Cullen takes off for Apec finance talks

It is almost a year since Apec was held in Auckland, but New Zealand's job is not over yet.

Finance Minister Michael Cullen leaves today for the pocket-state of Brunei to co-host the Apec finance ministers' meeting.

It is the first ministerial meeting in the lead-up to the leaders' summit in November.

Oddly, it is Dr Cullen's first international conference as a minister; he did not attend any as Social Welfare Minister in the last Labour Government.

"It's like free lunches. Ministers of Social Welfare don't get them. Ministers of Finance do.

"I suppose it is a pleasant change to be seen as a tool of international capitalism," he said, in an apparent jibe at claims he was pro-union on the Employment Relations Act.

Whether the international finance community will appreciate his wit any less than New Zealand business is assumed to remains to be seen.

But his first job will require more diplomacy than he is used to, since Prime Minister Helen Clark's remark that Apec would not get up steam this year because Brunei was too small to give it any leadership.

Perhaps rehearsing his lines this week, Dr Cullen suggested Helen Clark was referring only to Brunei's logistical difficulty in hosting the conference because of its size.

Apec logistics are the responsibility of a former commander of the Royal Brunei Armed Forces, who must squeeze 6000 people into 5000 hotel rooms. A Canberra firm has won a contract to train 1500 unemployed people in the tourism and hospitality trade.

Brunei is a tiny Muslim country of just 330,000 people.

The King of the oil-rich state is also the Prime Minister, Sultan Haji Hassan-al Bolkiah, who was deposed a few years ago as the world's richest man by Microsoft's Bill Gates.

The state collects no income tax, but this may change in the next few years.

The Sultan has announced plans to turn Brunei into an international financial centre, helped by New Zealander Robert Miller.

The Sultan is said to have a small but talented team of officials who are determined that the Brunei Apec will not be just a forgettable blink before the exciting prospect of a China-led Apec next year.

The Brunei Apec meetings are taking place in a setting of vigorous trade negotiations in East Asia and the Pacific. These include the finalisation of the Singapore-New Zealand Closer Economic Partnership; exploration of the Australia-New Zealand CER free trade linking to the Asean Free Trade Agreement; and Japan, China and South Korea exploring their own agreement.

In between the Auckland and Brunei Apec meetings, the World Trade Organisation Seattle round collapsed, giving more focus to sub-regional trade pacts.

Dr Cullen does not believe the Seattle failure makes Apec itself more important.

But he added: "Perhaps because of what happened in Seattle, it is more important for ministers internationally to be meeting and establishing confidence about the future direction of international policy."

It is likely that the Brunei meetings will be less about achieving pure trade liberalisation and more on the other strand of Apec: improving the economic and technical cooperation among Apec economies.

In Apec parlance, that is known as "capacity building." It used to be called "development."

Finance ministers have not had a big role in Apec.

They have met months away from the leaders' summit, and the second-star roles have traditionally gone to trade and foreign ministers who meet just days before the leaders.

But in an attempt to bring the work of finance ministers closer to the summit in November, a one-off dual chairmanship of this meeting was proposed.

Dr Cullen said New Zealand was presenting the largest set of papers, including a major one on international capital flows.

It was a voluntary action plan for promoting freer and more stable capital flows, in the wake of the 1997-98 Asia financial crisis.

Ministers would receive a briefing from the IMF, World Bank and other international institutions on the direction of "international financial architecture" on capital flows.

"I think it is fair to say, because of the way economies have been picking up, there has been a move back from any attempt to impose some sort of heavy international regulatory structure in terms of capital flows, much more towards an emphasis upon openness of information, effective monitoring and so on," he said.

"It is also fair to say that many economies have, in the backs of their minds, the fact there are still significant concerns, not just among the public at large, about the impact of capital flows and the potential destabilisation which can occur."

Better prudential management would enable dangers to be flagged earlier, and therefore the treatment of those dangers "to be a good deal less drastic than if things developed through to some kind of full-scale crisis."