 Good afternoon, ladies and gentlemen. Welcome to this interactive session on Trading and investing for global prosperity. I'm Rasin Sali I'm based at the Lee Kuan Yew School of Public Policy at the National University of Singapore and I have a distinguished lineup of of speakers on the theme with a very interesting public sector-private sector mix. I will introduce them in due course and also give you a brief idea of the format of the session. Let me say initially this is a session that's on the record. So all media people are welcome. Let me frame the topic to begin with briefly and then introduce the panelists. What's at issue here is opportunities for cross-border trade and investment in an uncertain and certainly not benign global economic climate. So we have continued anemic growth in the west or most of the west in the wake of the global financial crisis and that looks set to continue for years to come perhaps. We have of course a very different more rosy picture in many emerging markets particularly in this part of the world. But as recent trade data if you read your newspapers and seen your TV screens this morning you will know that the recent trade data from China and indeed from other parts of Asia looks pretty bleak at the moment on both imports and exports. So we are seeing a growth slowdown in this part of the world not least given depressed export markets in Europe in particular. So that's the environment. What are the opportunities out there for global trade and investment in that environment. That's the very big picture. Let me take maybe three aspects of it and invite the panelists to consider them as we roll through the discussion. One is how does trade fit into broader national or regional competitiveness. The global competitiveness report of the World Economic Forum came out just about a week ago. It ranks 144 economies along all sorts of indicators but one of the important indicators is international trade. Read trade and foreign investment. And there if you just look at Asia we see wide variation from some who are at the very top like Hong Kong and Singapore to others who do very poorly including some big emerging markets with China doing relatively better than others but not nearly as good as some in this part of the world. So how does trade figure in terms of broader competitiveness is one big question. Another one concerns global supply chains and that's going to be a key feature of our discussion. Supply chains take many forms but a signal feature of supply chains is what is called production sharing in this part of the world in East Asia where we see production highly fragmented and then vertically integrated to cater to markets all over the world but particularly over 50 percent that is final markets still in the West mainly in North America and Europe. Now that raises a whole series of questions. How can supply chains cope and prosper even in a climate of slow down for final markets in the West. Can these supply chains diversify to cater to final markets increasingly in other emerging markets. Can we see more intra Asian supply chains where we have regional production for regional consumption. Supply chains are particularly strong in ICT and we have one representative at least from the ICT industry here but can we see a widening of those supply chains in East Asia and elsewhere in other parts of manufacturing into services and even into parts of agriculture. So far South Asia has been absent from these supply chains with the exception of the garments industry and with some aspects of services like BPO and software exports. Can South Asia be integrated into these supply chains. Those are some of the many questions that arise in my mind on the supply chain front. Very finally the policy or regulatory environment for international trade. Nothing has happened of note in the WTO. The Doha around remains moribund. There's been a proliferation of free trade agreements not least in this part of the world with regional trade initiatives such as ASEAN ASEAN plus three and so on and most recently the TPP. But many of these trade agreements don't go very deep particularly when it comes to tackling non-tariff and regulatory barriers. We'll see how far the TPP grows in this direction. And not least at the national level since the crisis we've seen a creeping increase of trade regulatory protection. Some tariff increases but are more an increase in terms of other restrictions that disrupt not least global supply chains. And back to the supply chain what are the most important issues in terms of the regulatory environment. In terms of how to cope with how supply chains are disrupted by existing protectionism and what needs to be done to take those barriers back to allow those supply chains to survive and prosper in the way I described a little earlier. So there I have a little menu of questions. Others may arise to the panelists as we go along. Let me start with introductions. Firstly we have the Prime Minister of Lithuania, Andreas Kublius with us. Thank you very much Prime Minister for joining us. We have the Mayor of Chongqing, Huang Qifan. We have right next to me Heinz Haller who is Executive Vice President and Chief Commercial Officer of the Dow Chemical Company of the USA. We have right at the end Fred Hochberg who is Chairman of the Export-Import Bank of the United States. And finally we have Liam Casey, Chairman and CEO of PCH International here in China. Welcome gentlemen. A brief explanation of our format for the next 50, 55 minutes or so. I'm going to start with an initial round of questions to the panelists. They will have two to three minutes to answer. After that we'll have a discussion among the panelists and then I'll open it to you the audience to ask questions to the panelists and then come back to them for a final round. So off we go. Let me start with you Prime Minister. Lithuania only just over 20 years ago was part of the Soviet Union and part of the Gosplan. It made a remarkable and speedy transition to the market along with your Baltic neighbors Estonia and Latvia and you joined the European Union in 2004. So from being hermetically sealed as it were from the world trade for a small economy like yours and for an investment has become life blood. What are