Dodwell's blog 3 on SOM3 in Cebu

September 01, 2015

Tue Sep 1 2015
Flashback to Kazan and the APEC senior official meeting cluster in May 2012. A crowd of us from ABAC arrived to present to the Group on Services (GOS) on the unrecognized importance of services in our economies, and on the need to connect our economies on Global Data Standards. What a disappointing experience it was. The GOS agenda seemed flaccid. Interest in our services messages was muted at best. Our Global Data Standards proposals met with skepticism.
Now jump forward three years, and how the worm has turned. The GOS has grown muscles. The story of the critical importance of services is everywhere. And we are reporting on nine pilot projects ranging across pharmaceuticals to farm products where cooperation on application of global data standards is in healthy progress.
Nothing illustrates the transformed mood better than the impressive and important work unveiled by APEC’s Policy Support Unit on the importance of services in manufacturing supply chains, complimented by work being driven by the Japanese government. The PSU’s Gloria Pasadilla reported on 22 separate cases that have been researched to discover the range and importance of services in manufacturing supply chains that range from Japanese power plant production, to cherry harvesting in Chile, to printed circuit boards in Canada and welding services in Thailand.
The message of the cases is clear: services account for a huge share of the value of almost every manufactured product. The team discovered from 37 to 74 different services in each supply chain. If international trade data is altered to take account of this, the value of services trade rises from 23% of exports under standard trade measures, to 45% - becoming significantly the most important component of international trade.
The research results are also fascinating because they reveal that many companies simply don’t recognize the importance of services in the value of their goods – at least, not until they start to outsource them. Once they decide to outsource, they not only begin to calculate accurately the value and importance of services – they also begin to delegate work to local companies, mostly SMEs. They also begin to recognize how important it is for their competitiveness that services are delivered cheaply and efficiently. This is beginning to put pressure on many services suppliers – who historically have been carefully protected from competition – to supply better quality services more cheaply, with international competitors beginning to enter markets to force innovation and efficiency.
Policy wonks are now using a horrible word – servicification – to describe this transformation. In some ways, this ugly new word is a nonsense: companies are not “servicifying” – they are simply recognizing the services that have been there, unrecognized, all the time. The more widely these services are recognized, the sooner we will start to get liberalization of services trade – and some progress breaking down the many behind the border obstacles to liberalization that have been tolerated for far too long.
Group On Service Meeting
A special blog for APEC Business Travel Card
For any business traveller in Asia, today is a special and important day: anyone applying from today (September 1) for an APEC Business Travel Card will be applying for a five year card, not the maximum three years of the past.
The extension has taken more than two years to press through APEC’s Business Mobility Group, and through the 21 offices in our APEC economies responsible for issuing the cards. With over 160,000 APEC Business Travel Cards now in use, the change is significant, because it nowadays acts not just as a fast track to the short diplomatic queue in immigration halls around the region, but also as a visa in many economies, saving huge amounts of time and money for frequent travelers in the region.
And of course extending the life of the card from three to five years hugely reduces the workload of immigration department staff who are beginning to come under pressure to handle applications as the number of cards in use rapidly grows.
And it is here that the APEC Business Advisory Council is focusing its next big push. In pushing for the electronic lodgement of ABTC applications (enabling applicants to fill our an electronic form on line rather than go to a visa office and task an immigration officer to do the job for him or her) the aim is to reduce still further the amount of time it takes officials to check, approve and issue the cards. I think we have already won the case on principle: officials are now working through the practical challenges. Hopefully they will find none that are insurmountable.
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