KEY POINTS:
Australian Prime Minister John Howard has climate change as the main agenda item for this year's Apec leaders' retreat in Sydney.
Howard - who faces a tough challenge from Labor leader Kevin Rudd as they gear up for the federal elections - wants to develop an Asia-Pacific response to climate change.
He's written to leaders from the 21 Asia Pacific economies - including Helen Clark - about why it should be top of their list.
Howard's attempt to get a regional agreement in place to tackle climate change at the September meeting is risky. Rudd paints him as a pariah - a "denier" who embraces climate policies out of political opportunism rather than belief.
But Howard will pick up political dividends if he can persuade the US and China to come to the table with a resolution on how to tackle the post-Kyoto environment, particularly as Apec economies soak up 60 per cent of global energy demand and include the world's four largest energy consumers.
Informed observers suggest Howard has "called in some chips" from US President George W. Bush whom he supported on Iraq. As Australia is poised to provide much of the uranium for China's nuclear power a quid pro quo may be achievable.
But whether Howard can get more than a statement of principles is moot given the vastly different pace of development between China and the developed Apec economies.
Neither the big two - nor Australia - are signatories to the Kyoto Protocol. But they, as well as Japan, South Korea and India, are members of the Asia-Pacific Partnership on Clean Development and Climate Change which aims to accelerate the development and use of cleaner, more efficient technology in ways that both promote economic development and reduce poverty
Regional energy demand is forecast to double by 2030, so the Sydney meeting is seen as an opportunity to put the climate change threat at the forefront of decision making.
It is unclear whether the Asia-Pacific Partnership will be the basis of any post-Apec agreement. But senior Australian Cabinet ministers suggest that door is now open to New Zealand "if it pushes hard enough."
Australia - which held the initial Apec in 1989 - wants to lift Apec's sights from trade liberalisation to regional economic integration.
The CEOs' forum - renamed the Apec Australia 2007 Business Summit - will be "by invitation". Howard wants to create an event analogous to the World Economic Forum's Davos meeting complete with a panoply of the most prominent business leaders, international opinion setters, policymakers and the political leaders from the Asia Pacific.
But minus the Bono-style celebrity contingent that now dominates the WEF.
Howard's stratagem seems to be paying dividends.
One American chief executive who has agreed to speak wants 20 hotel beds for his corporate retinue - far more than Helen Clark's team will need - a practice that will put huge pressure on Sydney accommodation.
In Hanoi last year full programme details were not posted in advance. Most of the 1000 plus chief executives were Vietnamese.
With the Howard Government's declared intention for a regional economic and business integration agenda - rather than the original trade liberalisation focus - it is important New Zealand CEOs make an effort.
The big picture issues include: Demographics, energy and climate change, financial markets and structural issues, trade and innovation - all of which affect the conditions in which today's global supply chain management is played out.
There is another element to this.
One of Australian Treasurer Peter Costello's aims in setting up an Australasian single economic market (SEM) was for the demonstration effect it would have.
NZ Finance Minister Michael Cullen - who is integral to this process - had reached the view that it was time for economic ministers to step in as integration needed to go further than the CER trade agenda.
The SEM - rather like the current moves in Apec - grew out of the accelerated business integration between the Australian and New Zealand economies.
But Costello believes the SEM - with its focus on regulatory harmonisation for New Zealand and Australia's competition and securities regimes, banking prudential measures and stock change and accounting platforms and investment regimes - could provide a template for the Apec Two round of economic integration the Australian Government believes more important than trade liberalisation. It's in New Zealand's interest that the type of best practice policies that "Australasia is pursuing" does ultimately become the norm throughout the Asia Pacific.
At the Pacific Economic Co-operation Council's general meeting in Sydney yesterday it was made clear just how far the Apec paradigm has shifted.
The original Bogor goals of free and open trade and investment in the Asia Pacific by 2010 (developed economies) and 2020 (developing countries) is still important. But many of the trade liberalisation benefits have already been pocketed by business with the reduction of average regional tariffs by two-thirds from 16.5 per cent to 5 per cent in developed countries since Apec was born.
Now top of Australia's mind is climate change, the demographic shifts, movement of people through the Asia Pacific, new regional architecture, pandemics - and so forth.
These shifts are defining the shape of the region and the business environment.
Australia's Apec Ambassador David Spencer has set priorities for the 2007 Apec.
* A successful conclusion of the WTO's multilateral trade negotiations (Doha). The WTO's importance to business is reasserting itself as reaction builds to the proliferation of regional and bilateral free trade deals.
* A coherent regional response to major challenges Apec members face, particularly climate change and how to strengthen regional economic integration. On the latter point a proactive plan will be presented to the Apec leaders which may result in economic ministers playing a much larger role. NZ Treasury's Bob Buckle - chair of Apec's Economic Committee - is a major driver.
* A focus on "behind the border" reforms to ensure greater transparency.
* Human security: Counter-terrorism, pandemic and disaster management. At issue is whether Apec should develop regional response mechanisms.
* Decisions on Apec's moratorium on new members which expires this year. Twelve economies - including India - want to join the 21-strong club. The leaders will decide.
* The appointment of an Apec director and a beefed-up budget for the secretariat instead of rotating the directorship among nationals of the respective host governments. The $A5 million budget is shoestring material but some believe that may lead to Apec cutting across domestic economic policy-making.
The issues are complex.
China is opposed to a formal Apec director. Japan and the US - which split economic management over a number of portfolios - have misgivings. A lot of lobbying will go down before the 2007 agenda is complete.