the opportunities for trade and investment going forward in Lithuania and what are the big policy challenges for Lithuania but also Lithuania in the context of the European Union bearing in mind of course that trade policy is handled centrally in Brussels rather than by individual member states. Well thanks a lot. There you explained almost everything what I was ready to say about Lithuania, about Baltic states. First of all of course everybody should know geographically where we are in the northern part of Europe and of course when we are speaking about economy and representing some European country always at the moment there is some problem how to explain what is the situation in Europe and what is the situation in our country. So I would very briefly say that first of all of course we during those 20 years we went through very dramatic and very rapid and very dynamic changes. As you mentioned we became members of EU. We created successful market economy. Of course we faced several difficult crisis during those 20 years and the last one back in 2008-2009 was the deepest one. We went to recession back in 2009 by minus 15% during one year in GDP terms. All three Baltic states in a very similar way but last year we finished with 6% growth with a deficit going down this year down to 3% and inflation also around 3%. So if you look into the Baltic states, if you look into the what we call Nordic Baltic states, five Scandinavian countries and three Baltic states we are in a different situation if you compare with some European countries. So what made us really quite successfully, what helped us quite successfully to overcome the recent crisis of course was what I say always that before moving to smart growth you need to have smart austerity. I mean to move as rapidly as it is possible with consolidation of your fiscal position what we did back in 2009 and then recovery first of all of exports lead to recovery of whole economy. The Baltic states including Lithuania we have very open economies. Around 70% of our GDP is produced for exports. Around 75% of our exports are going to European Union markets. So of course what we, if you would ask what is the challenge, so the biggest challenge is of course how to have exports markets towards directions more diversified. Not to be dependent on very much on European markets. European markets and single market helped us very much during all those 20 years but of course diversification would be of a very great value. Second of course we are part of Nordic Baltic region and that is why we are really very good all of us. We are good in innovative economy and high tech economy and that is why we are also very much keen to stay an open economy despite all the problems. The Nordic Baltic region really is very attractive to foreign direct investment. We are if to calculate Nordic Baltic countries all together we are something like 11th economy if to take all the world and attracting foreign direct investment it means that also you are bringing new interconnections for your trade and for your possibilities for your companies, for your own companies to export to those new markets. So that is why for example we are very keen to have Chinese companies coming and investing into Lithuania and having an access not only to Lithuania market of 3 million people which is rather small market but also having access to the whole Nordic Baltic region of 3 million and to the whole single European market of 500 million. So that is how we see our strategy and how we see the challenges and we understand very well from our own experience that if you want to have good growth of your economy you need to be very open and not afraid of global competition. That is the first rule which we learnt during those 20 years of our independence. Thank you very much Prime Minister. Let me turn now to the Mayor of Chongqing Huang Qifan. Mr. Mayor, everyone in the room is of course aware that Chongqing has had phenomenal rates of growth in the last few years and has also been successful in attracting foreign investment. Perhaps you could tell us a little bit more about the Chongqing story as far as trade and foreign investment is concerned and what opportunities you see for your city in the future. For Chongqing actually in recent 3 years trade import and export volume increased 10 times. In 2009 it is about 5.5 billion US dollar import and export but this year increased to 555 billion. So this is an increase for the foreign investment is about 1 billion in 2009. Last year is about 10.6 billion US dollar. So by doing so we follow the international trade trade and that is about 20 or 10 years ago when the energy is very cheap is about 10 US dollar per barrel. So actually aviation and transportation is very cheap. We know that the famous book saying the world is flat. So when you produce a product wherever it is located then your materials and spare parts can be transported from the rest of the world and after it has been turned into finished goods it can be transported to another place. But after the financial crisis this is no longer deemed as a profit because now the energy is such that the price of energy is about 100 US dollar per barrel. So the transportation cost is very high and also logistic and supply chain. If we make the global transportation this is very time consuming so in Chongqing we have a processing trade location. The production is about 50 sets of computers, 30 printers, 30 million printers, et cetera. So this kind of production facility the production capacity is about one fifth of that of the world which is about 20%. I should ask such a question why can we build up such a production and trade base in Chongqing. I think that we are changing the concept of world is flat and we believe that in the current world the world is not flat at all and we have to have the vertical consolidation of vertical integration of the key components and the parts of certain products and we need to centralize the production of the key components in certain area and in this way for the K-parts producers and for those integrators they can really shorten their time of production and all those key components producers they can communicate with one another and in this way they can have collaboration among each