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APEC’s next trade frontier: Thinking small

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Asia-Pacific Economic Cooperation (APEC) kicked off its annual meeting with plans to think small, including finding ways to ensure small businesses benefit from trade deals.

The organization covers 21 economies, including the U.S., China, Japan and Russia, altogether representing around 57 percent of world gross domestic product (GDP) and 47 percent of world trade as of 2012. The group champions free trade and economic integration and cooperation, and its website touts that average tariffs have fallen from 17 percent in 1989, when the idea for APEC was first broached, to 5.2 percent in 2012.

This year's summit, held in the Philippines, has set its theme as economic inclusiveness.

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"It's not that clear what APEC actually does about that. We're not a development bank for example," noted Alan Bollard, APEC's secretariat and a former Reserve Bank of New Zealand (RBNZ) governor. "What we are doing is trying to identify parts of the economy that haven't had good exposure to the positive forces of competition and growth around the region and help them open up. That means small business, it means the services sector, it means women in the economy and it means some other areas," he said.

To an extent, APEC will keep doing what it usually does -- for example, trying to harmonize regulations across borders and cutting red tape -- but now it's also looking at the impact on small businesses, Bollard said.

Members of the police Special Action Force (SAF) walk in front of signage for the Asia-Pacific Economic Cooperation (APEC) summit after a drill simulating a Paris-like attack at the venue of the summit in Manila on November 14, 2015.
Ted Aljibe | AFP | Getty Images

"Small businesses can't muck around with all that stuff. They don't like paper, they don't like regulatory bodies, they don't like different requirements and we're trying to harmonize all that, which means getting one system that works," he said. "We're trying to ensure that some of these interesting new developments in electronic technologies for getting things across borders are working for small business."

Another conference focus is on trade in services, rather than just goods. That includes harmonizing regulations for sectors including telecommunications and software.

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"It's not just about moving goods across borders and reducing tariffs anymore," Bollard said. "It's all about services, which are a big part of all these economies now and how you get information and data and intangible stuff across borders."

He noted that the Philippines, where the conference is being held, is a big trader in services and APEC is hoping to gain information on best practices from the archipelago.

Because APEC's recommendations are voluntary, it acts as a "test kitchen" for economic practices which often end up forming parts of larger trade deals, such as the Trans-Pacific Partnership, he noted.