APEC urges accelerated trade, digitization to boost Covid-19 recovery

APEC urges accelerated trade, digitization to boost Covid-19 recovery

More than a year since its outbreak, the Covid-19 pandemic continues spreading in a complicated and unpredictable manner, causing unprecedented socioeconomic instability throughout the globe. In order to promote economic recovery, the 21 member nations of the Asia-Pacific Economic Cooperation (APEC) forum met virtually for the 27th APEC Ministers Responsible for Trade Meeting (MRT 27) to consider eliminating unnecessary barriers to trade in services, especially services used to boost the circulation of essential goods.

Removing barriers to circulation

Given the major drive to produce Covid-19 vaccines and accelerate vaccinations, governmental financial support programs, as well as successful endeavors by some economies to contain the pandemic, the global economy is expected to perform better this year than in 2020. In an April 2020 report, the International Monetary Fund (IMF) forecast global economic growth would reach six percent in 2021 and 4.4 percent in 2022, against its negative growth forecast of minus 3.3 percent for 2020. Analysts remain optimistic forecasting a GDP growth rate of 5.7 percent for the entire APEC region in 2021 and 4.1 percent in 2022, against a negative growth rate of minus 1.9 percent in 2020.

The 27th APEC Ministers Responsible for Trade Meeting took place online due to Covid-19

In a joint statement following the MRT 27, APEC member economies displayed a consensus on the need to identify unnecessary barriers to trade and trade promotion efforts.

“The Covid-19 pandemic once again put an emphasis on our interdependence and indicates the importance of keeping trade and supply chains free and open,” said New Zealand’s Trade and Export Growth Minister Damien O’Connor.

Vietnamese Minister of Industry and Trade Nguyen Hong Dien appealed to other countries to develop initiatives for the effective operation of regional goods and service supply chains. He emphasized the need for greater efforts to facilitate the circulation of essential goods as agreed by APEC ministers at their 2020 meeting.

In the current context, these efforts also help facilitate the supply of Covid-19 vaccines. Trade barriers such as export restrictions and tariffs are hindering developing countries’ access to Covid-19 vaccines. Currently, the average tax rate applied by APEC economies to vaccines is relatively low, about 0.8 percent. However, essential materials for vaccine supply, such as alcohol, refrigeration equipment, packaging and preservation materials, vials and rubber caps are subject to relatively high tax rates averaging more than five percent, which will possibly increase to 30 percent in some APEC economies.

APEC member nations will take the intiative in negotiating with the World Trade Organization (WTO) a temporary waiver of intellectual property rights on Covid-19 vaccines as soon as possible, at the latest during the WTO’s 12th Ministerial Conference scheduled for late November.

Digital transformation

According to Vietnamese Minister of Industry and Trade Nguyen Hong Dien, to ensure economic growth and maintain social stability, APEC member nations must maintain free and open trade and investment, increase regional economic integration, and ensure APEC’s leading role in the Asia-Pacific region. He emphasized the need to focus on e-commerce and digital transformation.

“APEC needs to increase cooperation in creative innovation, digital trade and the internet, ensure adequate infrastructure for effective digital connection, and enhance digital capability for businesses and human resources, especially vulnerable groups such as women and disabled people,” Minister Dien said.

Japanese State Minister for Foreign Affairs Eiichiro Washio agreed with Minister Dien that APEC economies should promote free exchange of digital information based on trust in order to build a better post-pandemic region. “It’s the pandemic that has accelerated digitalization. Therefore, a global rule for a digital society is necessary,” Eiichiro Washio stated.

The APEC ministers also agreed to accelerate implementation of the Internet and Digital Economy Roadmap adopted at the 2017 Vietnam-hosted APEC Summit in order to promote an efficient, inclusive, non-discriminatory digital economy; promote the application of new technologies and boost business development.

VietNam Economic News