other in such a value chain. So with that kind of concept in our mind we have attracted five major players into Chongqing such as HP, Cisco, et cetera and we also have six big manufacturers located in Chongqing and we are trying to centralize all those production and manufacturing capacities. In addition we also have 600 components producers located in Chongqing and in this way 80% of the raw materials for the production of desktop computers are locally sourced and within three years time we have completed such a target and after the financial crisis we are witnessing the increase of the energy prices and we are seeing the change of the logistics systems in the world. That's why we have to reshape our minds that the world is not flat at all and I think that Chongqing's model is leading the development of the mainland development. Thank you. Thank you. Thank you. Thank you Mr. Mayor. Let me turn now to Heinz Halle of Dow Chemical. Perhaps you could tell us something about how the chemical industry fits into this changing map of global supply chains particularly in this part of the world, China, the wider Asia, East Asia perhaps. Firstly and secondly what are the key regulatory issues for you in the chemical sector on trade and investment in these supply chains? What are the big bottlenecks? What do you think needs to be done? Well first of all the trade as such has been the facilitator of growth of the company for the last 115 years and it always has been a major part of our activity. When you look at a company like Dow Chemical which is backward integrated into hydrocarbons and forward into value chains the trade as such has been the facilitating and precursor to investment all the time since we moved from Michigan to Texas. That was probably a bigger cultural shock at the time than moving from Texas to Europe. So Asia and China in particular is not something particularly foreign to us and we have been growing the company over the last 115 years by starting trade. We should never forget that the chemical industry is a very asset intense industry. It's a very productivity oriented industry and it's a hydrocarbons based industry that actually needs huge capacity and so things like labor arbitrage and stuff have never played a major role for us but it's asset intensity and that brings me to the second point that we're making regulatory issues and sort of barriers of ownership type of stuff that are really things of concern to us. Free availability of hydrocarbons that can facilitate investment into local type of economies that's obviously number one. You need to be able to be certain because of the lifespan of these investments. Those are investments that are made for 30, 50 years as compared to the faster living type of product cycles like the IT industry so we need to have certainty in terms of what can we do with these type of assets. Are they continuously be able to operate? Are we having sort of similar rules like local competition in terms of access to markets locally? Are we equally treated in terms of IP once we invest? But before we invest we need to have access and free market chains are really the first driver for growth and I think there is an important dialogue that needs to take place with governments to make sure that you're not wasting the money of your investor into an asset that is not going to stay there and I think we need to really dissociate long integrated type into chain integrated industry versus sort of assembly industries and those are probably two different stories. Labour arbitrage is not important for us really. We're investing, we're trading with nations where we have a long term interest and we should never forget everything you do in life 95% of it is touched by chemistry so chemistry has a very, very important contribution to make to any industrial development you have in any of the nations of certain developments. Thank you very much. Now to Liam Casey who told me before we came up here that he came to China for a week and 17 years later he's still here with the wealth of corporate experience behind him and that's what I'd like you to speak to initially. Your company is very much at the heart of the kind of supply chains we've been talking about here in China to service the world as it were. Now on my visits to China in the last few years I have been hearing mixed views from the foreign business community so there are those who say that the kind of red carpet that you might have got 10 years ago no longer exists there are more protectionist obstacles partly because there is now more competition with state-owned enterprises and the general environment is more unfavorable. There are others who have told me quite the opposite who continue to be very optimistic about an ever-expanding Chinese market and broadly speaking a welcome mat. How would you assess the regulatory environment for you in your industry in China? What prospects do you see for the future? Thank you. We have been here 17 years and came here originally in 1995-96 but at the time it was to source products directly from factories in China it was the components and we were sourcing the components that were being used in the global marketplace so we were supplying factories in Europe and in the US and in Mexico and Brazil that's all changed. We've closed offices in San Paulo Brazil, we've closed offices in Budapest, we've closed offices in Guadalajara, Mexico so now all of our production is done in China so we're now dealing with finished product as opposed to components Now I could actually quote the mayor because everything he said is very accurate about the importance of the access to the raw materials and the skill workforce is critical but when we look at our business some of the other things that change as well is that the market has changed now we are supplying the Chinese domestic market for some of our foreign clients and actually recently we've started supplying some Chinese clients for the domestic market one of our new clients is one of the telephone companies here in China called Xiaomi which is a very fast growing company here in China talking about the regulatory and the red carpet when I came here first I was alone so there was no red carpet and I think we missed the red carpet because we