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U.S. Department of State - Great Seal

U.S. Department of State

Diplomacy in Action

Preview of APEC 2015

Matthew J. Matthews
Deputy Assistant Secretary, Bureau of East Asian and Pacific Affairs

Washington, DC
November 2, 2015


10:30 A.M. EDT



MR ZIMMER: Good morning. Welcome to the Foreign Press Center. My name is Mark Zimmer. I’m one of the Media Relations Officers here. We’re very pleased to welcome you this morning to a pre-brief of the APEC 2015 meeting with Deputy Assistant Secretary of State Matt Matthews.

Before we start, I’d like to take a moment to mention International Day to End Impunity for Crimes Against Journalists. That’s today, November 2nd. I don’t have to tell this group about the importance of a free press as part of every vibrant democracy regardless of location or culture. This commemoration, which the UN General Assembly initiated in 2013, reminds all of us of our responsibility to prevent violence against members of the media and to ensure accountability for those who do commit violence. The United States Government commends all of you for your role in promoting free speech, and we recognize the importance of journalists being able to do their work without fear.

With that, let me please welcome Deputy Assistant Secretary of State Matt Matthews. He will have some opening remarks, and then we’ll take questions. I will moderate that session. We’ll welcome colleagues in New York as appropriate. Thank you.

MR MATTHEWS: Good morning. I’m very happy to be here with you all to just preview a few items in the lead-up to our APEC senior officials meeting, the APEC ministerial, and of course, the APEC leaders meeting, which will conclude our APEC year.

I think as all of you know, APEC is a critical piece of our economic architecture in the Asia Pacific region, and we see it as the premier organization for advancing free and open trade and investment. It’s also used to foster cooperation in promoting sustainable and equitable growth. One of the most important parts of our Rebalance agenda is for shared prosperity in the region, and APEC contributes directly to that agenda. There are a number of things that go into it, but APEC basically is structured to help regional integration, stability, and to support rules conducive to U.S. economic competitiveness both for us and the region as a whole.

There are a couple of reasons why APEC really does work and works effectively. Number one, it’s the institution in the region that we use where we can cooperate on freer and more open trade and investment. It’s the right environment for holding those discussions. We have the right experts together both from government and from business to create substantial and workable, practical measures that help move us forward in that area.

It’s also a good institution for capacity building. The United States participates in that, but so do other economies in APEC. And the purpose of that capacity building is to make sure our participatory economies in APEC or developing countries have the capabilities that enable them to take advantage of the trade liberalization that we move forward on in APEC.

And, lastly, I’d say that it’s key to ensuring economic growth that is sustainable and that benefits everyone. That’s a key element in the themes that you’ll hear time and again during the Philippines’ year, is inclusive growth. It’s really something that APEC has been working on for some time, but it is being highlighted during the Philippine host year.

So, we see APEC being able to move forward on all these fronts because it’s an incubator for new ideas, for innovative approaches, and for tackling challenges in the region that other folks haven’t thought of or tried before. That’s facilitated, as I said, by the level of frank and open discussion that we can have in APEC. And we can have that kind of frank and open discussion because it’s an organization that’s based on consensus, and the outcomes that we reach are non-binding except inasmuch as each and every member economy commits to doing the things that we all have agreed make sense to do, that we all agree will expand trade, will create greater prosperity, and create benefits across our economies.

So what you’ll see over time is each and every economy coming to a conclusion, coming to a consensus within APEC, and then going home and doing the things they need to do to make those proposals fact, to make them real, to actually open their economies in ways that actually have spurred growth in the region.

I believe that APEC not only has but will continue to play essential role in enabling agreements like the Trans-Pacific Partnership and those of the WTO by helping economies envision and prepare for high-standard rules-based economic systems throughout the region. I think one perfect example of how APEC has done that is in the area of environmental goods and services.

So I just thought I’d highlight it for you because this year is the year in which all economies have committed to implementing commitments to either reduce tariffs on 54 items in the environmental goods and services list to below 5 percent or zeroing them out completely. That’s an amazing step forward, and it’s a step that inspired the WTO to try to pick up a similar process. And it’s moving forward now on a global framework.

