capital to draw upon in terms of dealing with the hard issues. but by virtue of a process which deals with things like investment treaties, things like a new evolution of the region's architecture, things like global advances on climate change driven by the two largest emitters in the world. but in time also on intractable questions like north korea and cyber security and also the rise of militant islamism. there is a basis to construct a new element of evolving strategic trust between the two which provides a platform for dealing with the unresolved challenges of the future. i conclude my remarks here how i concluded two night ago. dunn had this great saying about the chinese domestic reform process. what dunn said was -- this is way back in the late '70s -- if you're going to reform this thing called china in the great openings of new policy, economic

reform, domestically opening to the outside world international ly. then it's going to be a long process. so he used his marvelous analogy which is you cross the river steps feeling the stones step by step. [ speaking chinese ] i think we also need to have that concept alive in our minds about how you can possibly engineer that incremental trust building exercise between china and the united states as well. step by step but knowing in fact that there is a destination called a common future. for our chinese friends here in the audience today, if you talk about realism, [ chinese word ] means something in the context. there are positive terms in the chinese context. [ chinese word ] or [ chinese word ] international and global public goods means something in the chinese discourse.

so to frame a common vision, to frame a common concept but not to leave it at a level of political theory, but to then have an operational dimension which can be put into practice by regular symmetry by the two countries. that i think provides us a way to navigate our way through. if we don't, then i fear that the tendency will be towards inertia, drift, and drift becoming current, and perhaps in the direction in which none of us would want to see for the future. i thank you. >> thank you very much, mr. rudd. i would like to open the floor to some questions that, if i could, maybe i could start with one. the question is this -- do you think that american or chinese

economic strategy is sufficient given the broad scope of the region that you describe to us. what advice would you have for both countries in that area. >> well, the wisdom of foreign policy is never provide public advice to any government. it's usually likely to be unwelcome. private advice is usually of a different nature. but let me make some broad observations. that's looking from the region out rather than from america or china in. there's some basic metrics here. metrics, while boring, are important. china as of 2000 -- last couple of years has become the world's largest trading power. it's become the world's largest exporter. world's second-largest importer. and if you were to put together simply on trade metrics, china today is the number one trading partner -- about 127 countries -- around the world. the united states, around 73. depending on who you believe,

the world bank, the imf or whichever journalist just wrote an interesting story, and again, the measures of the relative size of the chinese and american economies, pricing, market exchange rates, calculations and what price assumptions are of ppp, the chinese economy is projected by a combination of the bank, the imf and/or the oecd to be twice in size of the american economy between 2024 and 2025. metrics are really important here. if you look at it from the region out, the economic significance of china both in terms of trade, fdi, and prospectively, depending what

happens with the liberalization of the rmb in the future, capital flows become a much more dominant factor in the economic reality of east asia than american. i don't think people have quite thought that through in terms of where it all leads. but if you take as your primary assumption that from economic power, other forms of power proceed, there is a fundamental underlying shift occurring across the asian hemisphere. that in turn of course in terms of its forward trajectory goes to questions like the sustainability of chinese growth over time, goes to the questions of will the growth rate be 7.5%, 6.5% or the most negative projections of averaging over the next decade averaging down to something 4% or north of 3%. but the projections both by the bank and the fund and the oecd did not assume the near projections. all i'm say something as a question of basic economic metrics, china is now more relevant to the economies of

east asia than the united states. that's a very thin margin at present, but as you see investment flows unfold and you see capital flows unfold depending on regulatory changes in beijing, that equation is going to change even more profoundly. it's up to the united states to respond to that as they so choose. but that is an unfolding reality in our part of the world. hugh white is here with us from australia. if you took the china trade out of the australian gdp, hugh, i imagine chinese exports would be 20% of australian gdp? that's quite a lot of cash for any economy. we are a $1.6 trillion economy. replicate that across smaller economies of asia and we're the fourth largest economy in asia after china, japan and india.

this equation is unfolding. so part of the american response is the transpacific partnership and the diplomacy associated with that. and for which there is a chinese counter narrative as well. i won't go into the probabilities and relative merits of both proposals. >> let me open it up for one or two questions. andre? >> thank you. i'm the chief representative from vietnam for the intrastate traveler company. wonderful address. thank you so much. so comprehensive. i just was taking notes from your remarks here. only thing that i have a question on is, in working towards this constructive

realism, great term. you defined it well. but it seems like a fly in the ointment, so to speak -- >> seems like a what? >> a main obstacle to working towards constructive engagement with all those variables is that, of all the parties to the equation, only china -- only china -- continues to violate using violence to intrude into the exclusive economic zones of, you know, the philippines and vietnam and other countries. and deny that they're doing it. i've been on business trips, i've seen them come right into the exclusive economic zone using violence. so -- >> i think the truth of all this is -- just to paraphrase -- because i'm conscious you've got the rest of the program to attend to and i've got to be out the door in a minute but i get the question. i think if you were to go through the analysis of each of the disputes from north to south, each has its own internal characteristics. if i was an international lawyer sitting at the international court of justice on each of these disputes and where the territorial lines lay, i would

probably have different resolutions on each of them. and having spent some time looking at the underpinning legal cases concerning senkaku, concerning spratly islands and the intervening seas and the claimant positions of all seven parties, this is a highly variable feast. it is not just that we as an australian government have traditionally chosen to be neutral on this. there is a reason to be neutral, and that is that the underpinning legal cases are, if they overcame the jurisdiction, are so complex. so if we had another hour we could go through each of these individually but i think that would be tiresome for people in this gathering. so rather than have an adjudication which says who's right and who's wrong in each one of these disputes, i simply point to the fact that china now has a more active pro-activist party in the last year or so. it proceeds from a series of perceptions within the chinese leadership about the united states which i sought to

articulate before. therefore, the concrete policy challenges is what do we do in response. that's what i have sought to articulate today. i'm sure in the rest of your conference you'll have an opportunity to dissect each element of each dispute. but that is not possible right now. >> andrea, associate professor at catholic university. >> which university? >> catholic university. >> okay. >> east d.c. >> as in holy mother church? that catholic? okay. >> you mentioned the rhetoric of containment is a misnomer, a misperception of the chinese.

how would you persuade to the chinese that the strategic -- the u.s. strategic rebalance to asia is not a form of hard containment? >> well, again it goes down to the whole question of definitions of containment. i mean the alliance structure in asia has existed, as you know, since the '40s and '50s. and was primarily constructed in those days with respect to the lateral lines of the soviet union. there is often more discourse of more marines going to darwin. we've got 2,500 marines coming each year for six months. i would say hold the next addition of the strategic balance put out by the iiss in london because that fundamental alters the global strategic equation. it doesn't. it's kind of a normal evolution of alliance

so, again i go back to definitions of containment. it doesn't actually fit the term. there are probably other terms which are better used in the international discourse to describe u.s. strategic responses to china but containment is not one of them. if you are looking at the classic definition of it, as framed by cannon and the others in this town in the late '40s. >> ladies and gentlemen, please join me in thanking mr. kevin rudd. [ applause ] more on u.s. and japan relations. good morning, and let me add my welcome to you to the csis asia architecture conference. my name is scott miller. i'm the program director for the international business program here at csis.

and it's my pleasure to moderate our first panel today, which is going to cover the economic issues that will be on the table, and as part of the conversation in the east asia summit and the apec leaders meeting. it strikes me that, you know, for most of the past 25 years, international economic analysts have been able to rely on a couple of things. first, that east asia and pacific economies would grow at a faster rate than the rest of the world economy. which has been true, you know, pretty consistently. there were some hiccups with the east asia asian financial crisis in the late '90s, and otherwise but overall there's very solid growth.

