[Title] APEC STRUCTURAL REFORM ACTION PLAN IMPORTANCE OF STRUCTURAL REFORM

The promotion and strengthening of structural reform in APEC economies is an essential prerequisite for achieving sustainable economic growth and development in the Asia Pacific region and beyond. The 1997 Asian Financial Crisis demonstrated the importance of ongoing institutional, regulatory and structural reforms to enable APEC economies to successfully address the challenges presented by economic shocks and market instability.

To maximise the opportunities from open markets "at the border", mutually supportive structural reform is necessary "behind the border". The objective of structural reform is to help achieve durable, non-inflationary growth with high levels of employment. By improving the functioning of markets, reform can remove impediments to full and efficient use of resources, helping governments achieve widely-held economic and social goals such as higher productivity and living standards.

Structural reform will support trade and investment liberalisation and assist APEC economies in realising the benefits of trade and investment liberalisation and facilitation, contributing towards the achievement of the Bogor Goals. Reforms establishing transparent and impartial regulatory frameworks will also boost business and investor confidence in an environment of global economic uncertainty.

Building on the lessons of the financial crisis, APEC economies can be the driving force for continued growth in the world economy by implementing appropriate reforms to address new and emerging challenges resulting from rapid economic changes. By implementing appropriate structural adjustments in a timely manner, APEC economies can seize new opportunities for prosperity. Therefore, APEC should reenergize its promotion of the benefits of structural reform and utilize high-level policy dialogues including peer review, complemented by capacity building activities to share experiences and best practice models.

APEC WORK TO DATE ON STRUCTURAL REFORM

APEC member economies have a shared responsibility to enhance prospects for sustained economic growth and maximise the benefits of open markets by addressing structural reform issues through commitment to reform "behind the border", advocacy and awareness-raising activities, capacity building projects and enhanced cooperation.

Recent APEC Declarations and Statements on the importance of APEC member economies undertaking structural reform, and advocacy from the APEC Business Advisory Council (ABAC) and PECC highlighting structural reform's importance to the international business community have played a key role in raising awareness on the benefits of structural reform and provided impetus for increased APEC work in this area. Examples of recent specific initiatives related to structural reform that have been undertaken within APEC include:

- A Structural Reform Seminar which outlined best practice management models and highlighted the important benefits of undertaking structural reform as discussed in the Reform Pays Off brochure - held in Khon Kaen, Thailand in May 2003.

- Finance Ministers' initiatives to strengthen corporate governance and improve insolvency systems.

- Initiation of a Corporate Debt Restructuring project in the Economic Committee.

- Various initiatives in the Competition Policy and Deregulation Group (CPDG) including implementation of the APEC/OECD Cooperative Initiative on Regulatory Reform, undertaking an APEC Training Program on Competition Policy and delivery of a Training Program to Promote Economic Competition in APEC Economies, with a focus on the electricity and transport sectors.

- Corporate law, competition policy and institution and capacity building initiatives implemented by the Strengthening Economic Legal Infrastructure (SELI) Coordinating Group including SELI Symposiums in July 2000 and 2002, completion of commercial laws seminars in Vietnam, the Philippines, Indonesia, Thailand and China, and the awareness-raising report Strengthening Economic Legal Infrastructure in APEC: Supporting Trade, Investment and Economic Development.

- Promotion of capacity building projects to strengthen Social Safety Nets.

- Good regulatory practice seminars in the Sub-Committee on Standards and Conformance and the Group on Services.

PROPOSED FUTURE STRUCTURAL REFORM WORK WITHIN APEC

Structural reform is a broad ranging and continual process. The recognition of transition costs during the adjustment phase of the reform process underlines the importance of careful and expert management. APEC will continue to play a leading role in the promotion of continuous economic reform in the region through advocacy and awareness-raising activities; capacity building projects and coordination and cooperation. A key objective will be to assist economies in their efforts to develop a constituency for reform and promote openness through their own policies.

- Advocacy and Awareness Raising Activities: APEC member economies and ABAC are encouraged to work together to enhance awareness and build support among key stakeholders in their economies on the importance of structural reform for economic growth and sustainable development in the APEC region. APEC fora are encouraged to improve advocacy of their structural reform work with the APEC Secretariat to promote structural reform outcomes through their communications and outreach work.

- Capacity Building Projects: APEC fora and individual member economies are encouraged to develop and implement capacity building projects and provide technical assistance, with the outcomes of all projects to be widely disseminated and acted upon.

- Cooperation and Coordination: APEC fora are encouraged to work together to advance APEC's structural reform agenda by sharing information, publicising the outcomes of projects and keeping each other apprised of progress with initiatives. Senior economic policy makers and regulators are encouraged to contribute to high level policy dialogues including peer review. Cooperation and coordination between APEC and regional/international organizations on their structural reform agendas should be improved, with regular dialogue to facilitate closer interaction.

Specific Initiatives

Relevant APEC fora have detailed their future structural reform initiatives. Examples of proposed APEC activities related to structural reform include:

- Finance Ministers Process will develop a Voluntary Action Plan for supporting freer and more stable capital flows (financial disclosure and deposit insurance), and hold two policy dialogues aimed at promoting greater understanding of the importance of high quality transparency arrangements in the financial sector.

- Committee on Trade and Investment will review structural impediments to trade and investment.

- Economic Committee will report on the progress and future plans of each member economy on structural reform in the 2004 APEC Economic Outlook.

- Competition Policy and Deregulation Working Group will continue the APEC/OECD Cooperative Initiative on Regulatory Reform (Phase II), the APEC Training Program on Competition Policy and complete the Training Program to Promote Economic Competition in APEC economies in the electricity, transport and telecommunications sectors.

- Strengthening Economic Legal Infrastructure Coordinating Group will continue to identify mechanisms for strengthening economic legal infrastructure, focussing in particular on corporate law and competition law/policy, capacity and institutional building, to hold seminar including seminar on Debt Collection Litigation/Arbitration in APEC.

- Social Safety Net Capacity Building Network will continue to focus on Pre-crisis Social Safety Net Planning and Prevention Measures; Strengthening Transparency and Accountability in Social Safety Net Operations; and Workforce Retraining issues.

APEC member economies are also considering individual initiatives to promote structural reform in the APEC region. Examples of proposed activities include:

- The forthcoming High-Level Symposium on Structural Reform planned by Japan in 2004 that will bring together experts and policy makers to canvass the key issues and explore how to promote and manage structural reform related activities in APEC.

- A one to two week intensive training program for selected developing economy participants focussed on the Implementation of Trade Liberalisation and Structural Adjustment and preparation of a Manual for the Management of Structural Adjustment planned by Australia.