So, again, incubator of ideas, effective means of communication within APEC where we have open discussions and plenty of time to examine the consequences of what a policy move might mean, then consensus and moving forward on it to implementation and providing that idea for others in the global economic community as a point of reference and, perhaps, adoption as in the case of environmental goods and services.

So that environmental goods and services list and the implementation of it is one of the real key highlights for deliverables this year. But there is much more on the APEC agenda, and first and foremost I would say is work on digital economy. This is something we’ve been working on for the past couple of years and we’re continuing to prepare it to ensure that the internet and the dissemination of new technologies that have led to rapid change is, in fact, possible within the APEC environment.

What does this really mean for us? It means that the internet needs to be open for markets and for free flow of information. The free flow of information is critical to firms making rapid and accurate decisions. So anything that prevents the free flow of information on the internet really is an impediment to growth. It’s an impediment to prosperity.

So we’re supporting a discussion in APEC that looks to identify those barriers and, as we move forward not only just this year but in the years to come, to thinking about ways we can move forward of dealing with the digital economy as a major trade issue for APEC, one that will allow us to address barriers in an effective way across the board.

The goal here, of course, is to make sure that we have a 21st economy in the Asia Pacific that continues to drive growth for the globe, and we’ll do that by making sure that we’re on that cutting edge, that we’re taking advantage of all the tools and all the benefits that the internet has that we can apply to our economic systems.

Another thing, of course, moving forward is work on the free trade area of the Pacific. There is a study going on now and … working chapters are being developed by various economies. That is something that will be progressing year by year as we look at ways of even broadening out the degree of integration within APEC.

There’s also, as I said, a key agenda on prosper – maintaining prosperity through sustainable, healthy, and resilient communities. So what are we talking about there? In APEC, we’ve come up with practical applications for dealing with marine debris. There are better programs going out now where cities are undertaking very pragmatic programs that will take debris, waste material, and turn it into energy – just a creative and effective and economically viable approach. Again, we’re doing it as an example, not only to the Asia Pacific region, but for the globe as well.

Fossil fuel subsidy reviews – we’re taking a look in APEC at those fossil fuel subsidies and asking each economy to take a clear look and ask themselves whether it’s delivering economic benefit or is it perhaps counterproductive. And in those cases where they identify a counterproductive subsidy - that means a subsidy that doesn’t work to that – the goal that we have in mind or that – or there are other policy options that might be more efficient. Folks are then encouraged to pursue those other options.

On the environment, we’ve got a number of initiatives but, of course, first and foremost was the environmental goods and services agreement. And I’d just highlight for you, in terms of environment, that the reason why that’s important is we are encouraging businesses and encouraging economies to adopt the best available technologies that allow us to grow, but to grow greener by reducing our carbon footprint. One key way to do that is by zeroing out the tariff, cutting the tax on those items so that businesses are more likely to adopt those technologies sooner and on a broader scale. That means that we can grow and reduce our carbon footprint at the same time. But in addition to that, we’re also doing work on electric vehicles and, as I said, we’re doing this fossil fuel subsidy study. So there’s that element on environment.

Again, there’s an element covering health. And in health, we’ve done work on both reducing the barriers – or not reducing but at last identifying barriers to trade in health care products. Again, looking forward, what we’ve got in mind here is this: What we’re trying to do is improve the health outcomes in each and every economy, and one of the best ways of doing that is to take a look and see where are the tariff rates inconsistent with that goal? Where are they so high that they’re actually preventing good health care products from getting to consumers who need them? And, ultimately, what we’ll try to do is work together with our other APEC economies and come up with approaches of how we can reduce those barriers.

But another thing that we’re doing is working in public-private partnerships on infection prevention and the control that is working in conjunction with the global health security agenda.

And a third area of work in APEC, which is very important and which requires private sector assistance – and one reason why APEC is so effective is it brings the private sector together with government – is to take a look at innovative medical products and take a look at the kind of global standards we’re adopting in applying them.

