Session Synopses

Sheraton Washington Hotel

May 17-22, 1996

Washington, DC USA

The APEC Bogor Declaration of November 1994 called for the establishment of free trade in the Pacific region by 2010 for industrialized economies and 2020 for developing economies. The Osaka Action Agenda addressed the means of achieving the Bogor objectives. This panel addresses both the what and the how of free trade in the Asia Pacific region.

The panelists considered the challenges posed by the desire to attain free trade in the Asia Pacific region by 2010/2020. They considered whether the achievement of free trade is a realistic goal, and if the Osaka Action Agenda - with the initial actions made as "down-payments" by member economies - is the correct road to follow. Panelists also considered what additional steps governments and the business sector must take to improve the region's business climate in the next 15-25 years.

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Critical to the economic success of the Asia Pacific region will be meeting the infrastructure needs of the region. China, Indonesia, Vietnam, and other Pacific countries and economies will require monumental infrastructure upgrades well into the 21^st century.

This panel examined the need for infrastructure in the Asia Pacific region and who will provide it. Panelists considered what the infrastructure needs for the region are, whether indigenous companies will play a greater role in the construction market, and how the barriers that prevent foreign firms from entering certain markets can be overcome.

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The ability to manufacture and then to export automobiles has, to a great extent, been a measure of industrial maturity in the 20^th century. Already, a number of countries and economies in the Asia Pacific region produce automobiles for both domestic and foreign consumption. The prospects for future growth in this industry appear to be both promising and precarious. The panel examined the possibilities for growth in the automobile industry in the Asia Pacific region and assessed its direction in the context of the overall global economy of the 21^st century.

The panelists considered the market access issues that need to be identified and resolved in the industry? Panelists also examined the existence of domestic champions, and how NAFTA and other regional free trade agreements will affect the automobile industry.

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One of the great challenges facing the Asia Pacific region for the 21^st Century is the integration of three distinct models of market economies. The Japanese, Southeast Asian, and the Western. The Japanese model is based on an industrial policy philosophy that is markedly from the Western laissez-faire approach, or the Southeast Asian model, which is principally based on family ties and personal relationships. An understanding of how they are different and how compatible they are with each other are issues that need greater exploration. This panel looked at the differences and similarities of the Japanese, Southeast Asian, and Western models of market economies.

The panelists first attempted to clarify and define the differences between the three models. They then discussed the feasibility of making an international economic order work with three different market economies that maintain distinct assumptions about trade, industrial policy, and consensus building.

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The ability of multinational corporations to attract qualified managers is and will remain one of the most pressing concerns for business into the 21^st century. The challenges that companies face are changing as businesses increasingly operate across borders. The most difficult problem for companies entering new markets is that of finding experienced, competent managers who can fit into a multinational operation. The most difficult problem facing rapidly growing economies is how to train sufficient managers to keep the growth going.

Panelists looked at questions of how local managers should be educated for local companies and what the internationalization of business management means. How and to what extent should companies educate local hires? Should companies exercise greater central control or decentralize decision making? Should there be a greater emphasis on local hire or sending well trained and experienced people from the home office?

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At the core of establishing a workable economic order in the Asia Pacific region is the ability to balance basic differences in culture, race, and values. Recently, leaders in the Pacific region have raised questions about compatibility, similarities, and differences between the cultural values of the Pacific countries and economies. The debate has been healthy and vigorous at times, but a more concrete dialogue is necessary to begin integrating these ideas and feelings into workable solutions for outstanding problems.

Panelists discussed the differences between Asian and Western values with regard to issues such as human rights, democracy, the role of the media, individual vs. the collective good, and dispute settlement. They looked at some concrete examples of where the differences are manifested: horizontal versus vertical methods of measuring relationships, laissez-faire versus managed, etc. Comparative examples abound, but will the differences interfere, or will they promote, trade and commercial relations between the Pacific region's economies?