the second thing that economists could count on was that asian pacific economic policy tended to move very steadily and consistently toward more openness and greater economic integration. the progress achieved, if you take this long view, is, frankly, stunning. whether you look at growth rates, but more importantly, look at the reduction in poverty, the creation of large and growing middle classes. it is one of the most remarkable performances from economic development standpoint in all of human history. so there's lots to -- lots that has been achieved and will -- that continues to benefit peace and security. having said that, today it's not quite the same picture. and i think that's what we'll talk about today. today, i think the view of east asia, and the pacific in terms of economic growth is still very positive. our more numerically inclined colleagues up the street at the peterson institute yesterday held their global economic forecast and once again east asia and the pacific looks to demonstrate stronger growth over the next 12 to 24 months than either europe or the united states. however, there have been

questions raised about the degree to which convergence, which has occurred between developing and developed economies over the past 25 years will continue, and at what pace it will continue. so there's -- there are questions being raised. likewise on the policy front, there are, i think, important questions about whether economic integration in east asia and the pacific will continue, or whether, in fact, it's reversible. there've been some large, important economies in east asia and pacific who have moved in a direction which frankly contrary and sort of less liberal than in the past. i would note the large -- the

proliferation of local content requirements. many of the policies in indonesia being a -- not the only example, but an interesting example of sort of indonesia first policies, global content retirements, decisions to no longer enforce or abide by bilateral investment treaties. a number of moves that, while head line by head line they didn't amount to much you put it all to the there's i think an open question about the degree to which east asia and pacific economic integration will continue and at what pace. so i think that's the theme that i would like to set for today's conference. we're delighted to have a terrific panel of experts to discuss these and other issues. you have their biographies in front of you so i won't read them but i will introduce them all to the and then let them speak in turn. we'll start with dr. bob wang. bob is senior official for apec the u.s. department of state. he'll be followed with another u.s. perspective, ed brzytwa who is director of apec affairs at the office of u.s. trade representative. following that mr. toshiyuki sakamoto deputy director general for trade policy and the trade policy bureau of the ministry of economy trade and industry. think of mr. sakamoto as the senior official for both apec

and east asia summit and he's representing that role, that's part of his portfolio today. finally we'll hear from the business community, one of the great things about east asia and the pacific and its economic integration efforts is the degree to which they incorporate business use and the perspective of enterprise. door they dwoskin is senior director of global trade policy for microsoft, but in her role today, she is vice chair of the policy for the national center for apec. national center for apec is the secretariat for the u.s. asia pacific business council members, and very active in apec matters for almost 25 years. in any case, with that, thanks for in advance for the panel and let me turn it over to bob.

>> thank you very much. but just wondering before i start, i think this podium is blocking the view on the left side, and i'm wondering if at some point someone can come and maybe move the podium, if possible. but if not, don't worry about it. so give the left side a little bit more equal treatment. anyway, let me start in the interest of time to just say that speaking about apec directly, that this year i believe will be a good year. i've only been doing this for about a year so i think this is a good year for me, in any case. it's only been one year experience. but i think it's been a good

year, and part of it is because for one thing, we know that president obama this year will almost definitely attend apec. he hasn't done it in the last two years, so at the very least this year he will. i think have him in beijing. because he's also, i think most of you know, going to be doing a bilateral immediately after the apec leaders meeting, after which he will then go on, he has a very long schedule, he'll be going on to burma for the eas as well as the asean-u.s. summit meeting in burma then doing a bilateral with burma, as well. then after that he will be heading off to brisbane, in australia, to do the g-20. in brisbane on the 15th and the 16th. so he has a very long trip and i think this is extremely important. because, i think it gives obviously our highest leader a chance to engage directly with asia in all aspects, first of all bilaterally with china, with burma, and so on. also regionally within eas, as well as within apec with 20 members in apec, 20 other members in apec, and also with the other asean members. and then finally, he goes to brisbane for a global agenda.

so i think in this, about seven or eight gruelling trip the president, the secretary, others will have a chance, really, to press forward and engage the region in a lot of issues across the board, from economics to politics, security, and so on. so i think it's already starting out, i think to be a very good year at least in terms of our engagement with the region. so, but in terms of the substance of apec itself, in terms of 2014, working with china, and with the other essentially 20 other apec economies, i would say at least from my perspective seriously it is a good year. all that here from the usgr talk a little bit more about the trade investment facets of apec and what apec has been doing this year. and i will focus on talking about essentially our work in

trying to promote sustainable development and sustainable growth in apec, as well as our work in trying to increase regional connectivity within the apec region, which of course, as you know, expands beyond the pacific over to peru, chile, mexico and so on. so we're doing a lot of, i think, good work on this. and in many ways i think i caught part of what prime minister rudd was saying. in many ways i think this builds up the kind of cooperation that he talked about in terms of the regional architecture of the region in terms of working to the on many of these different issues. again, let me just then very quickly, if you don't mind, just go in to the list of what we're actually doing at least in terms of the sustainable development side of our portfolio. there, i think you could probably divide it into three different areas. first area would be environmental.

i would say. meaning that with no -- having lived in china for ten years and other places we know that sometimes growth actually brings with it terrible consequences in terms of air pollution, water, food safety, and so on, so forth. so we really think that it's important within apec to start off knowing that there are issues that are going to come from fast growth. we need to, at the same time, while we're growing, begin to look at the consequences of that. so, in apec this year, we at the energy ministerial in beijing that i attended in august, and then our deputy secretary was there, we set a target of trying to double the share of renewable fuels by 2030 in the energy next within apec itself. we announced and talked about fossil fuel subsidy peer reviews that, that peru has already completed, new zealand will start right after their election. now that it's over, and china, the united states, have agreed to do fossil fuel subsidy peer

reviews with the goal eventually removing a lot of the inefficient subsidies for fossil fuel, and we're hoping that a few other countries will come in, or economies will come in, in november, to also announce that they will volunteer to do these. again to try to promote and indirectly renewable fuels within the region in terms of the environment. at the ocean's ministerial we had in august, there we again came up and we translated a lot of our objectives within our oceans conference that secretary kerry held in the department in june, we translated a lot of it in terms of getting more policy commitments to, for example, expand protected marine areas along the shores. the one thing that all economies have in common is that we all border the pacific. and so we're trying to expand the areas that are going to be protected. we agreed to do -- we begin to remove subsidies for fishing. to prevent excessive fishing so to actually maintain sort of you might say manage fishery. take measures against illegal

fishing. in the region. so all of these have essentially are in the environmental area that we will trying to, i think, were able to emphasize this year. in the second area i think that's going to be very important, and i think china is taking the lead on this, as well, and that's anti-corruption. so this year, we are going to, we endorsed it at the anti-corruption transparency working group in beijing in august. and by november i think we should have our leaders essentially endorse what we call apec principles on the prevention of bribery, and the enforcement of bribery laws, anti-bribery laws. so this will be very similar to what oecd, a little bit similar to what we're doing in the foreign corrupt practices act in

the united states. so this will be endorsed as well as a sort of apec general elements of corporate -- effective corporate compliance programs. you know, to strike at the private sector, as well, to get involved in reducing the degree of corruption that is pervasive within the region. and we believe this is important to sustainable growth. if you have bribery, corruption, i think as china's finding out today, eventually it will come back to bite new terms of the reactions of people who are left out of the growth. so i think this is very key. similarly at the sme ministerial we had in nanjing, again this is in september, early september, there we agreed to move ahead on sort of codes of ethics for two specific sectors, medical devices, as well as biopharmaceutical, and there we're trying to -- the goal is to by 2015 double the number of

associations throughout the apec region. that will sign on adopt these codes of ethics in terms of how you deal in the health sector. and they will set up an ethics portal, web portal, ethics portal, that people can have access to. and lastly, in terms of the area of i would say inclusive growth, we're very much focused, this is something that secretary clinton started in the u.s. here in 2011 on women economic empowerment. and there we're trying to do many things. japan is taking the lead on this in many ways. for example getting examples of 50 companies that have best practices. or trying to make it easier, facilitate sort of women participation within the companies, health issues involved there. on our part we're trying to essentially -- we have set up a dashboard of data indicators, where we begin to measure the sort of women participation in the economy throughout the apec economies, and then start to set targets, look at gap analysis where we can improve, look at best practices, and we're also setting up a portal, or a electronic platform that would essentially bring all of the women entrepreneurs within the apec economies together in this

electronic platform to begin to have, you might say, critical mass in terms of working together, procurement, sort of supply chain procurement for looking at women enterprises throughout the region, training, access to finance market and so on. so, many of these areas we're working on, last thing on connectivity. how much time do i have? okay.