evolved over time and we grew and today we would be a substantial sized business but as we grew we never fitted into the category we were never a big brand arriving here in China so there was no red carpet which I actually think is probably a good thing I think one of the other things as well is that China is a very large country and there are pockets of expertise in different parts of China I always say that Beijing is the political engine of China Shanghai is the banking finance engine of China but Xinjian is the commerce engine of China and I heard earlier today I heard one of the speakers talk about the speed in China and in China the Chinese word for speed is sudu and the Chinese word for real speed is Xinjian sudu and in our business time to market is everything it's amazing that we often say that time is our number one currency and dollar is second and the reason we say that is that the companies we work with the big global brands they are so tightly watched by analysts and stock analysts around the world that they can't afford to miss a launch date of a product if they miss a launch date of a product it can take between 5 and 10% off their share price now 5 and 10% off their share price is huge huge number so guaranteed of supply and guaranteed of meeting their ship dates are critical and for us for the global market Pearl of a Delta or South China is still the best location and as a company we are asset light so we don't own the factories so we're not biased we'll look anywhere for a factory if I can find a factory anywhere else in the world that will make the product better and I think on time, right quality and at the right price then we'll work with them so for us we've looked around Asia and we still think that the Pearl of a Delta for the products that we work with is still the best location Thanks very much Liam Fred Hochberg you're at the heart of trade finance trade finance collapsed in the wake of the crisis it recovered but there was a fear back then that there wouldn't be a recovery how would you encapsulate the state of trade finance globally today and how it factors into real world cross-border trade and investment and what are the opportunities ahead? Well thank you let me see if I can try all of that trade finance I represent the export input bank of the United States our volume actually President Obama was elected in 2008 in less than three years we're more than double the size we were three years ago so there's been a far greater reliance on trade finance partly a result of I think a number of factors one actually President Obama launched the National Export Initiative so the United States is exporting more producing more consuming less relatively so part of that secondly with the global financial crisis banks have pulled back and the impact of Basel 3 is certainly being a factor in banks desire to make long-term loans particularly loans very hard to get bank finance for more than five years in many projects we have a project that the bank is reviewing actually with Dow Chemical right now in Saudi Arabia and that needs 12, 15 year financing five year financing won't do so part of it is the reluctance of banks and I would say third is there is more and more trade going to emerging economies and many banks have had limits or caps on what they will invest or how much of their portfolio will be in those parts of the world so those three factors the growth of exports under President Obama the global financial crisis and more trade going to emerging markets has put much more demand on export import banks China XM Bank is obviously another example and a number of my other colleagues around the world so in an odd way I will just add we credit when we risk rate our portfolio our portfolio actually has a higher risk rating today than three years ago it's because transactions that were done by banks are now being done and can only be done through export credit agencies thank you very much let me arising from these initial interventions there are perhaps three or four common points which I want to throw back to you and trigger a discussion among yourselves one thing that strikes me from several comments is the changing geography of supply chains I got an inkling of the changing geography of supply chains within China with the migration of a lot of production now from the coastal provinces to not least places like Chongqing how do you see that panning out in the future and you Prime Minister talked about the Nordic Baltic region as a compact region for global supply chains a kind of regionalization phenomenon do you see that as part of a bigger trend whereby there's more regional clustering of production bases that are linked into global markets as it were Heinz Huller you raised a regulatory issue you said it was imperative for your company and your sector to have free access to markets and you also mentioned the word equal treatment i.e. non-discrimination now there are many countries around the world which engage in industrial policy industrial policy of the type to favor local companies national champions with discriminatory as opposed to non-discriminatory treatment how disruptive is that how disruptive can that be to this global supply chain phenomenon just another couple of points to throw at you pick any one of them you wish to what's the potential for South-South trade to increase trade between or among developing countries and emerging markets how do you see that going and Fred Hochberg raised a tantalizing point amidst all the gloom about the American economy today public finances slow job growth and so on there are some who predict that the United States is on the verge of an export revolution which will include manufacturing is that going to happen well that's a broad menu who would like to pick up the baton who would like to start well I'll jump in because I believe that yes the United States is poised for an export boom and actually at the other end of the panel here there's a very high you know companies like Dow the natural resources that the United States as we begin to grapple with shell gas and natural resources plus frankly the human capital I think puts the United States in a very good position for being a much stronger global player in terms of exports exports