APEC countries make sluggish progress on digital trade and regulations
With APEC member countries representing 2.8 billion citizens and accounting for nearly 75% of New Zealand exports, the multilateral institution is an important club for us to belong to.
New Zealand, as one of 21 members of Asia-Pacific Economic Co-operation (APEC) is this year spending in the order of $77 million hosting the annual forum for the first time since 1999.
The event will culminate next month in official leaders’ forums where priorities around trade and economic cooperation will be set. The Covid-19 pandemic has dealt a blow to our ambitions for APEC 2021, with online sessions replacing the usual high-profile meetings that are a rare opportunity for us to host world leaders.
But the virtual nature of APEC 2021 may serve a useful purpose – to highlight the importance of the digital economy and the barriers that remain for trade and cooperation in the region.
“The digital landscape is pretty fragmented,” says Anna Curzon, Xero’s Chief Product Officer and a member of APEC’s Business Advisory Council (ABAC).
“There are different standards, policies and regulations across the 21 economies,” adds Curzon, who was speaking on Monday at APEC 21 LIVE with Business, an event featuring the digital economy ministers of New Zealand and Taiwan and hosted by Microsoft.
Small business huge across APEC nations
While work is underway across APEC countries, from China and Malaysia, to the United States and Russia, to improve digital infrastructure and skills, less progress has been made on smoothing the way for more digital trade between APEC nations.
“What that means on the ground is that businesses face costs, and they face complexity,” says Curzon, who points out that nearly 97% of businesses in the APEC region are considered to be small businesses – many of them early in their adoption of digital tools and the businesses most likely to be hard-hit by the pandemic.
“At the very least, they’re not really being able to realize the full potential of digital. We’re leaving money on the table, and we are shortchanging businesses that can use digital tools to become more resilient.”
APEC has a whole area of work in the digital space, governed by its Internet and Digital Economy Roadmap. There is a list of worthy line items in the roadmap, such as universal broadband access and interoperability standards.
APEC doesn’t pool money collectively to invest in initiatives as the United Nations often does through the likes of the UN Development Programme, which has an annual budget of around US$6.8 billion. Instead, countries undertake to invest in roadmap initiatives, cooperating where required.
“Really there’s been little headway in implementing many of these items infrastructure, holistic policies, digital interoperability the things we’re still talking about in 2021,” says Curzon, who was appointed to the APEC Business Advisory Council in January. The council features three private sector representatives from each APEC country.
Curzon said it had three priorities when it came to the digital economy – helping businesses adopt digital technologies, improving digital trade and interoperability between countries’ systems to facilitate it, and prepare for emerging technologies such as artificial intelligence.
Ideas the Council is considering include establishing a portal for digital skills training, making e-invoicing more accessible to make it easier for accurate and speedy billing for companies trading between APEC nations and creating a “more seamless regulatory environment”.
“The region really has a patchwork of different approaches to things like electronic authentication, e-payments in digital financing, whether or not they use digital trade documents and processes,” says Curzon.
“It’s understandable that economies preferred their own way of doing things. But even when they might be different technical standards or regulatory settings or policy approaches, we need to find a way for systems to talk to each other and work together.”
E-invoicing, she says, would make a “really tangible difference” to small businesses when it came to having reliable cashflows, which is “one of the huge headaches for all businesses”.
“it’s so great to see the APEC trade ministers really endorsed the idea that digital border processes that were put in place during the pandemic should be locked in more permanently,” she said.
Digital economy minister David Clark said New Zealand had undertaken to use e-invoicing across the public sector and the government is working on integrating e-invoicing Australia for smoother trans-Tasman trade.
He said the Government’s digital strategy which was about to go out for consultation, had a focus on “trust, inclusion and growth”. Elsewhere around the APEC region, trust in technology is a key theme.
Mike Yeh, Microsoft’s Asia Vice-President, Corporate, External and Legal Affairs, says there was scope for stronger public-private partnerships to deal with issues like privacy in the digital world and the use of AI.
“How do we work with governments to develop the right regulations and policies that strike the right balance that give consumers and citizens that comfort that we’re going to use technology in an appropriate way that balances privacy, data protection, security, but ultimately enabled innovation and allows people to have the confidence to try new things?”
Microsoft has a large footprint of hyperscale data centres across the APEC region and will add to it next year with an Azure data centre region in New Zealand. But Yeh says the power of cloud computing platforms to support the digital economy could be undermined by disagreements between APEC member nations. He didn’t name specific countries, but the growing US-China tensions loomed large in his comments.
“We see it even in today’s geopolitical environment where there continues to be forces and tendencies to try to drive a more nationalistic development of technology,” says Yeh.
“And ultimately I think that that will create missed opportunities for us in the long run.”
Yeh adds that progress can be made on less problematic applications of artificial intelligence that are unlikely to raise privacy or ethical concerns.
“I do think there’s value in figuring out how do we enable the less controversial solutions,” he says.
“I think oftentimes we go into the worst scenarios, we get a little flustered because we can’t solve for those scenarios and then that just delay how we move forward.”
Thailand’s infrastructure needs
While digital trade and upskilling businesses to get into the e-commerce game occupies many APEC nations’ attention, some others have more fundamental priorities. Thailand’s Minister of Digital Economy and Society, H.E. Chaiwut Thanakamanusorn, told the forum that digital infrastructure in the form of broadband and submarine cables to ensure better global connectivity to the region were required in Thailand.
“A paradigm shift is needed to allow our respective economies to take advantage of the rapid developments in the digital space to speed up our recovery post Covid-19,” says Chaiwut.
Thailand will cost APEC 2022, so its task will be to progress issues the forum agrees to cooperate on in its New Zealand sessions. Chaiwut said online fraud and the use of digital platforms to facilitate human trafficking remained significant issues for Thailand to address, while praising New Zealand’s “digital inclusion focus”.
You can watch the full APEC 21 LIVE with Business replay here.
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