Project Title

Business Ethics Capacity Building for SMEs in the Medical Devices, Construction and Bio-Pharmaceutical Sectors 

Project Year

2011   

Project Number

M SCE 01 2011A 

Project Session

Session 3   

Project Type

Multi-Year 

Project Status

Project in Implementation   
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Project No.

M SCE 01 2011A 

Project Title

Business Ethics Capacity Building for SMEs in the Medical Devices, Construction and Bio-Pharmaceutical Sectors 

Project Status

Project in Implementation 

Publication (if any)

 

Fund Account

APEC Support Fund 

Sub-fund

ASF: General Fund 

Project Year

2011 

Project Session

Session 3 

Sponsoring Forum

Small and Medium Enterprises Working Group (SMEWG) 

Topics

Small and Medium Enterprises 

Committee

SOM Steering Committee on Economic and Technical Cooperation (SCE) 

Other Fora Involved

Anti-Corruption and Transparency Experts Working Group (ACTWG); Health Working Group (HWG); Life Sciences Innovation Forum (LSIF) 

Other Non-APEC Stakeholders Involved

ABAC and World Bank.

Proposing Economy(ies)

United States 

Co-Sponsoring Economies

Australia; Brunei Darussalam; Canada; Chile; Indonesia; Japan; Malaysia; Mexico; New Zealand; Philippines; Russia; Chinese Taipei; Viet Nam 

Expected Start Date

01/04/2012 

Expected Completion Date

30/06/2014 

APEC Funding

456,712 

Co-funding Amount

752,877 

Co-funding Percentage

62.24% 

Total Project Value

1,209,589 

Project Proponent Name 1

Ms Lynn A Costa 

Job Title 1

Senior Trade Development Advisor 

Organization 1

United States Department of Commerce 

Postal Address 1

14th & Constitution, Room 3867, Washington DC 20230 

Telephone 1

1-202 482 5428 

Fax 1

1-202 482 5428 

Email 1

Lynn.Costa@trade.gov 

Project Proponent Name 2

 

Job Title 2

 

Organization 2

 

Postal Address 2

 

Telephone 2

 

Fax 2

 

Email 2

 

Declaration

Ms Lynn A Costa 

Project Summary

According to World Bank analysis, approximately $1 trillion dollars is lost to the private sector annually as a result of corruption. Additionally, SMEs feel the greatest impact, because up to 25% of their operating capital can be lost to bribe payments for licenses, customs facilitation, demands for bribes in the tender process, and other gaps that exist in ethics compliance and enforcement. While there is no known method of accurately calculating the precise magnitude of dollars lost to corruption in any one country, it is well understood that developing economies and SMEs have far fewer resources to combat corruption. Consequently, through three APEC-funded projects last year, APEC economies tackled corruption costs and ethics compliance through the establishment of three sets of voluntary ethics principles in sectors where SMEs are the major stakeholders (medical devices, biopharmaceuticals and construction/engineering). Developing economy engagement in the 2011 projects was significant, which demonstrated their need for ethics compliance. Their engagement allowed them to take ownership of the drafting process. This ownership was crucial to achieving high level outcomes in establishing the core principles for each sector. Additionally, the three sets of voluntary principles include strong recommendations to governments regarding their role in curbing corrupt activities. In order for these voluntary principles to be effective, they need to become the foundational elements of individual, national industry ethics codes in developing economies where no code exists. The technical code writing workshops will accomplish this first goal. The second phase of this project (train-the-trainer workshop) will take national codes off of paper and “bring them to life”, through training on how to comply with the codes. The third phase of the project will raise awareness and support for the codes among the stakeholders who interact with the medical device, biopharmaceutical, and construction sectors, and therefore, are critical to ensuring compliance with codes.

The key objective of this multi-year project is to build ethics capacity in small and medium-sized companies, who are resource-constrained and cannot devote financial resources to hiring an ethics compliance officer or lawyers to ensure they are abiding by national or international ethics rules and regulations.  The three sets of ethics principles, established through APEC-funded projects in 2011, were created to forge APEC-wide alignment of codes of ethics in sectors of export interest to small and medium-sized enterprises. APEC alignment will help significantly reduce the high costs associated with global ethics compliance for small and medium-sized companies and significantly increase their ability to export across borders. As innovators, sub-contractors and suppliers in the global supply chain, or as businesses that compete directly through public tenders, SMEs need APEC support in meeting the ever-rising costs, rules, and regulations associated with transparency and accountability in commercial undertakings. The multi-step project design helps APEC developing economies without existing ethics sector codes, first establish codes of ethics for the three sectors, uses train-the-trainer capacity building workshops to geometrically expand the number of ethics trainers in developing economies who can work locally with industry associations and smaller companies, and facilitates awareness by relevant stakeholders (governments, regulators, construction and healthcare professionals) to build foundational support for SME ethics compliance efforts.  Government advocacy will be done through the stakeholder awareness segment of this project so that governments (regulatory agencies, procurement officers, anti-corruption commissions etc) recognize and support the codes.