on connectivity, we of course we will come up this year with a connectivity blueprint, within apec, that will essentially establish certain targets in terms of physical infrastructure, in terms of regulatory convergence to try to get institutional convergence in terms of trying to get regulations more harmonized across the region. and finally in terms of people to people. tourism in terms of finding different ways to increase that flows, education, within and among the different apec economies. and in this context this year apec will be establishing what we call an apec scholarship internship program, and hopefully by the end of the year we'll have about 100 of these to

be announced, where we'll try to get -- try to focus on getting students from especially apec developing economies to have a chance to go to other economies to either train or to study on scholarships that in our case will be provided by companies in the case of chinese taipei, in the case of china, australia, it will be more government provided scholarships, so we think all of this will bring to the in terms of the apec region, a greater connectivity. the last thing just to echo what prime minister rudd was saying, in my one year here working on apec, i find that working with my counterparts like sakamoto-san and others, i really found that just meeting four or five times a year in terms of the quarterly apec meetings getting to the that we actually have, i feel this, built up a camaraderie of group

of people, especially at the working level, who work together with each other every quarter, and meet and intercessionally, and that in many ways is building up, i think, this community at apec over the last 25 years that i think will be, you know, not specific outcomes for this year but will be, i think, in the long-term extremely important for asia. thanks. >> thank you, bob. ed, tell us about the trade stuff, as it were. >> thanks, scott. i'm happy to talk to you about the trade stuff. and the investment stuff. because that's an important part of apec, too. so, it's a pleasure to be here with you all today, and to talk to you about our trade and investment agenda in apec. and my remarks will be limited purely to apec, and i'm happy to take questions in that regard. but i'd like to talk to you about our expectations for our trade and investment initiatives in apec this year. and i think like bob said we've got a lot of really good, interesting work going on in apec. on a wide array of issues. and many of these issues are broadly supported. many have been pushed forward by our host china, and china and the united states are cooperating on a lot of things. and i think it's been a very interesting, at least personally, it's been very interesting to watch china lead a multilateral effort in the span of one year and to see where that ends up.

so we've got one month before we are in beijing again for the apec leaders and ministers meetings and i'd like to describe for you some of the specific initiatives that we're working on. but, before i go in to that what i'd like to say is that every single year we have an overarching priority that we ensure that apec remains the premier economic forum in the asia pacific for multilateral cooperation on trade and investment issues. that's a significant priority for us. because we think apec can do great things and we want to make sure that it continues to do great things. on trade and investment in a very concrete way. when the united states hosted apec in 2011, we fostered, and we achieved, a very results oriented environment.

we delivered a lot of meaningful and concrete results and outcomes to our stakeholders. and these included results on regulatory coherence, green growth, and a broad array of trade and investment initiatives. and rather than discussing our visions for apec we developed an agenda that was very action oriented and focused on the tangible things that apec could do to promote regional economic integration. so, every year we work along these same lines. we've worked with our hosts in the past on these lines, for example, in the year 2012 where we agreed on the apec list of environmental goods, which was a significant achievement. building on the commitment to reduce tariffs on environmental goods, to 5% or less by 2015. and in indonesia year, 2013 we created a new fund in apec for improving supply chain performance through capacity building. this was a very concrete initiative. this year we're doing the same with china, trying to make any outcomes on trade and investment as tangible and concrete as possible. and let me go back to environmental goods. i think this is the most tangible example, of a historic commitment in apec to actually do trade liberalization. and this is also an example of how apec is contributing to the multilateral trading system.

because as many of you know, we just launched a new set of negotiations at the wto, on an environmental goods agreement. the inspiration for that was the apec list of environmental goods. we're hopeful we can expand on that apec list, implement the commitments in that apec list and really create a new initiative with wto that really is meaningful for all of our stake holders. so, in terms of our specific initiatives, you know, we -- i'd like to focus on a couple of areas. good regulatory practices, supply chain performance, and also environmental goods and services, i'll describe exactly what we expect to achieve this year on that. and then global value chains. which is a very new area for apec. and i think it's a very interesting area where apec can do more concrete work in the future.

and all of these areas fall under china's priority of advancing regional economic integration. so we try to work very hard with the host to ensure that what we're trying to pursue on trade and investment also falls under their priority. good regulatory practices. this is an initiative that's near and dear to my heart as a former nontariff barrier negotiator. we have a responsibility in apec not to build current barriers but prevent current barriers from building. one of the ways to do that is to help regulators regulate better, produce more effective, legitimate higher quality regulations and to help regulators actually acquire better information about the proposed regulations so that they don't turn into barriers in the future. so there's three good regulatory practices that apec focused on, and this really started in our

host year. internal coordination of regulatory work, which is like how agencies communicate with each other about proposed regulation. assessing the impact of regulations, and conducting public consultations. and i want to focus on that last one because what we're trying to do this year is create a new set of actions that apec economies could take voluntarily to improve how they're actually conducting public consultations and working with their stakeholders, acquiring information. these are things like doing early notice of proposed rules. setting a specific time frame like 30 to 60 days for accepting public comment. building a web portal at the center of government, instead of the regulator by regulator approach for doing public consultations. so we're really trying to offer very concrete ways that regulators in asia pacific could do public consultations, and acquire better information. supply chain performance. in 2010, apec leaders set out a very specific goal. improve supply chain performance by 10% by 2015 in terms of reduction of time, cost and uncertainty. that's a very, i think, ambitious goal. and i think we're on track to achieve it.

but we've tried to come up with new ways we can work on that goal, and this year we agreed on a capacity building plan to help developing economies actually improve supply chain performance and overcome any obstacles they face. we think this is a great way to help economies, especially developing economies, implement their future trade facilitation agreement obligations. and these are very tangible projects that we're doing. expedited shipments. prearrival processing. issuing advance rulings. we're going to help developing economies at the economy level, instead of doing workshops and information sharing exercises actually implement these types of programs. we also created a new body in apec called the apec alliance for supply chain connectivity. this is a public/private body that will help us move forward these capacity building efforts. we're trying to leverage the expertise and the resources of supply chain experts all over the world to help us with these projects. and trade ministers endorsed both of these initiatives back in may, so we're going to

recognize this progress in the leaders week meetings. environmental goods and services. as i mentioned we have this historic commitment but what is the foremost priority this year is affirming that commitment, ashoeing that economies actually implement that commitment next year. it's a huge priority for apec it's a huge priority for the united states but we're also seeking that apec launch new work on addressing nontariff measures that impact trade and environmental goods and services because if we don't, the tariff reductions won't be as meaningful. finally global value chains. global value chains is like i said it's a very new area for apec. this is about how you add value from inception of an idea to the delivery of a product. as we all know, production of

finalized goods happens in various ways and in various economies. and i think the csis folks have drawn a lot of attention to this. so aspecific actually has a set of sort of policy principles on global value chains, and they include things like importance of services, and the importance of investment, the importance of smes. what we're focusing on in the united states is how we can actually address trade and investment barriers that impact global value chains. and i think the primary example that we're focusing on and we want to actually do more work on this next year, we want an instruction on this, is how do we actually understand the phenomenon of localization requirements. localization barriers to trade. and as scott mentioned, i think a big example of this is the requirement that you keep data centers locally. you know, because this is a concern that we have all around the world, and i think apec could do great work in helping us understand why economies are doing this. and what alternatives that are very trade and investment friendly can we provide to economies instead of using these requirements. so, i know there's a lot more to discuss on trade investment but i think these are some really good examples of what we're trying to achieve this year. thank you. >> thank you, ed. sir?

