Business confidence is being tested by uncertainty on multiple fronts
In Mexico City, the APEC Business Advisory Council convened to name what many have felt but few have said plainly: the Asia-Pacific stands at a critical inflection point, where trade fragmentation, energy volatility, and supply chain fragility are eroding the confidence that sustains growth. The burden falls unevenly — on small enterprises, women entrepreneurs, and vulnerable communities who lack the reserves to weather prolonged uncertainty. The council's message to governments is both urgent and ancient: coordinated action, taken now, is the difference between a region that holds together and one that quietly fractures.
- Trade barriers are multiplying, energy markets are lurching, and supply chains remain brittle — business leaders warn that confidence is eroding faster than governments are responding.
- The pain is sharpest at the margins: micro-enterprises cannot absorb sudden cost spikes, women entrepreneurs face compounded barriers, and vulnerable households risk losing jobs and affordable goods.
- The council is pushing for a standstill on new trade restrictions, acceleration of the long-stalled Free Trade Area of the Asia-Pacific, and investment in the ports, airports, and logistics networks that actually move goods.
- Digital trade, AI governance, food security, and women's economic empowerment are named not as aspirations but as structural necessities — the architecture of a modern, resilient regional economy.
- Formal recommendations go to trade ministers in May, with further refinement in Bangkok — but the council's underlying warning is that delay itself is a policy choice, and a costly one.
Last week in Mexico City, the APEC Business Advisory Council took stock of a region under compounding strain. Chair Li Fanrong named the moment plainly: a critical inflection point, where trade fragmentation, energy shocks, slowing growth, and persistent inflation are testing business confidence across the Asia-Pacific.
The pressures are not evenly distributed. Micro and small enterprises lack the cushion to absorb sudden cost increases or navigate new regulatory barriers. Women entrepreneurs face compounded obstacles in formal business structures. Vulnerable communities dependent on stable employment and affordable goods face real risks to their living standards — consequences that translate directly to households, not just balance sheets.
The council responded with concrete demands. They want trade ministers to declare a temporary standstill on new trade restrictions, accelerate progress on the long-discussed Free Trade Area of the Asia-Pacific, and invest in the physical infrastructure — ports, airports, logistics networks — that keeps goods moving. They also called for permanent bans on digital product tariffs, responsible AI governance, science-based food safety regulations, and structural commitments to women's economic empowerment, including equal pay and investment in care work.
Li framed these not as ideals but as practical necessities: open markets drive growth, connectivity builds resilience, and coordinated action produces results that isolated efforts cannot. ABAC will present its formal recommendations to trade ministers in May, with further refinement planned in Bangkok before proposals reach APEC leaders. The question hanging over all of it is whether governments will move quickly enough — because the longer uncertainty persists, the more likely companies are to make decisions that lock in fragmentation rather than openness.
In Mexico City last week, the APEC Business Advisory Council gathered to take stock of an Asia-Pacific region under economic strain. The picture they painted was one of mounting pressures: trade barriers rising, energy markets volatile, supply chains still fragile, growth slowing in key economies, and inflation persisting. The council's chair, Li Fanrong, named it plainly: the region has reached a critical inflection point.
What troubles business leaders most is the cascade of uncertainties. Trade fragmentation—the splintering of once-unified markets into competing blocs—creates unpredictability for companies trying to operate across borders. Supply chain disruptions, though improving, remain a source of friction and cost. Energy shocks ripple through production costs. Food security is threatened. Inflation erodes margins. The cumulative effect is a loss of confidence precisely when the region needs stability to invest and grow.
The impact falls hardest on those with the least cushion. Micro and small enterprises lack the resources to absorb sudden cost increases or navigate new regulatory barriers. Women entrepreneurs, already underrepresented in formal business structures, face compounded obstacles. Vulnerable communities dependent on stable employment and affordable goods face real risks to their living standards. This is not abstract economic theory—it translates to jobs at risk and households squeezed.
The council's response is a set of concrete demands aimed at restoring predictability and momentum. First, they want APEC trade ministers to declare a standstill on new trade restrictions, at least temporarily, to stop the bleeding of uncertainty. Second, they're pushing for faster progress on the Free Trade Area of the Asia-Pacific, a long-discussed but slow-moving initiative that would deepen regional integration. Third, they want governments to invest in the physical infrastructure that moves goods—ports, airports, logistics networks—and to reduce barriers to maritime and air transport, especially to secondary cities that lack connectivity.
Beyond trade mechanics, the council outlined priorities that reflect where modern business actually operates. Digital trade needs a permanent ban on tariffs for digital products and universal paperless trade systems. Artificial intelligence governance must be responsible and transparent. Food security requires science-based regulations that reduce compliance burdens without sacrificing safety. Women's economic empowerment requires not just rhetoric but structural change: equal pay, leadership opportunities, and investment in care work that enables participation.
Li emphasized that these are not abstract ideals but practical necessities. Open markets drive growth. Connectivity strengthens resilience. Synergy—the idea that coordinated action produces results greater than isolated efforts—ensures that policy actually works. The council will present these recommendations formally to trade ministers in May and to the women and economy forum separately. The next refinement happens in Bangkok, where ABAC meets before taking its proposals to APEC leaders.
What hangs over this moment is a simple question: Will governments move fast enough? Business confidence is already under strain. The longer uncertainty persists, the longer energy shocks ripple through economies, the longer supply chains remain fragile, the more likely it is that companies will make decisions that lock in fragmentation rather than openness. The council is essentially saying: act now, or watch the region fragment further.
Notable Quotes
Business confidence is being tested by uncertainty on multiple fronts, from trade fragmentation to supply chain disruptions. What we need now is decisive, collective action to restore predictability and stability.— Li Fanrong, ABAC chair
Open markets drive growth, connectivity strengthens resilience and synergy ensures that our collective efforts deliver outcomes greater than the sum of their parts.— Li Fanrong, ABAC chair
The Hearth Conversation Another angle on the story
Why does the business council think governments will listen to them now, when trade fragmentation has been building for years?
Because the pain is becoming undeniable. When energy shocks hit and inflation persists and growth slows simultaneously, even governments that benefit from some protections start to feel the cost. The council is trying to frame this as a moment where collective action is cheaper than continued fragmentation.
The standstill on new trade restrictions—is that realistic, or wishful thinking?
It's both. Realistic in that it's the minimum ask, the thing that might actually be achievable if there's political will. Wishful in that it requires countries to stop doing something they're already doing, which is harder than not starting something new.
You mentioned women entrepreneurs and micro-enterprises facing the highest risk. Why are they more vulnerable than larger corporations?
Scale and buffer. A large multinational can absorb a 10 percent cost increase by adjusting margins or shifting production. A micro-enterprise operating on thin margins cannot. Women entrepreneurs often have less access to capital and networks, so they have fewer options when disruption hits.
What does the council actually expect to happen in May when they present to trade ministers?
They'll get a hearing, probably some sympathetic nods, and maybe one or two concrete commitments. The real test is whether those commitments translate into policy. That's where it usually stalls.
Is there anything in their recommendations that actually addresses the root cause—why countries are fragmenting trade in the first place?
Not directly. They're asking for symptom relief: a standstill, faster FTAAP progress, better infrastructure. But the underlying reasons countries restrict trade—domestic political pressure, industrial policy, geopolitical competition—those aren't addressed. The council is working within the constraints of what business can actually ask for.