I’ll give you a following-up area for work that we’re doing, is in women’s economic empowerment. Here, the most basic thing we’re trying to achieve is ensuring that each and every economy in APEC grows at its optimum level, but the only way you can really do that is by ensuring that women have a full right to participate in the workforce and to contribute to our economic growth.

So in a broad range of measures, both on – by identifying policy frameworks that can facilitate and encourage full participation of women in the economy through a digital dashboard, and through a number of other specific measures, including this year we had one on transportation – women and transportation, which took a very clear look at this key node, making sure that women have safe transportation systems to get them to and from work, to make sure that that doesn’t become a barrier to their participation in the workforce. And as a kind of ripple effect, allow economies to say, okay, that’s the way it worked in transportation; are there other areas in our economy that are, unbeknownst to us or without us having really thought through them, creating barriers that we didn’t intend but are in fact there? As we take a look at the policy settings, we can say here are things, practical things, we can do to make sure that there’s nothing that stands between a woman and her desire to participate in that economy and generate income for her family and help that economy grow.

So one last thing I would mention to you is our work on disaster preparedness. This is something that was particularly poignant, I think, for the Philippines here because the Philippines, of course, is subject to as many if not more disasters than any other economy in APEC, whether it’s volcanoes, whether it’s earthquakes, whether it’s typhoons. But all economies in APEC to some degree or other have to handle these kinds of challenges. And what we want to do, particularly in APEC, is make sure that we’re coordinating in ways that, number one, ensure that we can get humanitarian goods to and from any disaster zone as efficiently and effectively as possible. This means over time dealing with the customs regulations and restrictions that might slow down that process. Our goal here is to make sure we alleviate suffering as much as we possibly can, as soon as we possibly can. And a second element of the APEC’s work on disaster preparedness is, again, I think unique to APEC because it takes a look at what happens after you’ve dealt with the immediate humanitarian crisis: What about getting our supply chains back in business? What about getting our businesses back up and running? What about making sure we have resilient energy systems that can be either sustained through a disaster scenario or be returned to service as quickly as possible? We’re looking at all those kinds of elements within the framework of discussions in APEC. So I think you can see we have a really broad agenda, but it’s focused on delivering economic improvement and greater prosperity and greater equity throughout the system.

So I think with those opening remarks, I’ll just open it up.

MR ZIMMER: Thank you. Please identify yourself and your outlet. If any guests in New York come to the microphone, we’ll recognize them.

Please, in the middle here.

QUESTION: Thank you. Welcome to the Foreign Press Center. I have a question about India. India has applied for membership of APEC and Philippines said it’s considering it. What’s U.S. position on that?

MR MATTHEWS: I don’t believe that there’s any active consideration within APEC for expanded membership at the current time. From time to time, countries and economies will register interest and – at present, though, there’s been no significant discussion along those lines. But at a future date, those things may be reviewed and we will see where they go.

One thing I would suggest is for any economy that’s interested in APEC, a great way to start is to go into – identify sub-fora or working groups that work on particular areas across our APEC agenda that are of particular interest to them and apply as a guest to send experts in to participate, both to help understand how APEC works and to get a better understanding of how we process and turn out good outcomes that help APEC be that organization that pushes for leading-edge and innovative ways of expanding a more open and free trade and investment environment.

MR ZIMMER: In the middle here, please.

QUESTION: Hi, I’m Alexander Panetta from the Canadian Press. So there will be a new member of APEC this year – Canada has a new prime minister in two days. So I’m just wondering whether there are any plans for either a bilateral or a pull-aside with Canada’s new Prime Minister Trudeau and any issues that might be priorities for the United States in dealing with a new government.

MR MATTHEWS: Well, Canada has a new prime minister and we welcome the prime minister into the APEC family, but Canada is not a new member. And Canada is a very significant and important member of APEC, one which we work with very closely. We anticipate having a tremendous amount of continuity in the APEC agenda and that Canada, if it does have new priorities that it would like to raise or address, I’m sure we’ll be hearing from the prime minister and his team when we go into the ministerial and leaders agenda period during these discussions coming up. But nothing’s been raised as of yet that I’m aware of.