>> thanks, scott. thanks for inviting me. i'm very excited about the opportunity to talk about the apec, and the eas. in apec, the united states is the closest ally of japan. both bob and ed are good friends of mine and are forming part of the apec community. since bob and ed thoroughly explained this year's apec agenda, including trade stuff, i will be just pointing out japan's priority in this year's apec agenda on trade stuff japan is promoting putting forward specific proposal on services. unlike trading goods, trading services has been left out.

kind of left out in the apec discussions. though we are now focusing this year's services, such as manufacturing related services, and environment services, both proposed by the united states. and in next year philippine will be hosting the apec readers meetings. as you know, in philippines, they have a very strong and a very competitive service industries, so we intend to come up with a concrete plan next year, for philippine years. on sustainable development from, as bob mentioned, we are now implementing our 50 companies, exemplary companies in terms of the importing women. and 5 companies will be, the name of 50 companies will be announced in the leaders week which include seven u.s. companies.

on the connectivity, japan emphasized the importance of quality of infrastructure, such as the life cycle cost, and environmental performance, and the safety including natural disasters. so those are the epic priorities for japan. let me turn to eas. because the name of the session is eas/apec. i think many u.s. people consider apec is for economic mothers where as eas is for political or security issues. i totally disagree with that observation. because eas, our economic ministers meeting was formalized last year, they started from substantial discussions with the input from eria, e-r-i-a which stands for economic institute for asean and east asia. they are doing some analysis on

industry traffic. because the business activities in asean is now cross border. for example, japanese automotive companies in thailand has now shifted its labor intensive process to neighboring countries they produce conducts in such countries then ship back to thailand mother subsidies on a daily basis. as such, japanese business activities in the region is really cross border, and eria is now trying how to develop such industry cross border in the future. also next year eria will come up with a recommendation how infrastructure should be developed in asian.

they did that research about five years ago, but next year they will revise such study in order to provide input to eas as well as asean summit. in this regard, i would very much appreciate if u.s. businesses are interested in this work and provide the necessary input. let me turn to also rcep, r-c-e-p, regional comprehensive partnership. this is not eas, because eas are 18 countries where rcep is negotiated by 16 countries. not included, u.s. is not included there. rcep is another mega fta other

than tpp and ttip which is the -- which is negotiated by 16 countries, asean 10 countries, and the 6 dialogue partners of asean. six dialogue partners have its own asean plus one fta already. and 16 countries amount to 48% of global population, 29% of global gdp, and global trade, and 45% of japanese export. whereas that figure is 30% for tpp. peep frequently ask me the question, what is the difference between tpp and rcep. from my view tpp is for cities

and rcep is to strengthen the regional supply chain based on the business reality. since you may not have much information on rcep but taking this opportunity to briefly explain what merit the united states business communities can get from rcep. rcep negotiating, not only trading goods, but also rule makings, such as ntb, nontariff barriers, tfp, investment protection, competition, and property rights. all these rule making if agreed will be applied to university. it's really difficult to apply domestic policies on these areas differently from, you know, rcep countries, a progress of rcep countries. and also if u.s. company establish subsidiaries in one of rcep countries, that company can benefit from commitment of

services under rcep. but there's other benefits for these communities if rcep is successfully concluded. and the -- i believe that the united states are very much interested in e commerce both in the context of tpp, and other international, and in this regard i am very grateful for the publication by u.s. asean business council which celebrated 30th anniversary last night. they published the report called beyond aep, asean economic community 2015. this is really work piece of work. it's a recommendation for asean, sme competitiveness, in that recommendations they focused on e-commerce which is very helpful for rcep negotiations. actually i am now drafting rcef nonpaper on e-commerce, and i took the liberty of putting some

paragraphs from their recommendation in japanese nonpaper on the commerce. it was really helpful. and also aec, asean economic community this is much more of the advanced than many of you think on tariff, crmb will be eliminated as 93% by 2015 and the remaining 7 will be also eliminated by 2018. asean is one of the most utilized by japanese companies. and national single window and also services are also very important undertakings in aec. so in sum, next year, 2015, it's very important for eas and asean, because rcep is supposed to finish the negotiation by the end of 2015, and aec will be established 2015, and the post-2015 vision of asean committee will be developed. so i believe that it will be

nice if japanese business communities, and the u.s. business communities, join for your business interests on these -- on these important issues. thank you. >> thank you. dorothy? >> thanks. thank you, scott. and thanks for asking us to have a bit of a business view on the panel. since it's baseball season, i guess i get to bat cleanup today.

i can say go nats. i actually have sort of three hats today. as scott mentioned, i am vice chair of the national center for apec focused on its policy work. at microsoft working on global trade and economic issues, and like a few other souls that i see around the room, i'm one of those recovering trade negotiators. and that's a hat that i don't ever seem to be able to take off. so let me tell you a little bit about the national center. so we're 53 companies in the united states across a wide range of sectors. and our mission really is to facility the private sector's involvement in apec. as scott mentioned, we provide a secretary to the private sector for apec issues throughout the year, and support the three presidentially appointed advisory committee members who

serve with the 20 other apec economy representatives. we're always looking for more u.s. companies that want to join. i don't get a commission or u.s. companies that want to join. i don't get a commission or anything. but you're always welcome to join. so what i thought i'd do is maybe talk a little bit about sort of a business viewpoint, and we've been very fortunate in the past number of years that one of our knowledge partners, and a member of the national center, pwc, has done a survey of ceos and business leaders in the region to prepare for these annual ceo summits. and i wanted to share with you some of the high level findings that we -- that pwc announced last year. i think they're pretty consistent with previous years, and it gives you sort of a good

sense of where the business community is on all of these issues. because i know having taken a lot of our execs to these meetings, it's like, what does this really mean? and is this going to really affect my bottom line? and this is a lot of fluffy stuff in a 15-page declaration. how does this actually affect business? so, the pwc survey was pretty interesting last year in terms of saying that there was a lot of confidence in growth, and that, in fact, there was a lot of emphasis on domestic consumption driven growth. and more attention to middle income consumers. what that meant, according to pwc, is that you know the nature of investment in the region is changing. it's going from beyond just manufacturing capacity expansion to really looking at new products, and investments, for example, in services. so that was one finding. the second finding was that the

partnership strategies of the companies seem to be changing. there's more of an interest in local partners. this is helping with the skills and talent gap. and it's also helping more to capitalize on local middle income demand. so, i said i work for microsoft. obviously this is a really happy finding for us. there was an emphasis in the report about data and that data is at the heart of customer demand and business opportunity. in fact, they said that there are four market forces that are individually and collectively redefining customer demand, and business opportunity. mobile computing, cloud computing, social technology, and the emergence of intelligent devices. and it pointed to work that needs to be done. obviously in the area of data privacy, something that -- where

apec has already done a lot of work. and that a growing number of business leaders identify that the legal frameworks for cross border data flows is really becoming an emerging barrier for their companies to benefit more from the digital economy. so, kind of music to our ears. that's been an issue that, you know, a lot of folks in the national center have been looking at. we, for our part, have looked at the importance of technology, particularly for small and medium sized enterprise, and there is a pretty strong correlation between those who have adopted technology, and more open to technology have become more successful, more integrated, as cloud computing becomes more pervasive, there's more opportunity for others to join the global value chain development.

so the fourth area that they talked about was the need for further improvements in infrastructure in order for business to grow. ed's mentioned this, there's been a lot of work pointed out to -- out on the need for more work on power supplies, dealing with clogged transit networks, lowering the cost of broadband, and really putting an emphasis on public/private sector infrastructure models. again, the finding was that lifting regulatory barriers is really essential, because we really need to reduce costs in this area. another finding was that inconsistent regulatory and other standards are really a key blocker to business growth around the region. that different rules for products and services are really increasing complexity, and the ability to scale in the region. and this brings in other disciplines, for example, such as ip and corporate governance. so, i think all of these findings are consistent with the

work that the government is doing. the one thing i think that ties all of this together is that in the findings, the business leaders were asked about their view of trade negotiations, and how this was going to help. and, you know, was it going to help, or was the creation of blocks going to create problems. and i think the finding was really that there is a lot of uncertainty, but it would be very important that no matter how all of these approaches are developed, that they really have to look to business to make sure that they're not inadvertently adding new barriers. and toshi and i had a good conversation yesterday about our staff and our interests, and i'm pretty confident that japan's going to push for a very high value agreement in rcep, that is going to help raise the gold

standard with him in the lead, i'm sure we'll get a really good agreement from that. we'll watch what he's doing. but in terms of the national center for apec we actually have a lot of work programs and projects under way and i really just want to flag those for you. we are doing something on infrastructure investment. we did help create a checklist to really identify for governments the sort of essentials to help deal with making the public/private sector investment infrastructure. really a reality. pointed to, for example, the need for creating business friendly fdi environment. i think that goes to a lot of the issues that ed raised. a lot of interagency coordination, and really some country benchmarking. we have started at the national center and should have, for the

meetings in china, another contribution on the digital economy really focusing on cross-border data flows. and really looking at how business takes advantage of cross-border data flows, or should, and then it's really not just a technology issue that anybody who is competing in the global economy really needs to be able to have data across borders. and then that gets you into a whole conversation about privacy, security, and how all of these issues fit together. excuse me. we also have done quite a lot of work in the health area. this year we've spent some time looking at the costs, and productivity losses that are caused by preventable health conditions. they're called ntds or noncommunicable diseases.

