High diplomacy meets high-tech at APEC 

California exports $100 billion per year to the 21 member countries of Asia-Pacific Economic Cooperation, or APEC. Thirty percent of those exports are electronics and computers. As America seeks to export its way out of historic debt, an unprecedented forum for spurring that mission arrives in the Bay Area.

When the CalAPEC committee began trying to win placement of the 2011 APEC forum in California, its members thought a local “digital prosperity summit” could highlight Silicon Valley’s role in furthering free trade and open markets, said CalAPEC Director and Chairman Paul Oliva.

Click the picture for graphics on exports and where venture capital flows.

“When you think about how technology feeds into and creates opportunities in every single area of our economy and human endeavor — energy, disaster management, consumer devices, telecommunications, financial services, health care — it’s one of those bundles of topics that is right for a policy discussion that eliminates barriers,” Oliva said.

APEC’s Conference on Innovation will put tech CEOs at the same table as heads of state to discuss tariffs, intellectual property rights, global standards, security and privacy.

“That’s where the format is unlike anything,” Oliva said. “In the G-20 or WTO or in the U.N., there [are] really strict diplomatic processes and business is not at the table. ... APEC has business input built in.”

Working sessions will systematically drill down into “incredibly complex” issues, looking for best practices and locating the “pain points where policy can be changed.”

The Information Technology Industry Council represents the voice of the major U.S. technology companies. John Neuffer, ITI vice president of tech and trade, helped conceive of the Conference on Innovation. He says APEC’s weakness is its strength.

Since it is not a formal negotiating body, it creates a safe space that “allows a very interesting cluster of economies to sit down all the way to the leader level and have discussions about issues,” Neuffer said. “Because it’s not a binding negotiating body, it can be about issues that would otherwise not be on the table.”

Launched in 1989, the fruits of APEC have been put to use in major global trade agreements, like the Information Technology Agreement of the 1990s, arguably the “most successful trade agreement ever,” Neuffer said. APEC “helped get this agreement across the line.”

ITI hopes to see smart “innovation policy” be implemented by countries around the world, and the Conference on Innovation is where it can demonstrate best practices and make its pitch for more free-trade agreements, stronger intellectual-property rights protection, lower corporate taxes, and global standards for data security and electronic interoperability.

But different policy issues weigh down upon business, industry leaders say. The global recession of 2008 continues to unfold, and “uncertainty” is a buzzword.

San Jose company Echelon employs 12 people exporting smart-grid technology to China and elsewhere. Echelon president and CEO Ron Sege will be in China during the Conference on Innovation, but his team will be in The City pitching energy savings to mayors, governors, and heads of state.

It’s not intellectual property issues or free trade that’s slowing Echelon down, Sege said, but the mercurial mood of U.S. policy. China is committing to place 300 million homes on the smart grid in five years.

“The U.S. has been a little bit more start-stop in this regard, and that’s an unfortunate situation of too many aspects of polices in the U.S.,” he said. “Uncertainty in the context of infrastructure is especially difficult. ... We need that stability, and that’s certainly an important part of the discussion at APEC.”

Darren Kimura, president and CEO of Hawaiian solar company Sopogy, celebrated his company’s selection in a recent APEC technology showcase, but he frets for the future.

The public collapse of Solyndra in the Bay Area might be a symptom of a bust in the solar industry. The global market went from being bullish on the renewable sector, to abandoning it during the global recession, Kimura said. Now, an over-supply has met a contraction of demand and prices are crashing.

“From a cycle standpoint, it really caught solar at the exact wrong moment. Companies that went public with $1 [billion] to $2 billion in revenue have no market,” he said. “And governments are now focusing on keeping the lights on, if you will. Keeping things going. They’re not as concerned about going into a debate about clean energy, carbon emissions and sea-level rise.”

Jason Wolf, vice president for North America at Better Place, which employs 600 people worldwide — 300 of them engineers — will be at the conference to talk up electric vehicle infrastructure. The Conference on Innovation is their chance to both make their pitches to new markets, and warn the U.S. that a window is closing.

China represents a tipping point for the global electric car market, he said. They’re not only manufacturing but developing their own native, low-cost electric vehicles. U.S. manufacturing already missed the compact and subcompact car revolution, and it destroyed Detroit.

“We might see a case where China beat us,” Wolf said. “We are at that inflection point, the jury is out, but we can determine if the U.S. has the same thing happen again.”

Fundamentally, though, the Bay Area is still at the beginning of an Asia-Pacific trade relationship that will become even more massive.

Daniel Feiler, head of corporate communications for eBay Asia Pacific, said a very large portion of overseas sales on eBay now consists of overseas buyers finding overseas sellers on the American eBay site.

EBay’s biggest vendor in Hong Kong does $22 million per year on the U.S. site, and the fastest-growing segment of buyers for Asian goods there is from Russia and Brazil. Silicon Valley technology continues to represent the bleeding edge of globalization, Feiler said.

“And we haven’t even begun to scratch the surface,” he said.

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David Downs

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