This project is a quintessential example of public-private partnerships because the project methodology brings together the key stakeholders from both the public and private space to address a non-tariff barrier that significantly impedes the growth and sustainability of SMEs within APEC. The project would begin in April 2012 and conclude in December 2014. Projects would be held in conjunction with SMEWG meetings, the SME Ministerial, or at locations where training space and administrative support is provided by a developing country as an in-kind contribution to the project.

Relevance

APEC should undertake this multi-year project because: (1) it helps APEC developing and emerging economies without existing ethical codes establish practical and functional ethics guidelines to ease the cost of doing business in sectors of export interest to small and medium-sized companies, (2) it builds capacity within SMEs to institutionalize the ethics work endorsed by SME Ministers and supported by APEC funding,  (3) it helps align ethics industry practices across the APEC region, thus facilitating the development of, and exports of, life-saving medical technology and  biopharmaceutical products and the execution of safe, economical and efficient infrastructure projects within the APEC region, and (4)  it helps SMES, who are the majority stakeholders in these three sectors, gain contracting opportunities within the APEC region by demonstrating they are a valued and trusted partner in the global supply chain. In essence, it brings the three sets of ethics principles established by the SME Working Group to life.

At the 17th SME Ministerial Meeting in Gifu, Japan, in 2010, Ministers recognized the need to increase transparency to facilitate trade between APEC economies. Ministers endorsed delegates’ recommendations to establish codes of business ethics in key sectors to raise the level of integrity in commercial transactions. Increasing transparency through established codes of business ethics creates a level playing field for small and medium-sized businesses who are striving to succeed in the international marketplace. Ministers acknowledged the important work undertaken by the SMEWG to establish codes of ethics in the medical devices sector and encouraged the SMEWG to continue its work across additional sectors.

This project specifically and significantly contributes to promoting regional economic integration via free and open trade and investment (Rank 1) by establishing codes of conduct that allow each APEC company to compete in an open and transparent environment for contracts and retain scarce capital to meet contractual obligations once contracts are secured. The establishment of ethics principles in the medical device, construction and biopharmaceutical sectors helps ensure that every SME from every APEC economy can compete for business in key sectors in the most efficient and cost effect manner possible.

At the SME Ministerial in Big Sky, Montana, Ministers endorsed the “Kuala Lumpur (KL) Principles for Medical Device Sector Codes of Business Ethics” and directed the SMEWG to continue ethics work in the construction and biopharmaceutical sectors. The “Mexico City Principles for Voluntary Codes of Business Ethics in the Biopharmaceutical Sector” were drafted in September 2011. The “Hanoi Principles for Voluntary Codes of Ethics in the Construction and Engineering Sector” were drafted in October 2011.  In Hawaii, APEC Ministers endorsed the three sets of principles and stated they “look forward to further APEC efforts to ensure that these principles have a practical impact for small and medium-sized companies”.

The APEC Economic Leaders’ Growth Strategy

This project also responds to the Action Plan in the APEC Leaders’ Growth Strategy (Rank 2) under “fighting corruption, and improving governance and transparency” by defining the context and the expectations of an industry as a whole. A code specifies the standards that each signatory will follow and sets the tone for what is considered proper professional conduct. This creates a business environment where bids are won and contracts are signed under the highest level of integrity and trust. This builds company confidence and industry credibility, and facilitates commercial activity between buyers, sellers, brokers and lenders. Commercial activity flourishes because each consecutive business contract or transaction is based on continuity of integrity.

Objectives

The key objectives of this multi-year project are: 1) help small and medium-sized enterprises in the APEC region overcome the costs and challenges associated with corruption and to help reduce the cost and complexity associated with SME compliance obligations under various anti-corruption/anti-bribery conventions and agreements; 2) help SMEs in sectors where they serve as major stakeholders, institutionalize ethics concepts so that all of their employees fully understand local, regional and global ethics commitments and the value of these commitments to sustainable company growth, and 3) expand the number of ethics trainers in APEC economies to increase the momentum and sustainability of the previous APEC-funded SME ethics work.