the study is actually going to be reviewed by leaders, and there's also some work that's been done in the health sector, as ed mentioned, with respect to the supply chain. we've done some work on finance. we have an asia pacific financial forum and really looking at integrated financial markets. so that's what we're doing as apec. we obviously have been working very closely with the u.s. government, was mentioned already the women's empowerment and creation of regional entrepreneurial networks. we obviously are very supportive of the expansion of the information technology agreement for many of you, you know that's pretty near and dear my own heart. the wto says that, you know, for all the time that you leave the ita undone you basically are leaving $2 billion of gdp growth an actually on the stable. so that should be a good incentive to have a very

meaningful and expansive and balanced, i guess, is the other buzz word, ita concluded, and i think apec played a really important role in manila in 1996, when we did the first ita agreement, and i think, you know, china has an opportunity to help show leadership so that the negotiators can go back to geneva and put the deal back together. ed mentioned the work on good regulatory practices. that is obviously something that the private sector here in the u.s. has pushed very hard. there are a lot of disciplines that are already agreed to in the wto, which need to be expanded. we've had a lot of learnings from our own free trade agreements and the work there. so, we think that that's been a really good exercise in consultation and development of the issues with the u.s.

government. ed mentioned the goals with respect to supply chain connectivity, and a lot of our members are front and center in promoting the trade facilitation agreements that we hope will come to fruition in the wto, and it's great to see that the government is working all of the angles to try and mike sure that our partners in apec are really ready to implement the trade facilitation agreement. we've also done a lot of work on food security, partnerships, the mining ministerial is a good example of something where the private sector really pushed to have a discussion about mining, and we were able to have the first ministerial meeting. there's obviously been a huge number of projects on the whole question of energy and energy security. and then, you know, the national center and its membership are

very engaged on what i would call the bread and butter issue. sort of the trade and investment issues. there was reference to the emerging problems on local content, and it's not just data centers. it's, if you want to be able to sell your product in a market, countries are going back to the notion that you have to actually establish a manufacturing facility. this is obviously since i am a recovering trade negotiator is actually a problem because we did a lot in the wto to reinforce the obligations that say that that's highly illegal. so, we're going to have to find a way to have a conversation, a more serious conversation, in

the region, because it's becoming a problem, and it's becoming a problem for a lot of those apec members who have attracted manufacturing. and that they're not going to be able to scale, because there are demands for local manufacturing. so it's, you know, localization of data centers is one issue. there's this myth that people think that if you put a data center in country that it's going to be a huge job creator. it's not. there are lots of economic reasons for looking at where to put data centers. not the least of which are some of the energy concerns that people have. obviously there's going to continue to be work on the free trade area of asia pacific, and work in studying apec's contribution to that. and then as i mentioned before, the smes. so we're looking ahead to what we think will be a really good meeting in beijing. will it be as historic as 2001? there was a lot of activity about china's joining the wto then and the run-up to doha, and we'll have to see how the issues sort out. we're very excited, and already working for next year with our friends in the philippines, to really see if we can't make a -- an even bigger push on the private sector involvement throughout the apec year, in the run-up to the leaders meeting. apec's making its contributions. and like i said, we're 53

strong. we love to be even stronger. and if you have an interest in the national center, we'd be happy to talk to you. thank you very much for the opportunity. >> thank you, dorothy. and thanks to all the panelists. what i'd like to do now is open the floor for questions. there are three simple rules for questioning, okay? the first is, when you're recognized, wait for the microphone. as you will recall from the opening remarks, we have a large online audience, and they won't hear a word you have to say until the microphone gets to you, and is turned on. wait for the microphone. second, start by stating your name and the organization you

represent. and third what i call the alex trebek rule, please make sure your question is in the form of a question. no statements, please. so with those let me start. yes, ma'am. microphone will be here shortly. >> thank you. my name is jane, my question is about china is pushing the ftaap in the coming apec meeting, or the feasibility study for the agreement, so from your perspective, from the business, from japan, from ustr's perspective, how do you see the prospect of this agreement? and for dr. wong, you mentioned about the enhancing construction of infrastructure, and connectivity. could you elaborate more about what does this mean? thank you? >> thank you. >> thank you for your question. officially i'll say you should direct that question to our press office. but, i will -- i'll give you a very brief answer on this. so, i think this question was very much litigated by trade ministers at their meeting in

qingdao. there was no consensus at that time on the feasibility study proposal by china. nor was there a question on setting a deadline. but there was a lot of support for apec's contribution to the realization of an ftapp. i think that's the way dorothy framed it. apec is a contributor. it does things like capacity building, information sharing on existing and ongoing rtas and ftas. it's done analysis in the past. but what it's not is a negotiation body. and i think our expectation is that apec will remain as a contributor. and that should be what happens actually at the leaders meeting. >> on the construction question, in terms of connectivity blueprint, the key thing now is to note is that as you know adp study had indicated that just about $8 trillion worth of sort of demand for construction infrastructure construction in

the region in asia, and our view is that in the final analysis the private sector really will have to step in to invest in to actually build the infrastructure, whether it's power stations or railroads or ports, whatnot. so what we're doing within apec, led by australia, by the way, is to actually create a pilot center. right now it's been created in jakarta, but we're trying to expand it to different areas, where working abec, as well, is to provide essentially advice on a checklist for example on how to actually improve the investment environment in terms of being able to attract private sector investment. so there are certain kinds of regulations that block this. there are certain kinds of guarantees that are needed. and so on and so forth. so, essentially australia, for example, is putting a finance ministry official in jakarta to work with their people to look at their investment regulations, and we're hoping to do this again, across the apec economies.

among those who really need and want to have infrastructure investment. so that's what we're doing. just public financing is not going to be sufficient in the long-term. you really need private sector to step in and the way to do it is improving the investment environment. >> i just direct a few words on ftap since you mention the japanese business community. the japan has strong ownership on ftap because the pathway to ftap was agreed in 2010 at yokohama leaders summit. which set out how apec should try or should help establish ftap. as ed said, apec is contributor. or as put in yokohama declaration, apec is incubator for the allies in the ftap. apec is not a negotiation forum. we need to have -- we need to understand the distinction on

that. but as you mentioned, there is debate whether we call on the feasibility study or not. what i want to emphasize is that all apec economies are strongly united in the determination to realize ftap. thank you. >> thank you. i would also note that ftap has really been an area of the asia pacific has been a commonly agreed political goal i think as far back as the sydney meeting in 2006, if i remember right. if prime minister rudd were still here he could correct me. but so it's been a long-standing political goal to my mind it's fully consistent with the volcker rules in many ways, and represents a -- represents important aspiration.

how it's actually executed is yet to be determined as the panelists have said. but, i do think it's important to recognize that and china's emphasis on ftap is wholly consistent with the apec leaders meetings at least in the past six or seven years. so thank you. other questions? yes, sir? >> good morning. thank you. lieutenant colonel scott mcdonald united states marine corps strategic initiatives group. leading off that comment, sir, and stepping back towards our theme of asian architecture, how do tpp and ftap, through apec, how do we step back and use these structures in order to build an asia pacific that is more welcome both for trade and security for all partners in the asia pacific? in other words we talked a lot about specific free trade initiatives, which are all to the good. more freedom more faster is more

better. but how do we make that into an architecture tool? thank you. >> i'm happy to talk about what we're doing in apec. but i think the questions on tpp please direct you to the press office. thanks. >> i do have a general comment. you know, i think just again harking back, by the way, again, hi, we serve in taiwan together, right? >> yeah. >> i suddenly recognized you. but i think generally, harking back to what kevin rudd, prime minister rudd was saying, the globalization part, and then the, you know, ethnonationalism part i think the idea is to promote trade in whatever form. as you have more interaction, more trade, more interdependence and so on that by itself is the architecture that essentially binds people together, and reduces the sort of the ethnonationalist sort of tendencies that sometimes occurs in the form of perhaps protectionism in trade.

