Climate hot issue for APEC


Climate change is top of the agenda for leaders' week, Glenda Korporaal writes
June 27, 2007
DEVELOPING practical policies on climate change will be the key issue facing world business leaders when they come together in early September for APEC leaders' week, according to Macquarie Bank deputy chairman Mark Johnson.
"Energy security has been an issue of concern to the APEC economies," says Johnson, who will chair the two-day meeting of 400 world business leaders.
"As the meeting gets closer, climate change has come to the forefront. This is partly because the prime minister put it there in his Asia Society speech this month.
"But it will also recognise the popular concern about the issue through the region."
In the last few weeks leading APEC members have made major policy statements on climate change, which was a focus of the recent G8 meeting in Germany.
The APEC leaders' week in Sydney will begin on September 3 with a closed-door, three-day meeting of the 63 business people who form the permanent Apec Business Advisory Council - three from each of the 21 economies.
Australia's members are Johnson, public relations consultant Peter Charlton, and small business operator Michael Crouch, who heads up Zip Industries.
That meeting will be followed by the two-day summit at the Opera House for an invitation-only group of 400 top business people to discuss issues such as climate change and trade policy.
The business people will then meet on the Saturday with the APEC world leaders.
In the past, the local chamber of commerce in the APEC host city has issued its own invitations to the business summit, which has tended to be a more freewheeling occasion.
This year, John Howard has taken control of the guest list, limiting the meeting to 400 top business people who will attend on invitation from Canberra.
This is designed to create a more tightly organised, structured program attracting major international business leaders.
The 63-member ABAC business group, whose permanent members meet several times a year, will issue a report in August of the major issues business would like the leaders to discuss at the September meeting.
The Sydney meeting is expected to spend time producing a statement that will stress the urgency of addressing climate change but also stressing some principles of the way it should be approached.
"The business summit will say there is a degree of urgency about the issue," Johnson says. "There will also be pressure for the principles of transparency and the comprehensive nature of any final proposals so business knows what is required of it."
Johnson says business will be looking for a set of principles from the leaders on how to approach climate change, rather than specific, detailed policy. "Business will recognise that this is not just an issue that affects the 21 economies," he says.
"It will be in all our interests to try to find principles that will allow all those economies to mesh with the rest of the world. We have to deal with this issue on a global basis.
"The leaders will be looking for the broad principles that might lead to long-term and compatible structures."
Johnson, who steps down next month as deputy chairman of Macquarie Bank, says a form of pricing mechanism, rather than strict government regulation, is the best way to change the energy-using behaviour of consumers and business.
"You can use regulation to change consumer behaviour but you are less likely to get it right," he says.
"Ultimately, we are all trying to move to some kind of pricing mechanism. You want to change consumer behaviour and you want to change business behaviour.
"You want to encourage innovation and new methods of dealing with this issue.
"Most business people would be of the view that a sensible pricing regime will give the best signals to those many disparate groups."
APEC has evolved considerably since it was formed in 1989 as an Asian-focussed alternative to the European Union.
The average tariff in each of the 21 economies is now less than 6 per cent compared with almost 17 per cent when it was founded.
ABAC itself, a standing group of three business people from each economy, was formed in 1995 to provide business with a forum to transmit ideas on key issues to the APEC leaders.
"The original intent of APEC was for all the countries in the region to improve their economic performance," Johnson says.
"The most appropriate way to do this was seen to be reform of the conditions for trade."
But, he says, while the concept of lower tariffs and more trade between the economies is still a key goal of APEC, there is also a recognition about the need to do more about broader impediments to trade, such as human skills, regulation and structural adjustment.
"Trade facilitation as well as liberalisation is now a big part of APEC," Johnson says.
He points out that much work is done in the meetings of specific industry groups, which get together throughout the year in sectors such as automotive, chemicals and energy.
"They deal with very specific issues, which often accomplish quite a lot in a tangible way," he says.
"This can include standards for goods such as refrigerators. So if you buy a Chinese-made refrigerator how can you be confident it meets NSW standards?
"The industry working groups make sure that the standards are harmonious. It sounds mundane but it is quite important.
"It has been more successful than most people appreciate."
Apart from the formal meetings, the informal contacts between business leaders and between business leaders and ministers in the APEC leaders' week also help promote trade, Johnson says.
The Saturday meeting between business leaders and the APEC political leaders is a freewheeling private section with no advisers present.
Johnson says the business leaders this year will be keen to hear from world leaders such as Russian president Putin, and Chinese leader Hu Jintao on that country's plans for structural reform.
"These will affect every facet of business, as you can imagine."
At the same time, business uses the meeting to put forward broad issues on which it wants action from the leaders.
"The leaders keep on submitting themselves to it every year," he says. "If they didn't like it, I suspect they wouldn't keep coming back."