Multi-Year Approach

The proposed multi-year approach is based on a set of building blocks. The first phase in 2012 will establish a common working platform across APEC economies by establishing a code of ethics in each sector, using the voluntary principles as the foundational tenants. Experienced industry ethics practitioners will provide technical assistance to any economy interested in developing a code of ethics in the medical device, biopharmaceutical or construction/engineering sectors. The second phase envisioned for 2013 is a “train-the-trainer” training camp to geometrically expand the number of ethics trainers in the APEC region. Qualified ethics trainers will implement a multi-day, comprehensive training program to help geometrically expand the number of ethics trainers in the APEC region. Novice trainers will receive educational instruction on 1) why ethics compliance is important to company sustainability, 2) how to affordably implement an ethics compliance program, 3) how each employee in a company is integral to company compliance, 4) how each stakeholder inside and outside of a company plays a role in ethics compliance, and 5) how to expand their ethics training team through mentoring. These new trainers will be training local trade association members (small and medium-sized firms) and will be expected to mentor others in the upcoming years so that each economy grows its ethics awareness and compliance programs. The third phase will build ethics awareness and the support for SMEs by each sector’s unique stakeholders (regulators, anti-corruption authorities, industry professionals such as physicians, hospital administrators, construction companies and engineering firms and procurement decision-makers) in each sector. This will help build a unified field of support for the new codes and new trainers in each APEC economy.

TILF/ASF Justification

In 2011 representatives from governments, industry and academia drafted three sets of voluntary principles for codes of ethics in sectors of export interest to SMEs. The three sets of principles, endorsed by Ministers, need to be implemented and socialized by industry associations -- particularly the small and medium-sized firms that represent their membership. Most developing economies, or their small business constituents, do not have the human or financial capacity to develop a comprehensive ethics compliance program. Yet, every APEC economy acknowledges that improving ethics compliance is critical to sustainable development, fostering SME competitiveness, and attracting foreign investment. The APEC Support Fund will ensure that technical assistance is available to developing economies interested in expanding ethics awareness and compliance, and to help them meet rising ethics obligations.

Beneficiaries and Outputs

Full compliance to codes of ethics involves several stakeholders: small and medium-sized companies, industry trade associations who work to eliminate trade barriers for SMEs, governments who are responsible for ethics enforcement, consumers who pay more for goods and services when the costs of corruption are added to the price of a good or service and/or receive sub-standards projects when corners are cut on final product quality to compensate for the added “under the table” costs of bribes. Ethics compliance has rippling positive effects across an entire industry and national economy, as it returns the scarce and lost operating capital to the small and medium-sized companies who are struggling to find research and development,  export finance, and production expansion capital.

v  The small and medium-sized companies in the designated sectors, who are members of their local trade associations, will be the main beneficiaries of the project. They will receive ethics compliance training relative to the unique set of stakeholders in their industry: 1) proper and ethical interactions between healthcare suppliers and healthcare providers, 2) proper relationships between companies and research and regulatory bodies, 3) what local, national and international laws actually mean to their companies and how non-compliance can result in large financial fines and penalties or blacklisting by governments and multi-national corporations.  They will receive training on 4) practical and cost efficient methods of implementing an ethics compliance program which in turn will make them a more valuable partner in the global supply chain with respect to large companies who contract them as sub-contractors and suppliers.

v  National economies will benefit because this project helps eliminate the “culture of corruption” that undermines social values, government institutions, and commercial activity within the APEC region.

v  Governments will benefit from this project because sector-based codes of ethics and adherence to ethical practices helps reduce the cost of enforcement within and across industries. The project will also help raise the Ease of Doing Business Indicators across APEC economies because the project helps minimize investor risk in key sectors which helps bolster foreign investment in developing economies.

v  Industries as a whole will benefit because the ease of doing business within an industry will be increased because the rules by which the industry operates will be codified and clear for all the stakeholders.

v  APEC consumers will benefit because no longer will companies tack the additional costs of corruption onto the price of consumer goods and services, making the cost of products cheaper and safer for public use and consumption. As an example, companies that abide by a code of ethics are far more inclined to build structurally sound infrastructure.

v  Consumer confidence in company products and governments will rise as a result of sector-based ethic compliance.

Dissemination

The U.S. private sector will disseminate outcomes to global member associations electronically. The U.S. government will electronically disseminate any new codes of ethics to the SMEWG group so each economy is aware of new national industry codes as well as local efforts to improve ethics compliance. Local chambers and business associations will be notified of training activities and the new trainers will be expected to update industry groups and association members on activities and outcomes. The target audience is SMEs in the medical device, construction and biopharmaceutical sectors, as well as relevant stakeholders who work with SMEs in these key sectors. The United States International Trade Administration’s Office of Market Access and Compliance is exploring the possibility of establishing an ethics website as a resource for global ethics compliance. There is no intent to sell outputs arising from these capacity building workshops.