but that's i think the point. the point is to open the borders, trade with each other, have interdependence and i think that will create the type of stability that we need in this region. thanks. >> with the multiple paths toward ftap. i think it's important for economies to recognize that their interests lie in fewer not more solutions along the way. this is a point that mack goodman and i discussed at last year's conference. we published a short report on this. but, you know, making these agreements interoperable step by step is, i think, a real -- a practical way forward that for me and matt, as we look at this, is strongly in the interest of the countries. a year ago there was a lot of talk about whether rsep and tpp were in conflict, and the point i made at the time the question came up was there are seven economies that are parties to both. it's strongly in those seven

economies' interests to make sure the requirements are as similar as possible. their own industry is one thing. their own economic operator would find that to be appealing. ultimately that's the way you solve this. it's not necessarily a straight line. it's not all that direct. but step by step you can get closer to integration by recognizing the underlining incentives. so thank you for the question. other questions? yes, ma'am. >> with csi's energy national security program. thank you so much for the great presentations. my question is a little more at the 30,000 feet level but pretty much following up on what dr. wang said. so there is now the development that's finally sort of signed off in july, and then there's a proposal to have this asia infrastructure development. i would like to hear your

panel's assessment or reviews on what are the key drivers behind these sort of emergence of new potential architecture, economic architecture, and what that may do to the influence of the existing one, not just the regional ones like adb but then also imf, the world bank? and lastly -- well, i guess sort of including what their influence may be on the global sort of economic governance as we know -- as we know it today. thanks so much. >> hi. just quickly, i think the driver for all of that, the banks and you talked about aib and so forth, i think the driver clearly a demand in this case,

say aib, for infrastructure development in the region. i mean, there really is a need for that, especially in southeast asia but in a lot of other parts of the region. so there is a need for it. and the main issue here that would be something of concern to the united states and to others is that when we actually have these multilateral development banks that we actually do have established standards. and we try to meet the standards in ferms of -- again, i talked about this earlier -- making sure we don't destroy the environment when we go about sort of investing in infrastructure. make sure it's the governance, no corruption, because construction industry generally has a number of issues in this area. and so we have to make sure it meets these standards of governance, transparency, labor, and procurement and so-and-so forth. that's basically our major concern. so i think as we move ahead with trying to build up different

banks and what not to meet the huge demand in the region, we need to keep this in mind. thanks. >> is there a question over here? i'm sorry. the sight lines are such that -- yes, sir. you're right in the spotlight. sorry. >> hi. thanks. my name is jimmy tobin, i work for alibaba. i have a question about when you design policies for trade, it strikes me that usually what that really means is it's a business-to-business policy. but business-to-consumer trade is grow, and i'm wondering if, you know, when you design poll sis do you take, you know, that approach? do you look at it like that? or is it just mostly, you know, think about it as business-to-business trade? thanks. >> look, i think just as a general response let me start by saying the world's changing really fast. and who's in international commerce and the scale of firms in international commerce is subject to very rapid change and that's being recognized by policymakers. you know, for instance, you know, 30 years ago, you needed a certain scale to be able to find consumers of your product or

service. you needed to be able to establish operations and make contractual relationships with, say, freight forwarders or customs brokers or whatever it might be. you also needed to be able to back up and have the financing to carry off the agreement. you look at today's world, and your business is a good example of this, where an individual can go on a site like alibaba or ebay and find a product or service that they have no way of knowing where it was or how to get to it 10 or 20 years ago. i'm an ebay and alibaba user because i have a geriatric car in my garage that's very difficult to get parts for otherwise. so this kind of thing can be found when it couldn't be found before. second, logistics firms are operating at a small scale with customs brokers, u.p.s., federal express, fed ex express, other companies, essentially provide a service you used to have to create on your own as a firm or an industry. third, relatively simple

financing, electronic financing is vitally important to the transaction and can now be done across borders. this changes the scale of operators in the international trading system. ebay's reported on this. so it's a very important dimension and it really affects the way governments do consulting. but let me start with that and see if the panelists have anything to add. >> let me just add something very quickly. the answer is yes, basically, to your question because we had an intereconomy actually session in beijing just prior to august. and alibaba was there, and they gave a good presentation. uber, others. and the idea was to look at the impact of internet in terms of business-to-consumer, how that -- scott says, how that improves it, but also to look at the policy implications behind how do you facilitate that to allow smes and others to grow and to

continue to facilitate trade between business and consumers. >> one thing i would add to that in terms of our apec initiatives, i think we do usually are the consumer in mind. it's not just about the business. i mean, supply chain, for example, yes, many transactions happen between companies, but at the end of the day we're trying to help businesses actually reduce their time to market to get product to consumers more quickly, more efficiently, and more cheaply. so consumers have been in businesses, everybody benefits from the work we do on supply chain. i think many of the other initiatives we have in apec are similarly expansive in that regard. >> so i think your question was, you know, do you have policies

to make sure that there's a program of consultation. so, you know, i can speak for, you know, the experience in the united states where it's actually part of, you know, congress' direction to the executive branch as far back as the trade act of '74 where there is a pretty extensive network of advisory committees, you know, and there is -- but there is this idea of, you know, publishing notice and trying to get information from everywhere about the cost of taking a position. and it gets to i think what ed was talking about in terms of the good regulatory practices. you know, so in terms of developing a trade policy position, some of our best fights in the interagency back in the stone age when charles and gaza were there, you sat down and you had different agencies that had responsibility for let's say consumer protection and some of the other issues to make sure that as you were putting a policy together that it actually worked for everybody. and i think it's -- it was a

pretty successful model. it's gone through a couple hiccups, but i think the code of -- this good regulatory practice makes it much more participatory and gives the opportunity to make sure that there is this better linkage between business and consumer. but i also think there's sort of a misunderstanding. i mean, a lot of the trade agreements don't tell you how a contract is to be written. so, for example, in our business, you know, there are a lot of things in terms of protections with respect to privacy and security that don't really need to be written in a trade agreement but there are sort of contractual conditions that address some of the customer need. and, you know, you set sort of a broad frame and then you let -- you let the business move ahead. so i hope that helps.

>> thank you. we have time for one more question if there is one. yes, sir. >> thank you. my name is steve hirsh. i'm a journalist who writes about asia periodically. i want to ask a question that i think is only tangentially related to apec but i think is important to asian architecture, the economic impacts of it, and it's not a 30,000-foot question. one thing i never hear discussed in washington, discussions of the economic shape of asia right now, is the impact perspective of asean political and economic integration. and the reason i ask this is they just got back from seven weeks in southeast asia, and the political and economic implications of this development

are at the tip of everybody's tongue. nobody is talking act the kind of things we talk about here in washington and paris, trading measures, so forth. they're talking about the massive implications that they see happening. and i'm wondering if the panel has any thoughts on this. thanks. >> thank you for your question. as i mentioned in my first remarks, aec, asean economic community, the group asean is really influential and very relevant to u.s. business economies. and so is for all japanese business communities. and as you know, the japanese companies has made tons of investment, foreign direct investment in asean countries for many, many years in the past. but these industries are largely manufacturing industries whereas u.s. business investing in asean

in other areas such as service industries like i.d., financial industries, and distribution. i think both industries and manufacturing and no manufacturing are very important and influenced by the initial beginning of economic integrations. aec economic integration has been progressed well for deduction of tariff. as i mentioned earlier. but when it comes to nontariff barriers, there is a long way to go. they create the need to do much more to reduce nontariff idea in asean countries. and these issues, you know, relatively more important for probably nonmanufacturing industries, i would say.