MR ZIMMER: Thanks very much. Let’s go to the side here, please.

QUESTION: My name is Varughese George. I have a follow-up question on India. I’m from India, The Hindu newspaper. India has already been an observer since 2011 and President Obama, when he visited India last year, did say that the U.S. would support India’s membership in APEC. So are you suggesting that there is no forward movement at all on that – India’s request for membership?

MR MATTHEWS: I think it’s just important to be very careful and accurate about describing the President’s comments. The President has welcomed India’s interest in APEC, and I think that speaks for itself. We are welcoming your interest. We welcome India’s examination of what APEC’s all about, but we have not entered into a discussion and I don’t believe India is formally pressing for actual membership now in APEC. And remember, keep this in mind, APEC is an organization that’s consensus-based. So each and every member of APEC has to agree to an expansion of APEC membership, and no discussions in APEC this year have focused on that topic – just so you’re focused on that, okay? You’re welcome.

MR ZIMMER: We’ll do the front and then we’ll go to the back, please.

QUESTION: Thank you, Matt. Rita Cheng from Central News Agency, Taiwan. Every year the U.S. delegation will meet with the Taiwan’s counterpart during the APEC. I wondered is there any meeting confirmed during this year? And any other topic that you will be discuss with Taiwan’s counterpart?

And also, not every country in – of APEC has been included in TPP. I wonder the America – how America and in what way will put the – cooperate the TPP (inaudible) with the – like the region’s economic framework? Thank you.

MR MATTHEWS: Okay, I’m not sure if I got all of that. But first and foremost, Taipei is a full member in APEC – Chinese Taipei is a full member in APEC, and it works across the whole APEC agenda with every other economy in APEC and we work with Chinese Taipei in those various sub-fora and working groups, in senior official meetings that I participate in with, and of course during ministerials and even the leaders meeting. So I think you can anticipate that, just as in prior years, Chinese Taipei will be an active participant in all those elements and we look forward to that.

MR ZIMMER: In the back, please.

QUESTION: Good morning. My name is Adam Xu from Voice of America, Mandarin service. I have two questions. You mentioned the U.S. will support the discussion on the free flow of information on the internet. I’m wondering: Do you have a list of participants in the (inaudible) or is this discussion going to be carried out? And can you elaborate on the focus of such discussion, and what are your expectations?

And my second question is about the South China Sea. Given the recent tensions in South China Sea, is it going to be on the agenda in the APEC discussions?

MR. MATTHEWS: Thank you. So, on digital economy, right now we’re at an early stage in the APEC process on discussing the digital economy and digital trade issues, so I would say that this is essentially a working-level process. But both at ministerial and, I believe hopefully, at the leaders level there will be acknowledgement that this is an important issue that has to be discussed and engaged in, but it primarily has to be engaged at this working level to make sure we kind of start to flesh out all the different specifics that we think are critical to ensuring that we have a free and open internet that supports future economic growth. So I guess that’s where I’d say we’re on that one.

And I have nothing for you on the South China Sea, except I would just reiterate that APEC is an organization that focuses on economic issues.

MR ZIMMER: How about on the side for this one.

QUESTION: Hi, 21st Century Business Herald. About TPP, some trade experts told me that among the TPP members in the ASEAN countries, Malaysia will be the one, the country that will face a lot of challenge during the TPP ratification process in terms of the prime minister’s challenge from his own party and from parliament. So is this the case, or do you optimistic about the ratification process of TPP in Malaysia as there will be a trade minister session in the APEC? Thanks.

MR MATTHEWS: Well, I am optimistic about ratification of the TPP agreement by all the participating economies. It doesn’t mean that it won’t take a lot of work. Even in our own country we anticipate it’s going to be a major effort to make sure we do a good job of explaining the actual outcomes of TPP and what the benefits are. But we remain optimistic and I think we remain optimistic across all the participating economies.

MR ZIMMER: In the middle, please, then we’ll go to the back.