in the last this past year topped $2.1 trillion a record however exports are still no more than 14% of our economy now that's up from about 9% so that's a dramatic growth but China it's north of 35-36% Great Britain does not produce a lot of things not a lot of manufacturing it's 30% of Britain's economy so the United States has I think a lot of runaway ahead of it in terms of picking up export growth and really what President Obama's talked about and China's talking about is balancing our economy we've been too much about consumption not enough about export and investment China the reverse of that one would argue a lot of investment a lot of export and now it's trying to rebalance in favor of consumption so this rebalancing is actually ultimately good and ultimately it does affect all these supply chains Just to make a point in terms of what's happening in the economy obviously hydrocarbons economies are important but I think a fundamental change that we see is the insourcing of outsourced type of working steps in some product areas that actually has made supply chains very global and has facilitated a lot of the building but industrial policy sort of is a very important element of that whole discussion as well that you really need to have a manufacturing economy to really support all the other type of steps further down and I think when you ask will the US be an export economy I'm absolutely convinced it will be but there is a few steps that have to be happening before because there needs to be a certain amount of insourcing to be in control of your total supply chains which is posing an interesting question for the logistics service companies because that is a world that is probably changing big time as well and I fundamentally believe that every economy has got to look at a fully integrated manufacturing strategy again has got to basically get back into control of their manufacturing and therefore be really ready to go and change a few supply chain arrangements that we had in the past because it really all started with labor arbitrage right and labor arbitrage in my opinion is gone so you're going to have to worry about your technology and that's where fair trade and regulatory equality comes in you want to be in charge of your IP and you want to be sure that your next invested dollar is going to the best place but that is still the best place over the next 30 years given the asset lifetime that it stays there so that there is a variety of issues in that whole discussion Just now the moderator kicked off a lot of questions I just want to respond to some of them I think for an international processing and trade location or base whether it's domestic company or foreign company foreign company should be had fair treatment be it state owned enterprise or private enterprise small enterprise or branded enterprise or foundries or just spare parts manufacturers or should receive equal treatment same tax rate same treatment same government policies so this is the prerequisite there should not be any discrimination or differentiated treatment otherwise we will not be a world level production that foundation or basis and also it's a world level production basis so the spare parts and materials that can be sourced original but the final product is sold all over the world therefore the customs of the country should be in line with the world customs administration in terms of their systems and standards etc. for example the Chongqing customs and nutrition in order to export the goods from Chongqing to other countries it needs to go Belarus, Poland, Germany, the Netherlands, Belgium go through their customs and the trend going through all those mentioned countries and regions these customs should have an easy and convenient standardized way to clear the customs so that this can increase the efficiency so if there is an inconsistency then it's going to prolong this in China we have the China Euro bridge in the past we used to go through the north one that is through Harbin in China to Siberia in Russia and then reaching Russia only stopping and going through one country but it's a long distance so the efficiency is not very high and now in Chongqing we have another one that is through Chongqing through Xinjiang to Kazakhstan and Russia and also to the Diaspora in Germany so six countries customs administration we signed a convenient agreement for custom clearance so these seven countries customs once it passes through one section of one of the customs administration then the other customs administration does not need to inspect the goods so we have a unified railway system arrangement as well we have the fixed and designated fees for railway transportation with the fixed time, etc so that in each container the price of transportation in seven countries are all the unified prices therefore this cross-border railway agreement as well as the cross-border customs and nutrition arrangement are all unified so now we are talking about international trade so there need to have international settlement so once you pay the spare parts you pay with a certain currency you are making different production and processing here in China so we also pay in RMB so in Europe there are different currencies but in mainland China we do not have the off-land price for the settlement so if in China this kind of off-land financing is linked with that of the rest of the world then this is bottleneck for international trade so from China's perspective we need to further open to the outside world so that this kind of production line especially this kind of international trade settlement systems can be set up in Chongqing in Shanghai if we can do a proper job in these areas I believe the world trade can be better Prime Minister I would like just to continue and to add something about Nordic Baltic region but to continue what Mayor said really it's very important this way of resolving the logistic problems and I remember well how three years ago perhaps we had the first Asian-European Transport Minister's meeting in Vilnius and I was presiding in that meeting and exactly those issues how to agree on transport routes on railways routes from China from Asia to Europe really that was very interesting to see and to follow how rapidly things