so i think the u.s. -- you know, i think u.s. economy should and could pay more attention to the development of aec, because as i said, next year is a key period, key year for -- because asean will be considering the beyond 2015 region to move further -- to move forward on aec i'm not quite sure whether i could answer to your question, but it's my remarks. thanks. >> that's a great first approximation. thank you for taking the answer or having that answer. we're at an end here, and so before i thank the panel and you, the audience, for your attention, let me let you know what happens next. this is the conference equivalent of the fourth inning stretch. you now get to basically stretch

your legs for about five minutes while we reset the stage up here and the next panel comes on. but before we do, please join me in thanking our panelists for this morning's contribution. [ applause ] up next, energy security in asia from the center for strategic and international studies, recent conference on the asia pacific summit in beijing.

my name is murray hebert the. we worked to put on today's conference. our next agenda item, our next panel is on energy security in asia. i think we all know that the energy narrative picture in asia changed dramatically over the last decade. at least in part because of the rapid economic growth. so we have two great -- four great panelists to join us today. who will give us brief overviews of the situation from their perspective, and then we veal a discussion involving the audience. so our first speaker is jonathan elkind, who is the acting assistant secretary for international affairs at the u.s. department of energy. previously jonathan served as principal deputy assistant secretary for the office of policy and international affairs. and before that, he worked at the brookings institution on energy security and foreign policy issues. jonathan, the floor is yours. thank you very much.

>> thank you very much, murray. ladies and gentlemen, it's really a pleasure to be here at csis today. i see that one of the dilemmas of having a beautiful new building is that the world outside -- you get reminders that the world outside is out there and a distraction it certainly is. it is in my view very fitting that we have this discussion about energy security in the asian frame at this time and also in this place, because between the developments in energy security, the challenges and opportunities that one sees emerging in asia and those that one sees emerging in the united states over the last several years, one could say that the two are the most dynamic pieces of the global energy scene at present. the united states and our companies have worked together

with countries and companies of asia on energy issues for quite a long time. nonetheless, i think it is worth taking a step back and looking at kind of the current state of play in terms of context that provides the backdrop to our discussion on this panel. in 1977, u.s. crude oil imports amounted to 46% of u.s. consumption. that rose as high as nearly 70% a few years ago. but dramatically then in the period of this new young century we've seen an important change. in 2013 domestic crude oil production in the united states amounted to nearly 10 million barrels a day and it looks like now for the foreseeable future the imports of crude oil into the united states will be on a downward trend, not an upward trend that was true so very recently.

in asia, meanwhile, one sees dramatic growth in crude oil consumption and in other energy consumption. according to adb, the asian development bank, net oil imports in the asia-pacific region will rise to more than 25 million barrels a day by 2035, and that's pretty close to the current crude oil output of the middle east. within that, the international energy agency foresees that oil dependency in southeast asia will be probably on the order of 75% by that same time period of 2035. these statistics i think are useful as framing on the oil side because they speak to the importance of investment and trade across boundaries and between different regions of the global energy world.

one can see similar interesting changes happening in total demand. if you look at some of the data -- historically back to the 1970s, in 1977 the united states accounted for 31% of global oil consumption. asia was roughly 17% in that same period, and today we find that those orders of magnitude have roughly reversed with the united states consuming around 20% of global production, asia around 33%. so i won't go further into this context, but i will just underscore that whether one looks at coal with the dramatic rise of coal combustion in china, in other asian countries, whether one looks at oil, whether one looks at natural gas

with increasing global trade, of liquefied natural gas, one sees very, very dynamic growth all across asia, and that is an important backdrop to our topic today. if i look at the u.s. perspective about how we are engaging with our partners in asia, i would call out several different features. one is that the united states is committed to working with our partners, our friends, our allies from around the globe to enhance energy security for all involved. in may of this year, the g-7 energy ministers met in rome for the purpose of a renewed focus on energy security as an issue that, again, had kind of receded

from view for a period of time and then re-emerged into our -- the forefront of our focus. a second piece of the u.s. energy policy that i would emphasize at the outset is a focus on accelerating a transition to a low-carbon economy. in june of last year, president obama rolled out his climate action plan which calls for important steps that will significantly alter over a long horizon the profile of u.s.

energy consumption and use. in addition, the president's climate action plan called for steps to make our energy systems and our economy more broadly significantly more resilient to a changing climate, because this is the reality that we already are experiencing. and third, we are engaging with international partners on this agenda as well. let me give just a couple of examples before i close. one, in the context of apec, the united states has worked very closely with partners from all around the asia-pacific region, focusing on energy development, energy security, and energy sustainability. for example, the energy working group under apec is pursuing now goals of reducing energy intensity by 45% across that -- across all of the economies of apec. by 2035 based on 2005 levels, doubling the share of renewable energy in the apec economies energy mix by 2030.

and collaborating on the phaseout of inefficient fossil fuel subsidies. in the international energy agency, which counts as its members -- among its members several asian -- important asian partners, the membership of the iaea has been seeking to increase our engagement with other nonmember countries across asia. one particular example that i would give in this context are the conversations about a new form of a nonmember affiliation between iea and some key partners including china and india. this is the idea still under development of an association relationship between those nonmembers and iea. this is motivated by our general sense, again, that the dynamism in the asian energy context is

one that calls for significantly increased engagements. we are also working bilaterally with important partners all across asia. i will not, in view of time, go into details here. i will simply highlight three -- well, let's call it four in view of the prime minister's visit this week, four key asian relationships that matter deeply to the united states in the energy arena. one is with india, where earlier this week there was a series of announcements about new initiatives in the energy and climate space. a second is with china.

indeed, when the apec summit occurs in about six weeks' time, it is reasonable to expect that, again, energy will be an important part of that conversation. and certainly in the bilateral meeting that president obama will have with president xi jinping we expect the same. japan has been for years a very, very important partner to the united states all across the waterfront in terms of different technology spaces, in terms of policy collaboration, energy efficiency, the gamut from one to the other. and last but not least, our collaborations with the republic of korea are i would say also an important piece of our bilateral work. so i will stop here and hope that i've been able to provide at least a point of departure from the u.s. perspective. the core point that i would emphasize is the following -- in a time when one sees a great deal of dynamism in the energy context of the united states, we nonetheless are focused very,

very closely on the fact that the dynamism in the asian energy economies is the other prevailing reality. we applaud this. we want to work closely with asian partners. i'd be happy to take any questions that you all may have after the other speakers have finished. thank you very much. >> great. thanks, jonathan, for the very helpful overview. our second speaker is mr. takayuki sumita. mr. sumita is the director general of natural resources and the fuel department in the agency for natural resources and energy in japan's ministry of economy and trade. previous to this job he served with meti in brussels where he worked to improve cooperation between the eu and japan. and sumita-san is a graduate of georgetown university. please, sumita-san.

>> thank you. it is my pleasure to be here in front of you to explain our view on the energy securities in asia. said we applaud this and want to work with asian partners, i would be happy to take any questions when the speakers have finished. thank you very much. >> thank you for that helpful overview. our second speaker is mr. sumita who is the director general and the agency for natural resources and agency in the economy and trade. he served in brussels where he worked to improve cooperation between the eu and japan. he issa a graduate of georgetown university. >> it is my pleasure to be here. i will explain our view in asia and i am happy to come back here after the 22 years after the graduating. s as you well know, this is an important issue in the country. the energy policy is the energy secretary and it's the department.

in the case of asia, the asian countries have a good mixture of the supply and consumption, some of the asian countries and supplying energy in the very big consumers of energy. at the same time you have faced several challenges recently. the first is the increase in the oil import in the future. secondly, we are facing debt and a very high price of gas. especially energy. we have difficulty in the rising of natural gas. the third is how we can make those two compatible so the energy environment is economic growth in the case of cole and how to divide the coal. in the current situation, the biggest challenge is how to respond to the energy demand. from the viewpoint of the primary energy supply, we have a

good mixture of oil and gas and coal and so on that has the secondary energy that we can see that the rapid increase of the demand of electricity. some predictions say during the coming two decades, the demand of electricity will increase by 100%. at the same time we need to secure the environment or conserve the environment. that's why we need to encourage those asian countries with less coal options like nuclear or renewable energies. this is maybe amateur share of the u.s. government to increase the local options. to asian countries. at the same time if we see the energy securities or economic growth, for many asian countries, coal has advantages

from those points of view. that's why according to the prospect, at this moment the portion is 70% of total electricity skpli still more than half in the year 2013. in other words, a total electricity demand on coal will increase by 18% during this coming years.