QUESTION: Hi, Maria Garcia, Notimex, the Mexican news agency. As – Mexico as a member of APEC has started ambitious economic reforms. Do you think that the Mexican model could be – to what extent the Mexican model could be regarded as a model for other members of the APEC?

MR MATTHEWS: Other members of APEC? Well, I would say this, that we have a very broad agenda of issues in APEC, and I would say it’s probably fair to say that almost every economy participating in APEC has at some point introduced innovative ideas or good policy suggestions that get discussed by APEC and ultimately adopted by APEC. And Mexico, of course, is one of them. But it’s part and parcel of the way in which we operate, so particularly in every host year whenever an economy decides to host, they have a chairmanship role which allows them to help highlight issues that they think are of critical importance, and they naturally do this in consultation with other economies. But it does give them a chance to provide some additional input.

But even in non-host years every economy has the ability to introduce at working levels at the senior official level new ideas that they think will help all the economies at APEC to grow more effectively. And Mexico has participated in that and they are an active and helpful player in helping us move towards a more liberal and open system. So I can only say thank you to Mexico.

MR ZIMMER: All the way in the back, please.

QUESTION: Hi, I’m Marion with NHK Japan Broadcasting Corporation. I have two questions about two major economic developments in the region this year, first of all the TPP and then also economic uncertainty coming out of China and the resulting financial market volatility. And I’m wondering if those two things would specifically be on the agenda for the leaders’ summit. TPP, I assume, would definitely be a focus in the trade minister summit, but I’m wondering if there would be a sort of separate TPP meeting at the leaders’ level as well.

QUESTION: Well, there’s been no decision, I think at this point, on whether or not there will be a TPP sidebar meeting at the ministerial or at the leaders’ meeting, but I refer to USTR on that. As we get closer to the date they may have something more for you on that.

In terms of China, China is pursuing a broad-based economic reform agenda. It’s a challenging process of shifting the growth model – one dependent on investment and exports to domestic demand – and it’s a natural process you would anticipate that when you go through a major economic policy transition like this that issues will arise. They seem committed to the process. I think though the IMF and other economies understand their commitment and are supportive of their commitment to that reform process.

MR ZIMMER: Do we have more in the back? (Inaudible.)

QUESTION: Thank you very much. My name is Tatsuya Mizumoto from Jiji Press. About digital economy: so, are you discussing about cyber security? And then about TPP, I know you have now TPP agreements, so what kind of the impact you will have against APEC discussions by this?

MR MATTHEWS: Okay, cyber security does get raised in certain fora within APEC, and – but it’s – we have a pretty strong economic focus for the discussions. So what you want to do is make sure that you have systems in place that preserve trade secrets, that preserve the integrity of business information, et cetera. You want to make sure that economies are protected against potential economic downside of cyber hacking, et cetera.

But I’ll get back to you with more detail that would probably help you, because I don’t have the specifics in front of me but I’d be happy to give you more information on that in a follow-up.

And then your second question was? I’m sorry.

QUESTION: (Off-mike.)

MR MATTHEWS: Yeah. So APEC’s agenda is separate – TPP is a separate negotiating group of economies. They’re all APEC members, but it’s done separately. So we’re not driving the APEC agenda based on what happens in the TPP negotiations. The APEC agenda keeps moving forward on trade liberalization processes regardless. So – but obviously, we all welcome the successful conclusion of the TPP, but it won’t directly affect the APEC discussion process.

MR ZIMMER: Do you have a short follow-up?

QUESTION: Yes, I want to follow that, so on the TPP. But I think as – to your final (inaudible) that you are going to write a TPP standard to – in the APEC area, right? So --

MR MATTHEWS: Right. So there are two things. There’s a free trade agreement of the Pacific discussion group, which basically is starting to flesh out what chapters in an APEC-wide agreement might look like. That discussion process will go forward, and is going forward, and chapters are being worked on by individual economies who have raised their hands and volunteered to help contribute. And I guess that’s what I can tell you. That’s an ongoing discussion process and ongoing drafting process. That continues.

MR ZIMMER: Any final questions? Okay.

