (2018/SOM1/027): Following the decision at the Concluding Senior Officials Meeting (CSOM) in 2017 to grant an ongoing mandate to the PSU, the PSU Board meeting

submitted the proposed amendments to Clauses 57 and 58 to Senior Officials for endorsement.

- Key outcomes of the PSU Board Meeting: The PSU Board approved the extension of the employment period of the PSU Director, Dr Denis Hew, from February 2019 to December 2020. The Board approved

the half-year evaluation report for July - December 2017, endorsed the latest PSU’s Work Program (2018/SOM1/003), noted the draft 2017 PSU Annual Report and a number of upcoming projects, noted

the progress in developing a performance framework for the PSU as recommended by the PSU mid-term review. The Board also discussed about the financial sustainability of the PSU in which one of the

suggestions was to study the funding mechanism of other similar institutions for reference.

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Papua New Guinea and the Philippines spoke to express appreciation to the PSU Board Chair for the report and to the PSU for its work. They supported and endorsed the proposed amendments of the PSU governance

arrangements. The Philippines looked forward to inputs and ideas from the PSU for the AVG.

Senior Officials endorsed the proposed amendments of the PSU governance arrangements and took note of the PSU’s work program.

5. OTHER BUSINESS

5.1. Preparation for the 10th Tourism Ministerial Meeting

Papua New Guinea reported that the 10th Tourism Ministerial Meeting (TMM) and related meeting would be

held from 29 May – 2 June 2018 (2018/SOM1/021 and 2018/SOM1/021a). It introduced the TMM’s objectives and discussion sessions. One of the key deliverables would be the Ministers’ Statement with the theme

“Harnessing Inclusive and Sustainable Tourism in the APEC Region”. The third draft of the Ministers’

Statement would be circulated before end March. The Meeting would be held at the Stanley Hotel, with the Ministerial Meeting on 1 June. There would be a technical tour for Ministers and one delegate per economy

on 2 June.

5.2. Preparation for the Ministers Responsible for Trade Meeting

Papua New Guinea informed that the Meeting of APEC Ministers Responsible for Trade (MRT) would be held on 25 – 26 May 2018, with the following possible topics for discussion: supporting the MTS; deepening REI

and FTAAP; fostering sustainable and inclusive growth through digital economy; and promoting the post-2020 discussion. Ministers would be invited to give three-minute presentation/intervention on each of their

selected topics of interest. On the second day, Ministers would discuss on the post-Bogor and the AVG.

5.3. Documentation list

Taking into account comments by members, the APEC Secretariat updated and finalised the documentation

classification list.

6. CLOSING REMARKS

SOM Chair thanked all Senior Officials for their indulgence to push through all the agenda of the meeting. He

valued the comments and would take them into account.