Vangelis Vitalis: Why NZ's big Apec challenge is so important

Vangelis Vitalis New Zealand APEC chairman picture supplied by MFAT

This year's Apec forum - hosted by New Zealand - offers a crucial opportunity to shore up a regional commitment to the rules-based trading system, says Vangelis Vitalis.

Vitalis, one of New Zealand's most senior trade officials, is chair of the Apec senior officials meeting this year, effectively leading the talks.

He is optimistic that progress can be made on key trade issues despite some big challenges facing the Apec group.

Not least of those is the Covid-19 pandemic which has forced the forum to be held as a virtual event this year.

Each of the 21 nations in the group takes a turn as host and New Zealand has been planning for this round as host for five years.

New Zealand last hosted the Apec forum in 1999.

"So it is a source of great regret at our end that we're not able to welcome visitors to New Zealand," Vitalis said.

"That's unfortunate. But there is good understanding across the region that Covid is what it is. And we're just having to work it out."

But the challenges for this Apec forum are actually much greater than just the pandemic logistics.

"The context in which we are hosting this is first of all one of great uncertainty," Vitalis said.

"The health shock and the economic shock combined have made it very challenging for us.

"And it is also a big challenge because many of the assumptions we worked on and certainly existed in 1999 when we last hosted…they are really under tremendous pressure."

Vitalis is referring to the push back against globalisation and trade liberalisation that has snowballed in the past few years - accelerated by the policies of the last US President.

"First of all a rules-based trading system is under tremendous strain at the moment," he said.

"Openness, that whole sense of Apec being an open regional dynamic economy that's also under tremendous pressure.

"We've seen the sharpest increase in protectionism across our region since 1995."

Given the tensions between Apec's largest members - the US, China and Russia - and the range of different political regimes within the 21 member group, reaching some sort of consensus on the future of trade seems daunting.

But Vitalis said he remained confident that a new resolution can be signed.

There was a shared vision that all 21 members had signed up to in 2020 - the Putrajaya Vision 2040 - that offered some common ground.

"It's a one-page document, it's a shared vision for a dynamic free and open prosperous region…and a resilient region.

"The overarching deliverable from our year will be what's called the implementation plan."

This is the document that essentially charts the next 20 years of work for the organisation – for all 21 economies.

"NZ holds the pen on that document. We'll be writing with that document obviously consulting with our partners on that," Vitalis said.

That document will cover things as far-reaching as trade, renewable energy, how we deal with climate changes, what we do about fisheries stocks as well as the classic Apec questions of structural reform and how we recover from Covid.

Vitalis also hopes to see progress on the indigenous economy and the women's economic empowerment agenda as well as "something important about digital innovation".

"Success would be that we get all 21 of us to agree to a document that charts agenda for the next 20 years," he said.

At meetings so far Vitalis said he had been struck by a shared sense that members wanted Apec to be responsive and relevant.

"That responsiveness and relevance does mean that we need to find a way to work together.

"We all have different ways of thinking about the world. We all have different political systems."

But Apec was crucial to New Zealand's economic prospect, Vitalis said.

"We can't afford it to just become a talk-shop. Three quarters of our exports go to those 21 economies.

"All of our free trade agreements are with one or other of those members of the Apec family."

The importance of Apec was as an incubator for the free trade rules that New Zealand needed to succeed as a small exporting nation, he said.

"I always think of Apec as being the eco-system from which you get the hard rules. In other words Apec is not a free-trade agreement but it is the glue that holds together free-trade agreements that we negotiate around the region."

He offers a practical example of what the forum has delivered for local exporters.

"The Asean free-trade agreement has a set of customs procedures that were agreed that help New Zealand businesses speed up the procedures via which they would go through a port in Malaysia or Indonesia, Vietnam and so on.

Logs loading for export. NZH File Photo.

"Those procedures came out of Apec they came out of nearly a decade of hard work, customs officials from all those parties working together to develop guidelines and best practice rules."

Since we last hosted in 1999 markets had become increasingly open.

"The rules-based system, including agriculture, was legally enforceable. We could take big economies to court and win," he said.

"We took the EU, we took the United States, we took Indonesia, Australia...we took them all to court and we won because of the rules. And they brought their systems into compliance."

So essentially if you are in business now the rules that you're using for exporting and regulations you are dealing with now, were forged by Apec 20 years ago.

What the rules are like in the next 20 years is what Apec members are sitting down to talk about now.

"That's right," Vitalis says. "We've forgotten where all these rules have come from. We have this transparent certainty in our trading relationships and Apec has been fundamental to delivering that.

"We've taken that for granted but I'll tell you what, the last three years have revealed how fragile some of those assumptions can be.

"We have countries in our region imposing tariffs on New Zealand, things that we regard as being against the rules.

"So this rules based system, we've really got to fight for it, to retain it.

"Because we will miss it if it's gone. Because the last 20 year years ... I call the last 20 years the golden weather for NZ trade policy."

Vitalis sees signs for hope.

Apec was the only international organisation that delivered a joint declaration – all 21 nations - to keep supply lines open in the middle of the pandemic last year.

That's was a very significant achievement, he said.

"And it gives me hope that actually we can build on this and I should give credit here to Malaysia for chairing [2020] so agilely and deftly.

"In other words I have no excuses to find the consensus there."