APEC-ASEAN COOPERATION, CORPORATE SOCIAL RESPONSIBILITY -

UNCLAS SECTION 01 OF 02 JAKARTA 000182

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SENSITIVE
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AIDAC

DEPT FOR EAP/EP, EAP/RSP AND EAP/MTS
TREASURY FOR IA-SETH SEARLS
USTR FOR WEISEL AND CUTLER
SINGAPORE FOR SUSAN BAKER
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COMMERCE FOR 4430-BERLINGUETTE
DEPARTMENT PASS FEDERAL RESERVE SAN FRANCISCO FOR FINEMAN
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E.O. 12598: N/A
TAGS: APEC ECON ETRD EINV EFIN ID
SUBJECT: APEC-ASEAN COOPERATION, CORPORATE SOCIAL RESPONSIBILITY -
AMBASSADOR HASLACH VISITS JAKARTA


1. (SBU) Summmary. Ambassador Haslach met with business and
government leaders January 21-23 in Jakarta. American business
leaders noted that U.S. companies have a comparative advantage in
the region on corporate social responsibility (CSR) programs. ASEAN
and APEC are seeking ways to work more closely, including on food
and product safety, energy and tariff reduction. The USG seeks
greater Indonesian engagement in APEC. End Summary.

AmCham Meeting
--------------


2. (SBU) In a meeting with American Chamber of Commerce (AmCham)
leaders on January 21, Ambassador Haslach provided an overview of
APEC and issues of interest to the business community. Haslach
noted the significance of APEC economies (40% of global population,
50% of trade, 60% of GDP). U.S.-ASEAN trade totaled $166 billion in
2006 and expanded 7% per year between 2002-2006. An important
initiative is the Free Trade Area (not "agreement") of the Asia
Pacific. Haslach noted that of the recent four Free-Trade
Agreements, Congress passed Peru, but Columbia, Panama and Korea are
progressively more difficult. Food safety is an area of great
concern to the U.S. given the recent problems with imports from
China.


3. (SBU) The U.S. supports the Sydney Declaration on Climate Change
to disseminate clean and energy efficient technologies. APEC also
completed a "Corporate Social Responsibility" report in 2005 and
Peru, as current chair, is keen to focus on examples and best
practices. The USG hopes that Indonesia will play more of a
leadership role in APEC.


4. (SBU) AmCham leaders noted that while U.S. companies are actively
engaged in the APEC region, we do not always communicate that
effectively. This often weakens the U.S. business position in
dialogue with host governments. By contrast, the Japan-ASEAN
agreement is largely political, but many Asian nations focus on form
as much as content. The USG is often too focused on content over
form. Japan has effectively used its umbrella agreement, and the
fact that President Yudhoyono signed it in Japan on a high-level
visit, to leverage additional cooperation. The AmCham is working
closely with the Indonesian Chamber of Commerce (KADIN) and the
International Business Chamber (IBC) on issues of concern to both
the domestic and international business communities. "Sometimes it
is better if the GOI is not hearing it just from the U.S.," one
AmCham leader stated.

Corporate Social Responsibility:
U.S. Firms' Comparative Advantage
--------------


5. (SBU) On CSR, one AmCham member noted that U.S. companies have a
significant comparative advantage over other countries. Even the
next best competitors, Japanese firms, do not do nearly as much as
U.S. companies. AmCham leaders noted the rapid expansion of China's
involvement in several sectors: from power generation, to extractive
industries, to telecommunications. U.S. companies are way ahead of
China on CSR, especially in the extractive industries area. The
Parliament's inclusion of a CSR clause legislation in July 2007 may
make Indonesia, the only nation in the world to legislate CSR
according to the head of AmCham's CSR committee. Ambassador Haslach
said she would share the OECD guidelines with AmCham, which may help
in outreach and communication efforts on the issue. "We can't focus
on trade liberalization and not consider the social aspects," she
noted. The fact that U.S. companies in Indonesia have been
finalists three years running for the Secretary of State's Award for
Corporate Excellence (including winner GE Indonesia in 2007),also
helps to highlight U.S. firms' CSR activities.

ASEAN - APEC Cooperation
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JAKARTA 00000182 002 OF 002



6. (SBU) Ambassador Haslach outlined U.S. priorities for APEC in
meetings at the ASEAN Secretariat on January 21. Lok Hwee Chong,
Assistant Director for the Bureau of Economic Integration and
Finance, emphasized that closer ASEAN-APEC cooperation depended on
the APEC Secretariat moving from seconded member country officials
to an institutionalized professional staff. It is difficult to
ensure continuity and maintain momentum on long-term projects, he
said, with the current rate of staff turnover at the APEC
Secretariat.

SIPDIS


7. (SBU) Dhannan Sunoto, Director of ASEAN's Bureau of External
Relations and Coordination, echoed Lok's comments. Because member
country line agencies that work on a particular sector for ASEAN may
not be the same as those that work on the same sector for APEC, a
permanent staff at the APEC Secretariat would be crucial for closer
coordination with ASEAN. He added that ASEAN would likely pull back
its participation as an observer in APEC meetings because of budget
constraints. Ambassador Haslach encouraged the Secretariat to
continue to participate in higher-level meetings and agreed that a
revamped APEC Secretariat could help facilitate information-sharing
with ASEAN.


8. (SBU) Responding to Ambassador Haslach's review of U.S.
priorities for APEC, Lok outlined several potential areas for
collaboration with ASEAN. Under food and product safety, ASEAN is
developing a product safety mutual recognition agreement with China.
He added that negotiations had been difficult, but that with the
recent focus on the safety of Chinese-made products, there is a new
momentum for the agreement. On energy security, Lok proposed that
the ASEAN Center for Energy, which explores energy conservation and
alternative energy options, could be a forum for cooperation with
APEC.


9. (SBU) Lok explained that ASEAN is implementing regional tariff
reductions by sector. ASEAN has twelve priority sectors for tariff
reduction, eight of which are product-specific, such as automobiles.
The Secretariat has contracted out visibility studies on the
benefits of tariff reductions so that member countries have
supporting materials to seek buy-in from their governments. He
offered that ASEAN could potentially share its experiences with APEC
as it rolls out these reductions.


10. (SBU) When asked about ASEAN's plans to implement a single
currency and market, Hwee Chong explained that ASEAN is looking at
the implementation of regional monetary units as a first step.
ASEAN is also planning to harmonize standards for listing stocks and
bonds cross-border. He said the Secretariat hopes to announce the
plan following the ASEAN finance ministers' meeting in April.

Trade Minister Pangestu on APEC
--------------


11. (U) At the ABAC seminar on January 21, Indonesian Trade Minister
Pangestu noted that APEC remains a useful forum for confidence
building measures. APEC, as a non-negotiating forum, helps tackle
difficult and sensitive issues before they reach a more formal
stage. APEC can facilitate issues reaching critical mass before the
World Trade Organization (WTO) rounds, for example. APEC supports
WTO goals by creating practical and incremental steps toward
progress. APEC can also enhance regional integration efforts. In
addition, APEC makes use of ASEAN's work as platforms for
cooperation. In one example, APEC seeks to replicate ASEAN's single
window of customs standardization by 2010.


12. (U) This cable was cleared by Ambassador Haslach.

HUME