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Russia's return to the status of a Pacific power looms on the horizon. Historically Russia has played a significant role in the Pacific region and it appears that Russia will once again play an influential role. To become a Pacific power Russia will need to become fully engaged in the economic and political environment of the region. This panel looked at the prospects for Russia in the Pacific and the opportunities and obstacles that exist for Russia to become a major economic player in the region.

What are the best prospects for cooperation between Russia and Pacific Rim economies? What kinds of investment opportunities are there in Russia? How can the human and natural resources in Russia be best integrated into the region's economy in a manner that benefits all parties and the region as a whole? What kind of strategic role will Russia take in the 21^st century?

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Without question the greatest challenge facing the Asia Pacific region in the 21^st century is the securing of a stable supply of energy resources to fuel economic development. Simple mathematics reveal that the region will outgrow its own natural resource base shortly and will need to secure new sources. This panel looked at the problems of supply and transport of energy to the region.

Panelists examined the short and long-term prospects for natural resources in the region and whether there are untapped supplies of energy that can be used to meet the region's needs. They also discussed expanding cooperation to include improving energy infrastructure and the removal of restrictions that inhibit the development of trans-national grids and pipelines. Can trans-national cooperation ease the burden of the region's energy demand? How will the rest of the world react to the region's increasing consumption of the limited energy pie?

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Uniform regional environmental standards may not be practical, economical, or politically viable for many economies. With this reality in mind, panelists discussed how the economies of the Pacific Basin can identify common interests, and formulate effective strategies to build their economies with minimal negative environmental impact.

Panelists also examined whether environmental standards, regulations, and policies can be science-based and cost-effective and, at the same time, have a minimal impact on trade and investment. How can governments in the region develop environmental policies that do not constitute a disguised barrier to trade and investment?

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The question of protecting intellectual property rights goes far beyond the conceptual level of interpretation of law and reaches down to very practical dilemmas for both developing and developed economies. Protection of intellectual property is increasingly becoming a matter of the highest priority for advanced industrial economies. Yet there is a tension between upholding the principle of protecting rights and the needs of developing economies for rapid infusion of technology. This issue is becoming more critical as the relative value of intellectual property and technology rises. This panel addressed the notion of whether intellectual property and technology should be protected at all costs.

Panelists considered the practical problems associated with protection of intellectual property and technology. How far should intellectual property rights be protected? Could enforcement of intellectual property rights inhibit global economic development? How do these issues relate to investment decisions for companies interested in doing business in developing economies?

The negotiations and founding of the World Trade Organization (WTO) have greatly influenced the shape of international trade. Many problems associated with the implementation of the Uruguay Round remain unsolved. How they are dealt with and executed will have a tremendous impact on the economies of the Asia Pacific region and APEC. This panel looked at the connections between the WTO and the Asia Pacific region's economies.

The panelists reviewed the first year of the WTO, discussed recent developments in relation to the Asia Pacific economies, and addressed where the WTO is headed. How will APEC and the WTO work together? Are there any aspects of the WTO that will hinder economic development in the Asia Pacific region?

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The issues surrounding the growth of the telecommunications industry in the Pacific will pose some of the greatest political and business challenges in the 21^st century. Perhaps more than any other, this industry will be the source of continuing economic development. To discuss and consider the future of this critical and most competitive industry was the purpose of this panel.

Panelists looked at the current state of the telecommunications industry and then discussed the prospects for the growth of the industry in the Pacific in the 21^st century. What will be some of the greatest barriers to market entry for telecommunication firms? To what extent will there be international cooperation in the field?

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The development of the aircraft industry will have a profound impact on both economic and strategic developments in the region. Europe and the United States have maintained leadership in the aircraft industry throughout the post World War II period, but on the eve of the 21^st century it is apparent that the major countries and economies of the Pacific are vying to get into the business. How will the new players be integrated into the manufacture, design, and marketing of aircraft? This panel looked at the prospects of the aircraft industry in the region and attempted to determine the shape of the industry in the 21^st century.