QUESTION: I am Grigory Dubovitskiy, Russian news agency RIA Novosti. Are you aware of any plans, maybe possible, to discuss any questions with Russian delegation on the sidelines while SOM meet, maybe you aware of what level it could be?

MR MATTHEWS: I don’t know about – and I can say to you that I meet with the Russian delegation for the senior officials level on a regular basis and at every SOM basically – and my predecessors did. So those discussions continue because we have points of discussion that need close communication on a regular basis. And my team that does APEC issues is, of course, working with our counterparts in the Russian delegation to APEC. As for more senior-level meeting schedules, I don’t have the specifics for you on that.

MR ZIMMER: One here, and then a final couple in the back.

QUESTION: Two quick follow-up questions. Alexander Panetta, again, from the Canadian Press. Can you give an example or two of some of the environmental goods and services you’re talking about, and what a change in tariffs might mean or an elimination of tariffs might mean in terms of their proliferation? That’s the first follow-up.

And the second thing I wanted to ask was, if I understand correctly, that you don’t know yet whether there might be a meeting with the new Prime Minister Trudeau of Canada?

MR MATTHEWS: Well, I’d refer you to the White House on their scheduling of bilateral meetings for the President during the period of the leaders’ meeting.

As for your other question on environmental goods and services, well some obvious ones that come to mind that are covered are wind turbines and solar panels – things that you’d say just – inherently you’d say anybody who wants to operate more greenly and wants to generate green power will want to make sure we can get those products to every market in APEC with the lowest tariff possible, if not zero tariff, so that a greater number of firms and a greater number of households can actually adopt the use of those technologies to reduce their energy intake and their carbon footprint.

MR ZIMMER: Okay. Maybe one more after this one.

QUESTION: All right, thank you. Rob Gentry with TV Asahi. I had a follow-up on your question about – on your point about reducing tariffs for health care products. Is it tariffs or is it also non-tariff barriers that you’re interested in on that?

And then as a general question for the leaders’ meeting, what does the U.S. hope to have in terms of discussion on currency in the region, in terms of its effect on trade? Thanks.

MR MATTHEWS: So for healthcare products let me just be clear, we’re in very early stages of discussions on health care products. Really what we’re doing at this current stage in APEC is agreeing to kind of identify barriers. But one other thing that I’d like mention to you that we’re doing with regard to healthcare products in APEC is having private sector and governmental cooperation on helping to identify substandard health care products that can enter the market or even fraudulent ones, and then making sure each economy has effective means of taking those substandard products out of the pharmaceutical system to make sure we’re not delivering products which don’t help improve the health outcomes for our citizens. But so we’re really at an early stage on that healthcare initiative, and we’re not to the point of, I think, identifying tariffs or talking about tariff reductions but just basically doing a study of the overall picture on barriers.

And I’m sorry, what was your other question?

QUESTION: Currency.

MR MATTHEWS: Currency. I can’t give you anything on that. I don’t know that there’s – yeah, I just don’t have an answer for you on that one.

MR ZIMMER: Do we have a final question? Over here, one more. Last question, please.

QUESTION: Sorry, it’s still a follow-up to the TPP. I just wondered, is that like the similar, that during the APEC the discussion group will have a meeting and any country who would like to join the TPP, that they will have the chance to talking about that? It’s something like that? Thank you.

MR MATTHEWS: Yeah, well, thanks for that question. I don’t believe it’s envisioned right now. Remember, every economy that’s in the Trans-Pacific Partnership at present is focused on one thing. It’s getting from the conclusion of the negotiation to ratification within their own system, and that’s precisely where the United States is. So our focus is completely dedicated to preparing everything we need to do to get ratification by the U.S. Congress. And until we get that done, we’re not really going to be focusing on other economies.

We welcome the interest of other economies in APEC who are interested in TPP, but we just have to tell folks, please understand our focus right now is getting to ratification.

MR ZIMMER: Okay, we appreciate Mr. Matthews joining us this morning out of his busy schedule. We appreciate your joining us. We’ll see you next time. Thank you.

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