Gender

Using the same recruitment process that was utilized in the three APEC-funded SME ethics projects implemented in 2011, women will be recruited to participate in the multi-year projects. Women represented 46% of the participants in Malaysia (medical devices) project, 42% of the participants in Mexico (bio-pharmaceuticals) project, and 45% of the participants in Viet Nam (construction) project. Many, if not most, of the world’s ethics practitioners (public and private sector) are women. Gender numbers will be captured for statistical purposes as was done in the three previous ethics projects.

Work Plan

Year 1 (2012) in Brunei: On the margins of the SMEWG meeting a code-writing workshop for the medical device sector will be held for industry associations to help bring APEC developing economies, or those without existing codes of ethics, to a common platform for the 2013 train-the-trainer workshop. Note: Only six (6) APEC economies have existing codes of ethics for the medical device sector and approximately 75% of companies in the medical device sector are SMEs. These SMEs are struggling to understand the complex ethics rules and regulations in the APEC region and the expectations placed on them by large firms as sub-contractors and suppliers. Each economy requesting assistance will be asked to provide information on existing national legislation or other sector codes useful to the drafting process.

Technical code writing will take place during the workshop, where each developing economy will receive peer support in the drafting process from industry ethics practitioners (industry lawyers whose primary responsibility for ethics compliance in their association or company, and current or former regulators who regulate the medical device industry. Each economy requesting assistance will be asked to provide information on existing national legislation or other national sector codes useful to the drafting process. Example: Some APEC economies have one sentence dedicated to medical devices in their pharmaceutical codes, but the sentence does not deal with the unique issues relative to the medical device industry. Drafters will draw on the KL Principles for the Medical Device Sector as a building block, and incorporate language that conforms with existing national law or regulations.  Note: The peer mentors have already been assembled for the Brunei project. They were identified by AdvaMed, the largest medical device association in the world, in consultation with the Project Overseer and known ethics officers in APEC economies with high level codes. The mentors include, but are not limited to, ethics experts who participated in the launch of this work stream in Gifu, Japan, and also participated in the drafting of the KL Principles in Malaysia. These experts deal with industry ethics compliance on a daily basis and serve as advisors/consultants to their companies or association members across the APEC region. 

The mentor and twin will collaborate closely on the draft text. Mentors would provide guidance on what normally is included in a high-level, quality code.  The draft will be taken back for local industry endorsement. Mentors will be available to their twin via email or phone should questions arise. Mentors will report progress on a pre-established basis to a public-private advisory group who will track code writing progress. The public-private advisory group would be recruited among: 1) private sector corporate officers who are responsible for maintaining ethics compliance for their companies on a regional and local basis,  2) industry association ethics compliance officers responsible for regional or global ethics compliance, 3) current or former government regulators who are knowledgeable on current codes and international ethics requirements, 4) corruption  or enforcement experts from developing economy anti-corruption commissions, 5) members of the Anti-Corruption Transparency Working Group, 6) ethics practitioners from academia or NGOs who participated in the drafting of the voluntary principles in 2011 and signalled a desire to provide technical assistance in future projects.  The assessments of this public-private advisory group, will inform the next phase of the project as to the readiness of each economy to move forward to the train-the-trainer capacity building segment in 2013. If a particular APEC economy needs further assistance to finish the code drafting phase, the mentor assigned to that economy will provide technical assistance. The drafting mentors have agreed to support each “twin economy” until a full industry code is established. SME delegates will be invited to observe the drafting process in Brunei. Delegates from the relevant APEC Working Groups and ABAC will also be invited to participate and engage in the process.