started to become real so in that case really the Nordic Baltic operation is also very important because again those ideas to have such kind of conference they match from our Nordic Baltic Transport Minister which saw really good opportunity to have such good cooperation with Chinese counterpart Nordic Baltic cooperation I would name it as some kind of very strong regional clusterization starting from political clusterization we have very good political traditions of political cooperation then going into all the areas of economical and financial cooperation for example in Lithuania we have something like 90% of financial institutions which came banks which are coming from Scandinavia then we have our major trade partners of course of Scandinavian countries major investors again are Scandinavians, Danes or Swedes and we are benefiting we are not a very large country with 3 million inhabitants we are benefiting out from that and being part of this Nordic Baltic region means a lot because it has its own brand as fiscal prudent region as the region which really has very strong advantages in development of innovative and high tech technologies and economies and the region which is very much focused on exports so that is, I don't know if that is a unique experience of our region or not but we are really very much enjoying being part of all the different regions which match in one very nice name Nordic Baltic region and that is where we see the goal really to look forward how to move ahead with that internal cooperation even more Thank you, the Prime Minister was being modest Lithuania is the largest country in the Baltic region by population ahead of Latvia and Estonia Liam? On the whole global trade flows we manage tree flows, we manage the flow of information, the flow of product and then the flow of cash and again getting what the Mayor said about the different customs the product entry into a country for us this is some of the biggest risks, now it is getting much better and again we think that once this improves and with the tools that are available today especially the access to data because data has always been the gap and if we can track the information we manage the physical flow of goods with that we can manage the financial flow of goods and the one barrier to the financial flow of goods is it's the banks, the banks any time I sit with a supply chain finance a bank talks about supply chain finance the first thing they'll mention is letters of credit now letters of credit were invented by Marco Polo started to use them first and he didn't have Google Earth or any of the other tools that are available today that you can use to track global trade and again when you look at some of our product I can take a product from a production line in Xinjiang a consumer in New York in three days including the production I can take it to Tokyo next day I can take it to here in China so when you collapse the time involved in the trade flows you also collapse the risk that's involved and the thing is we see a great opportunity for disrupting supply chain finance consumer finance has been disrupted by companies like PayPal companies like Square, companies like Stripe now these are all created by fantastic young super intelligent people who don't have business experience but they have experience of going to Starbucks and buying a coffee or going to 7-eleven buying a pack of gum so what I want to do is we want to get those guys involved when they see a billion dollars of receivables how do you disrupt that because the banks certainly are not going to do it so that's one of the exciting things the banks are probably some of the ones that are probably most innovative in the space at the moment and again one of the things that we say in business and it's again what the mayor is saying about the customs in business today geography is history and that's the way it's going because when we think about a roll out on a product for a client for us we look at a global roll out and how fast we can do it and in the past it was very regional and today it's much more global I was just going to add bankers like letters of credit because they like the fees they collect on we try and encourage credit insurance and a number of other things that are far less expensive but I think many banks they still like letters of credit because they're cumbersome and they're costly and they generate nice fees but I would totally agree with you when we could work with anybody that's expensive and far faster okay thank you gentlemen let me open it now to you the audience please feel free to ask questions to anyone of or several members of the panel and please introduce yourselves with your affiliation if any when you do so who would like to ask the first question the gentleman over there I'll take a round of questions to the panel thank you Mr. Chairman I'm David Campbell Bannerman I'm Member of European Parliament for the East of England and I'm on the International Trade Committee of the Parliament so I'm involved in free trade agreements like Japan is coming up India Australia New Zealand I just wanted to ask a question in light of that with the World Trade Organisation being quite successful despite DOA in driving down tariffs around the world trade blocks is the era of trade blocks actually fading you know is actually the reason to have these trade blocks actually diminishing because it's now global and the World Trade Organisation and tariffs in general are falling doesn't mean that actually they've had their day such as EU thank you including the EU interesting right any other takers for an initial round of questions please don't be shy if not I'll get straight back to to the panel any takers for that question so the products that we work with and the the kind of clients we work with they sell a lot of their products online there's a phenomenon in the States at the moment called Kickstarter which is a crowd sourcing or crowdfunding for projects and the number of clients go on and they put their products up there they'll sell products to 100 countries okay so the consumers are driving it more so than so if consumers in Japan want to buy a product they're going to go online they're going to source it and they're going to find it and what