to reduce the dependency on coal is one of the very common things for u.s. and japan in asian countries. as i mentioned, the initial approach is to encourage them to utilize nuclear gas or renewable energy. those low-carb on options. at the same time they are facing debt and concern on financial or security and especially in the case of gas, they are facing the high price of natural gas. that's why the gas is not a good option for east asian countries and also nuclear and renewable. that's why idealistically speaking to reduce the dependency on coal is the best option for the u.s. and japan. and the second best option and the very big challenge for us. to reduce the reduction from the coal is the mainly realized by

the improvement of efficiency of electricity generation. in the current situation, the most advanced technology is the ultra super critical which has more than 45% energy efficiency. it is almost 20% better than the traditional. it means that we can reduce the c02 emissions by 20% and by introducing a very high efficiency.

at the same time such high tech and efficient coastal lot in the case of the super critical, it takes almost 1.4 billion u.s. dollars to introduce those kinds of super critical. it is almost 40% more expensive compared with the conventional. and also if you compare the total cost by 40 years' time, the total cost is almost the same in the case of the super critical. that's why this big initial should be financed by some ways. that's why we need to encourage the asian countries to introduce as high as possible technology concerning that.

by doing so, you can avoid the deployment of low efficient that may be supported by and disciplined taken by the countries if you can effectively encourage them to introduce the highest and the total is here to the emission that will be reduced by 20% at most. in this situation the very important function for japan is falling. we have very high efficient places in operation especially the super critical with very big strings of operational technique and also the maintenance

technique. that enables them to maintain high efficiency. for a long time. it's a very important point. also we are now investing a lot to the next generation technology like igcc or igfc. in addition that, we have made a lot of effort in cooperation with the u.s. government or in the area of the utilization. to share these, it's very important and in the end of august or in the end of last month, japan announced the meeting or the east asian summit minster meeting issued joint

statement related to the introduction of coal technology. we see that in the future in the asian area, the demand on energy will increase, but we need to have a very strong concern on the environmental issues. we need to have a solution to make both challenges combatible by introducing several measures including the encouragement of deployment of coal technology. thank you very much. >> thank you very much. that was very helpful. our third speaker is doctor hume in. they have a very long name. it's longer than csis.

for asean and east asia based in jakarta. he does work here on energy security and energy efficiency and coal technology and power infrastructure connections and etc. the doctor is a graduate of an economic development and policies from kobe university in japan. please? >> thank you very much. very good morning. i'm delighted to be here speaking to you about asia. for energy security. i would like to standoff by saying several challenges. that will give you a clear picture of the security in that way. the way asia is thinking and u.s. and not america and europe has slightly different perspectives.

that's why i want to start by the challenges we are facing. the conclusion will be understood by the many participants here. as you see that asia is growing into the economic growth that is exciting. given the economic growth. that growth has many challenges. not including the rising of energy demand. the rising of energy is not a good thing. we have to curb those energy demands. by various measures. and also with the growing population they have three points, 3 billion population. 600 million population and imagine how many population and united in terms of energy access. but clearly for electricity. in terms of energy demand in the region actually by now and as a whole, that energy demand will grow by double from 400 million

up to 8,500 million. in terms of energy perspective, the enormous issue of how they secure reliable energy in terms reliable energy. to keep up the growth, by saying how many more population be provided commercial energies. to say that, i think the issue we are facing is is providing energy access. keep energy securities and also the issue to keep economic growth. another point is we are at the cross roads that we also strive for environmental issues. how in terms of energy security. it depends on how you look at the energy security and family that they face. they are experts on energy securities and depend on how you

look at it. in the energy mix in asia, particularly asean in east asia, you have fuel and you have coal and you have renewable. coal is very significant and important role in striving economic growth in asia to say that u.s. and america have really enjoyed coal in the past to keep u.s. by now until you have we are not really enjoying t what they enjoyed. we do not have the connectivities like in north and again to the connectivity. the production is low, but it will be most low by 31% of

import for energy. as you look at the energy of coal, coal has a great thing to say in energy mix. it continues to be almost 50% in energy by 2035. with energy put in perspective, one needs to have a reliable delivery and affordable prize. in terms of supplies and stability for asian, it's very good. by the donation and australia having reliable prize and supply in the region, in that regard, cole remains strategy important for energy security for asean and east asia. when we are coming to the balance between how we are concerning the way the coal has been burning currently and the

practice actually asean and east asia for emerging economy and poor countries, they are burning coal because of the current power plant having very low efficiency. including the clean coal technologies. you can burn coal more efficiently and at the same time saving fuel and minimizing the operation and the cost in investments are higher compared to low efficient coal power plant. currently there is a variety of technology there. japan having the power plant and that is emerging, but i think there is a struggle in terms of how reliable the power plant are.

we are not able to afford that. with that regard, where i come from, we conduct this from the economic return in terms of clean coal technologies and found that by using ultra critical power plants, it really provides a very good return in terms of economic and environmental benefits. just within the time frame period. in terms of providing electricity and cheaper, with that we really provide strong recommendation to east asia. they afford this kind of high efficient technology coal power plant. a commercial line, but why are they not able to assess the

technology? with that i would say that this deployment of clean coal technologies are to support that if the asean cannot afford that, they can afford lower cheaper technologies that could be in so many years before they have that. there must be international framework in that regard to support asean, to afford clean coal technology. particularly would be public financing. those costs will be difficult to accept whatever is treated by itself without support with public financial support on clean coal technologies. with that regard, i think it's very crucial to support that in the absence of the public financing on clean coal technology. imagine that they are a country emerging in chinese companies and they are ready to invest in

a lower cost and also less efficient. we are not able to afford it. i would like to say that any of these public financial supports will make them in that regard. we will find a brown economy in the future. with that, i will stop and take questions later on. thank you very much. >> great, thanks, doctor. our first speaker batting clean up is michael livman. he directs ge, power, and waters long-term power generation forecasting. prior to working for ge, michael led the modelling efforts at the u.s. department of energies office of energy efficiency and

renewable energy. thank you very much. i think michael wants to use a power point. daniel? >> thank you, murray and thank you csas for hosting and convening this interesting and important day. while the power point is being opened, i should say i noted with some display that i was the odd man out and the only one bringing slides and the representative from microsoft didn't bring a power point. i will have to look at the slides. about energy mix and you might have a few different conclusions. we will talk about energy diversity and focus on the power sector. i'm not going to talk about transportation oil, but this is power sector. the first thing i am showing is

that this is the mix of capacity across asia so it includes asia and japan and australia. you can see the brown there, the big wedge on the right has increased you can see it's slightly more than 50% coal. the green box at 5% you can see that ours shows the reversal of the trend. a lot of this is because of china. the great run up in coal in china influences the entire asian energy picture and over the next ten years, some of that begins to reverse. there is more nuclear and more wind and more solar. there is a gas that holds itself

own. now, across the different economies in asia, the growth varies and they have different reasons for that. different priorities, for example on nuclear in japan which is still figuring out what will happen to the plants that are now off line. versus the economies that are seriously considering nuclear as part of the future. you can see huge increases in the rates of solar and wind, for example. across the economies, over 700% growth over the next decade. where as coal still growing, but not nearly as quickly as some of the other options. and again, a strong push for increasing role of gas across many asian economies. now, to get to this point, to get to an energy system or power

system that has more diversity in it and less cole in it, there a number of challenges that economies will face. the first is as was mentioned, the fuel price. you can see on the left of these various bars, the coal price across the region. i have representative economies that is lower than both the diesel price and the gas price. the second bar is the price in 2024. the difference between $2 gas and $14 gas in malaysia or $4 and $16 in japan. these are enormous differences. getting away from coal is going to depend on required -- require concerted and long-term actions. another challenge is a really huge increase in electricity demand and all of the