Panelists considered the economic and strategic implications of aircraft manufacture in the Pacific region. Who will be the principal protagonists? How will the division of labor be determined? How open will the markets be for the trade of finished aircraft, parts, and technology? What will the strategic implications be for the economies that are excluded from the aircraft industry?

Many experts suggest that in the 21^st century the region will face a food crisis of considerable magnitude, spurred on by rapid population growth and magnified by growing consumer demands as regional economic growth multiplies. Others have a contrary view, believing there is much more that can be done on the supply side, including improved food handling and distribution systems, to satisfy rising demands.

A food crisis - fact or fiction? Using a detailed analytical assessment of this question by a consortium of eminent international researchers, panelists in this session canvassed issues of food supply and demand, food handling and distribution, technology transfer, food security, whether there are implications for trade globally and in the region, and how all peoples of the region and the world might enjoy an appropriate diet.

Throughout the 20^th century Japan has played a pivotal role in the Pacific region. With the end of the Cold War and its emergence as the world's second largest economy, Japan's role of the past forty years is changing. This has extremely important implications for all the economies of the region. This panel looked at Japan and the economic, political, and foreign policy directions the industrial powerhouse may take in the coming century.

The panelists addressed Japan from a variety of angles. What will be the economic condition of Japan in the coming decade? Will Japan's political system enable it to provide leadership in the region in the next century? What are the prospects of an expanded Japanese military presence in the region? Will Japan become more inward looking, turn its attention away from the United States and toward Asia, or maintain the status quo?

Between 1980 and 1995, China quadrupled its GNP - five years ahead of its goal. With an increasingly affluent population and a GNP continuing its 12 percent annual growth, China's importance to the regional and international marketplace is ever increasing. Businesses and entire industries make decisions in Asia, taking into account the influence of China's economy and business sector.

Panelists in this session discussed the business environment in China today and the challenges and opportunities that influence their business decisions. What are the risks and rewards of investing in China? Will infrastructure development in China be able to keep up with demand? What new opportunities will be created by China's plan to develop its non-coastal regions? This panel looked at the opportunities and challenges of doing business in China today.

The roles that China, Japan, and the United States choose to play in the 21^st century will, in large part, determine the economic viability of the Asia Pacific region. The 20^th century was the "American" century and many predict that the 21^st century may be China's. The current and future roles will be important, but more significant will be how the three countries interact with each other and how this interaction will affect the region's developing economies and emerging markets during this period of transition.

Panelists examined the economic, political, and security issues surrounding the development and character of each country's role in the region. Given the various territorial and political disputes, how will China, Japan, and the United States share the leadership of the Pacific region? How will the variant political and economic systems of these three countries work with each other in the 21^st century?

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Full implementation of the North American Free Trade Agreement (NAFTA) and the Free Trade Area of the Americas (FTAA) by 2005 will create the largest single market in the world. Is the business community in this region prepared to take advantage of the new opportunities in this enormous open market? This panel focused on the present and future impact of these free trade agreements on the Americas, and reviewed the indirect developments and related opportunities of these agreements.

Panelists also explored the linkages between NAFTA and FTAA, in addition to the prospects of a free trade agreement in the Asia Pacific region. What are the lessons to be learned? What problems were brought about as a result of NAFTA and FTAA, and how can they be avoided in the future?

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A reliable and ready source of capital for the burgeoning Pacific economy will be critical for the success of the region. Now that ideological barriers have fallen between countries and economies, what will be the framework in which capital will be distributed in the region. Will capital formation be a source of cooperation or friction? The panel looked at the question of capital formation for the Asia Pacific region and attempted to determine who the major players will be and what the character of capital markets will be in the 21^st century.

Panelists addressed the implications of competition for limited foreign capital and the future of global financial markets. Who will be the principal sources of capital in the Pacific region? How transparent will capital flows be? What will be the role of international lending institutions in the region?