we're finding is that the entrepreneurs and startups are finding ways to supply so I think that the market is going to move it I think that the tariffs I'd like to say something I'd like to say something I think that in terms of the world trade organization it deals with the tariffs and due to we're trying to reduce the tariffs and in the coming years I think that there are three issues that the WTO should get attention to otherwise it will lose its value because now we have been witnessing the decrease of the tariffs and duties but how can the customers of different countries work together to provide their services and in China you know for most of the goods they have the electronic ideas being packed to the products and in China there are a lot of products being packed to the products and for the customs in China once a product is packed and inspected by single customers then this product can go through all the other customs inside China and I think that the information can be shared by different customers of different countries and I think that this issue should become an issue that the WTO should pay attention to but that I mean we need to have a sharing of information among all the customs and in this way we can facilitate the trade and in addition we see the increase of the processing trade in the world and I think that in the coming or that is I believe that one third of the international trade will be processing trade and another one third will be the e-commerce trade and how are we going to deal with the e-commerce oriented trade for example how are we going to make the payment how are we going to settle all those payments and for the Chinese customers they tend to buy from the American market and how should the customs investigate or in fact all those parcels going through and we need to have international rules and regulations on that without those international rules and regulations I think that the e-commerce trade will be hindered and the development of the e-commerce trade cannot be developed and in China we have a lot of B2C and B2B trade and this has created some new issues for us and we have to consider the new regulations to put them in control and the third issue is the e-commerce related currency and we need to consider the convertibility of the different currencies used for the e-commerce trade and I think that those are the three issues that the WTO need to consider against the new backdrop thank you thank you thank you very much next question please you sir hi good afternoon my name is Jerry Matius from Bayonet & Company we recently issued a report on the consumers in China the way they think which is quite different from maybe consumers in developed economies in terms of the patterns and the ways they consume goods and they buy and the loyalty to brands how do you see that affecting supply chains which are mostly demand driven in terms of their model and their operation here in China and Asia versus the western world or the developed world and how could that affect trade so could you see a different model of supply chains developing for Asia what complexity could they bring to organizations as well as global trade thank you you sir you are referencing to the hydrocarbons but the extent to which sourcing from grains or other natural materials is also impacting the nature of the trade flows any other questions yes madam thank you my question is based on what you just mentioned I think that the Melchor has mentioned something about the the common trade facing all the questions so I have a specific question for Mel and do you think that the role of the transport in common trade will become more and more important in the future and do you think there will be any gaining rules in this respect I think that in Chongqing Chongqing is an inland city in China and we do not have any borders or customs in Chongqing and if we like to change our inland city to a kind of border city then we can liberate the other means of transportation for example the air transportation and all we can consider the development of our train transportation and since we have the train transportation connecting Chongqing with the other countries and other cities that has something to do with the customs and we have been in contact with the customs of several countries including the customs of Lithuania and we are trying to set up a very convenient custom agreement and the Premier Wen Jiabao signed such an agreement with President Putin in the year of 2010 and after the establishment of this agreement we actually set up a Euro Asia railway bridge and for those high-end products in the past it was very difficult for all those high-end products to go through such a railway bridge because of the different practices of the customs and originally for the Chinese goods they had to be transported to the European market through the port cities such as Guangzhou and Shanghai and we had to ship all those products by the marine transportation or by ship transportation and now we think that it is a little bit easier for us to develop the train transportation system connecting Chongqing and the other countries especially those in the Central Asia and I think that the convenience of the customs should be very important for the trade development in the world Thank you, Mayor Hong Gentlemen, the previous two questions would anyone care to respond? Maybe I can react to your question on is the hydrocarbon economy going to be persistent or is the green type of backward integration into hydrocarbon equivalence going to change anything I think technically we're a long way away before the green raw material input will make a dent into the overall material flow of the world I think what's clear on the energy side that we're seeing a lot of alternative energy that is changing the shorter supply chain the national supply chain is a little bit with wind energy, solar energy and type of alternative gases out of agricultural waste type of stuff that's a totally different problem in terms of that's local supply into an energy grid which most of the nations are having a problem then organizing global supply chain and you've seen that here in China with the demise of the wind industry because the wind industry basically forgot to ask can we