Abac opposes Trump policies

The APEC Business Advisory Council (ABAC) was created by the leaders of the APEC member economies in 1995 to provide the business perspective to leaders on matters that would contribute to the realization of the common aspiration of a seamless Asia-Pacific region where goods and services flow freely. It met for the first time in 1996 during the Philippine year as APEC host. I was fortunate to chair that first meeting which brought this unique body into existence – which predates the G20’s B20 and ASEAN BAC. Today it remains the prime private sector body in APEC with a seat at the table in all its meetings and direct access to APEC leaders through their face-to-face dialogue. I remained as ABAC Philippines chair until 2010. The Philippines is currently represented by Tomas Alcantara, Lance Gokongwei, and Joanne de Asis.

ABAC was intended to be the independent voice of business and for members to represent the views of their respective business sector. Although members are appointed by the heads of government, ABAC has been relatively independent in its stance on critical issues. That stance has become even more crucial now that globalization and open trade are under attack. Likewise, the momentum for global action to address climate change has run into a brick wall. The pushback gathered steam with the assumption of President Donald Trump into office. In response to these developments, ABAC has put at the top of its agenda the support of the WTO, the growing of MSME’s to promote inclusion and climate change mitigation.  

Global trading system in peril

Rising anti-globalization sentiment and the increasing resort to unilateral actions have undermined the multilateral trading system (MTS) which has operated under the WTO’s governance. Technology and the openness that the MTS engendered have been instrumental in the explosion of trade in goods and services and the movement of people which has benefited Asian countries in particular, the Philippines included.

The WTO’s dispute settlement body has served as a main pillar of the MTS. WTO members rely on dispute settlement proceedings to ensure transparency, clear rules, and a fair system on trade. But today the dispute settlement procedure—and the MTS along with it— is on the verge of crisis. The United States has been withholding approval of appellate body appointments, which require the agreement of all WTO members, in protest of several issues it has with procedural and structural aspects of the appellate body. It has justified the unilateral actions it has taken – most recently against China – because it says the WTO has been ineffective in ensuring fair trade.

Actually the US has benefited greatly from WTO dispute settlement. Since 1995, the US has been a complainant in 123 disputes, winning over two thirds of those cases, including recent cases against China. But it could cease to function if no new appointments are made to replace the members whose term ends in 2019.

ABAC chair 2019 Richard von Appen said that ABAC will deliver a strong message to Leaders that it is now urgent that the crisis in the WTO’s dispute settlement system be resolved – specifically, the impasse, involving the appointment of members of the appellate body. He also acknowledged that there is a need to reform the rules to make sure that the WTO remains relevant and fit for purpose – including to ensure that modern business models can flourish, and that women and MSMEs can access the opportunities and benefits of the global economy.

“This is crucial for every economy, large or small, to promote the benefits of free trade not only for economic reasons, but also to keep a permanent dialogue on common challenges and opportunities. We should not take the WTO for granted; in the current global environment it would be almost impossible to create a new organization like that, if the current one was to disappear which would negatively impact developing economies”, von Appen said.

Climate change and sustainable growth

APEC economies collectively generate almost 62 percent of global carbon dioxide output and over 55 percent of total greenhouse gas emissions which have been proven to contribute to climate change.

Climate change has had a severe impact on the Philippines as it has exacerbated severe weather conditions leading to super-typhoons, prolonged drought and severe flooding.

The Trump administration has indicated that any climate change policies that they deem hindering the growth of American jobs will not be pursued. President Trump has rolled back some of the Obama-era regulations enacted with the purpose of combating climate change. He has questioned if climate change is real and has indicated that he will focus his efforts on other issues instead. He has also informed the UN that the US is withdrawing from the Paris Agreement which sets targets for greenhouse gas emission. President Duterte has signed the instrument of accession to the agreement although he criticizes it as “unfair to poor countries.”

Said ABAC: “Sustainability, most crucially climate change, is also one of our priorities. This is the vital challenge of our age, and we think business can play a real role in helping to develop innovative ideas on climate change and supporting the transition to a sustainable, resilient and low-carbon economy not only for current, but more importantly for future generations.”

ABAC has recommended that efforts be intensified to double the share of renewables in the APEC energy mix by 2030; reducing 45 percent of energy intensity by 2035; increasing the use of transitional fuels such as natural gas (including LNG) in the energy mix; facilitating trade in energy-efficient low carbon goods; and the use of IT and new business models to meet the global goal of reducing greenhouse gas emissions.

Our business sector would do well to support ABAC’s position on these two critical challenges of our times and encourage our government to take action. It is imperative that President Duterte should attend APEC to echo these views when he meets with his peers in November in Santiago.