APEC seeks to grow economies with an eye on sustainability
SAN FRANCISCO: Leaders of Asia-Pacific economies want to boost output with an eye on issues like reducing inequality and protecting the environment, US Treasury Secretary Janet Yellen said on Monday.
SAN FRANCISCO: US Treasury Secretary Janet Yellen (center) delivers opening remarks during the first session of the Asia-Pacific Economic Cooperation (APEC) Finance Ministers Meeting in San Francisco, California, on November 13, 2023. — AFP.
Her comments at a press conference come at the end of talks with finance ministers of the 21-member Asia-Pacific Economic Cooperation (APEC) forum.
Citing legislation like the Inflation Reduction Act — a signature achievement of US President Joe Biden — Yellen told reporters “APEC economies recognize the potential of this strategy and are pursuing similar policies.” Economic development and environmental action need to work together if the world is to combat global warming, Yellen said.
“We need to further improve our long-term economic outlook by boosting labor supply, innovation, and infrastructure investment, in ways that are also sustainable and reduce inequality,” Yellen said in San Francisco. After several years focused on post-pandemic recovery, 2023 was a “pivotal year” for APEC, said Yellen, a time where governments could refocus on “advancing fiscal reforms to build our economies over the long run.”
But economic development cannot be separated from the immediate need to wean humanity off planet-warming energy sources, she said, noting that less wealthy countries needed help to make the leap. “We’ve discussed how to finance efficient and effective energy transitions while supporting the individuals and communities who are most vulnerable,” she said, referencing as an example the Just Energy Transition Partnerships (JETP) in Vietnam and Indonesia.
These agreements define conditions for rich countries to commit to financially assisting the energy transition of developing countries. The JETP for Indonesia, the largest economy in Southeast Asia, was unveiled last year. It provides public and private funding of up to $20 billion in exchange for capping emissions from the electricity sector by 2030 and reaching zero emissions in 2050.
At the end of talks Monday, Yellen also noted that efforts to build a stable economic relationship with China are moving “along the right path.” She said leaders are focusing on “unlocking the flow of sustainable finance” as well, like by exploring ways to encourage the development of credible climate commitments and to create effective voluntary carbon markets.
Not all financing systems are equal, Yellen said earlier Monday, noting that the markets for carbon credits need to be examined for ways to improve their integrity. Carbon credits, which allow companies to offset their CO2 emissions, effectively permitting them to claim a heavily-polluting product is “carbon neutral”, are increasingly coming under the microscope, amid claims by critics that they amount to greenwashing. Besides working with the private sector and international financial institutions, Yellen added: “There is also commitment to continued work on the responsible development of digital assets.”
Digital assets technologies carry risks, which calls for regulation, she noted. Such assets include unbacked crypto-assets and central bank digital currencies. Leaders of the bloc will gather in San Francisco for a summit later in the week.
Meanwhile, President Joe Biden’s administration signaled Monday it would postpone a draft of an Asia trade pact that had been set to be unveiled at a summit in San Francisco, after facing domestic criticism. Biden, welcoming 20 other members of the Asia-Pacific Economic Cooperation (APEC) forum to San Francisco where he will meet on the sidelines with Chinese President Xi Jinping, had been expected to announce substantial progress on a nascent trade deal.
But Treasury Secretary Janet Yellen said there was still work to be done on the most contentious part of the so-called Indo-Pacific Economic Framework for Prosperity (IPEF), the trade component. “There’s been significant progress, but it looks not to be complete, like something that is likely to require further work,” she told reporters after leading talks of APEC finance ministers. “Nevertheless, in a number of areas that I think are critically important to the United States, like supply chains, environment, sustainable finance, we’ve made a huge amount of progress and we’ve made progress on trade too, but it appears not to be complete,” she said.
IPEF falls well short of a traditional trade deal as it does not offer trade access. Nonetheless, it would aim to set standards for business across some 40 percent of the global economy including three of the world’s top five economies — the United States, Japan and India. IPEF also includes Australia, South Korea and much of Southeast Asia, but notably not China, as the United States tries again to assert a leadership role in Asia. — AFP.