feed into the state grids and that has led to an interesting sort of delay of wind energy investments so there is a lot of regulatory type of discussions that need to take place a lot of rules and regulations that are important because the technology behind that that's global supply chains too that sort of got disrupted by a lack of a clear statement a clear policy statement so very often the root causes for disruptions of supply chains are coming from the unexpected end because the public-private partnerships have not really been clarifying all the rules and that's true in Europe with the feed-in tariffs for solar we have a huge issue with solar right now that's disrupting a lot of supply chains for the wrong reasons because the regulatory bodies and the producing industry haven't talked to each other and I think we can talk all about tariffs in my opinion tariffs are not the issue the issue are clear views of what you want to achieve and how global these supply chains are and is it B2C, is it small products and I would actually agree with Liam that you can get anything within probably 3 or 4 days from around the world it's a bit more difficult to supply a 300,000 ton oil tanker into a 2 billion dollar asset and I'm sure my friends from Reliance would agree with that so I think we need to be a little bit more specific on industries on what needs to be done to supply chain where the trade security needs to be I agree that it's easy to buy a computer on the internet and ship it from here to the US it's a bit more difficult where you have huge volumes and I think those really need to be to do different discussions because it's different regulatory bodies it's different environmental standards that you need to have it's a lot bigger risk the credit risks if you ship a super tanker of oil are a little different than shipping an Apple computer and I think we got to be really careful not to generalize those sorts of issues but look at industry sectors agricultural industry is another one that's probably the one with the biggest potential for deregulation and therefore these eruptions of supply chains the unfortunate thing is nobody wants that particularly not the big producing nations just on the gentleman's question from Ben we actually, our e-commerce businesses and our B2C business is by brand as opposed to by e-tailer and we see some very interesting trends when we look at the Chinese brands the basket size is much bigger than say the US shoppers when they shop in China so that's one thing that's of interest Prime Minister very briefly just to continue what Mayor was speaking about how it's important in supply chain good logistics and what we can achieve and what we are trying to do together with our Chinese counterparts on bringing some new new arrangements so what Mayor was speaking shipping goods from China to Europe it takes as our experts are saying around 45 days if those trains will go from China to Europe according to those arrangements which we are making and where we experience the first shuttle train from China coming to Lithuania which was called very nice name so it takes somewhere around 12 or 14 days so that is the difference in supply chain what you can achieve then on some questions on specific specific markets specific attitudes in different markets I am not an expert on those issues and I do not know very well Chinese market and I cannot say anything very specifically but from our experience what I can in a very brief way to show back in 1995 we were negotiating free trade agreement with European Union still on our accession way and just now I have a lot of meetings with our neighbors from Ukraine from Moldova from South Caucasus and they are going through negotiations on free trade with European Union they are saying well we are different we cannot go so smoothly with negotiations you should look into our specific situation and I remember well in 1995 we were negotiating the same I remember how we were afraid of some items in free trade agreement which was proposed and then we agreed and I do not remember and it does not create any kind of big problems all our specific issues Thank you Prime Minister we have two minutes no time for any more questions I am afraid would any members of the panel have any final thoughts based on your interventions and our discussion some final takeaways for the audience I will jump in quickly one of the things that is needed will be and it relates to what the Mayor talked about in some way and that is a greater transparency and greater agreement on what are the terms of trade because for many years 30 odd years the OECD set the terms of agreement so there was a framework so trade finance we have now a situation where we have China, Brazil, India large industrialized countries China the largest export in the world not a member of the OECD so moving towards a framework where there is transparency and agreement on that I believe will take finance somewhat out of the shadows but also keep it in the background so that we have products and goods and services competing on their own merits so I think that is one thing we need to work on in the next few years thank you thank you very much gentlemen we are about to close my final task is to leave the audience with a couple of final takeaways from our whole discussion and I have only two in mind one is despite the current global economic gloom I noticed a fair amount of optimism that supply chains can continue going global and widen and deepen so that is one thing to bear in mind the second thing to bear in mind is the regulatory environment tariffs are much less important now and the issue the Mayor Huang talked about e-commerce he talked about customs the issue now is very much about non-tariff and regulatory barriers not just in manufacturing not just in the obvious area of agriculture where of course they are highest but also in a whole panoply of services infrastructure where actually protection behind the border regulatory is higher than it is in manufacturing but these are precisely the areas because they are so complicated because they are so politically sensitive that elude agreement in the WTO in FTAs and in other forums and so on thank you very much ladies and gentlemen and thank you for the panel