Year 1 (2012) in Russia: In conjunction with the SME Ministerial in Russia, the United States will hold a similar code-writing workshop for the biopharmaceutical sector, using the Mexico City Principles for Voluntary Codes of Ethics in the Biopharmaceutical Sector as a basis, to establish an equal platform among all APEC economies in preparation for the extensive train-the trainer workshops in 2013. This code-writing workshop will bring the biopharmaceutical sector on par with medical devices. Similarly, a public-private advisory group will be established to monitor and evaluate the progress made in each economy to assess readiness for train-the-trainer capacity building in 2013. PhRMA and Rx&D Canada (the world’s largest pharmaceutical associations) are already in the process of securing mentors for this project. They are drawing on expertise found in Japan, New Zealand, Australia, and other APEC economies with strong ethics compliance regimes. Their member associations span the globe. Each of these industry associations house ethics lawyers and practitioners who work with large and small companies on a daily basis to ensure ethical practices are observed in the development, manufacturing, research, marketing, distribution and sale of pharmaceutical products. Ethical relationships between healthcare professionals and stakeholders are critical to the healthcare industry’s mission of helping patients by developing and marketing new medicines. Promotion of medicines, vaccines and biotech products is essential as it informs healthcare professionals about new treatment options, helping them receive appropriate training and provide the most suitable solutions for each of their patients. As pharmaceutical promotion and codes of conduct continue to evolve in the ever-changing healthcare environment, a multi-stakeholder approach is crucial in ensuring that patients receive the best available care worldwide.

Year 2 (2013) in Malaysia:  At the Malaysian Anti-Corruption Commission Training  Facility in Kuala Lumpur, Malaysia, the United States will organize a train-the trainer program to significantly increase the number of ethics trainers in the APEC region. This segment of the training is critical, as it will geometrically expand the number of skilled ethics trainers who can help small companies adopt the industry-specific codes drafted in 2012. Training candidates from each economy will be identified through a selection process to ensure high level outcomes. The training candidates, culled from relevant industry or business associations, will be given intensive training by qualified industry ethics trainers to 1) establish a thorough understanding of the financial and social value of ethics compliance, 2) provide extensive ethics training relevant to the stakeholders in each designated sector and the codes established in 2012, and 3) provide novice trainers with the skill sets and tools to conduct training in their own economies. The local training will be supported by experienced ethics professionals from industry and/or ethics compliance organizations as needed. Ethics mentors will provide on-going support and will track training progress through regularly established intervals. Training manuals and background materials will be created by experienced ethics training experts in collaboration with the relevant business associations and international organizations that focus on ethics compliance. Regional ethics trainers will provide on-site training support if required. A training survey will be conducted to capture information on the training progress made in each economy. This survey will include the number of training sessions implemented by each trainer, the number of companies that participated in each training session, the number of employees that each company represents, the number of companies that held an in-house ethics training session after the training concluded, the number of companies that dedicated a staff member to ethics compliance, and information on the challenges and/or benefits associated with ethics training. This information will be transmitted to the APEC Secretariat in a report. The United States will track this information throughout the life of the project.

Year 2 (2013/Fall) Indonesia:  As the medical device and biopharmaceutical sectors have similar stakeholders, the United States envisions holding an awareness workshop for healthcare professionals, regulators, and anti-corruption authorities to help build support for the work undertaken by and for SMEs in these two sectors. This phase helps SMEs by connecting all the stakeholders required to support SMEs in their desire to conduct commercial activity in an ethical and responsible manner. Stakeholders within a particular industry can help bolster an ethical environment to help SMEs seamlessly and efficiently sell products across APEC economies.

Year 3 (2014/Fall) in the Philippines:  The construction sector has a unique set of stakeholders (large and small construction companies, engineers, construction management companies, anti-corruption or agencies responsible for public procurement, etc) that will benefit from ethics awareness in support of SMEs. This workshop will bring together the relevant stakeholders to bolster an open and transparent business environment for sub-contractors and suppliers from small and medium-sized companies who are contracted by the large, global construction companies in the global supply chain to complete infrastructure projects within the APEC region.

Year 4 (2014/Spring) in Chile:  Note: Funding for this final segment will come from outside sources. This additional segment will bring the new ethics trainers to one location for the purposes of identifying training setbacks, identify training gaps, and to provide additional training to those interested in improving skills to increase their training capability. This is an opportunity to share training achievements, discuss training challenges, learn new skills from training colleagues and experts, and discuss revenue streams for sustaining in-country training programs. Advanced training will be provided by well-established global ethics compliance trainers who are committed to advancing ethical concepts in economies with SMEs as majority stakeholders. These experts will be joined by marketing and fundraising experts who have experience with creative and successful fund-raising programs in developing economies. Participation in this advanced workshop will be based on need and interest.

Risks

Two risks have been identified. First, it is critical to the success of the train-the-trainer segment envisioned for 2013 that economies without current industry codes finish the code writing segment planned for 2012. To offset this potential setback, large industry associations and private companies (AdvaMed, Rx&D Canada, PhRMA, Fluor Corporation and others) have committed to providing on-going support and assistance to help economies finalize their individual codes. The twinning system envisioned for 2012 should help mitigate any potential setbacks in the code-writing phase.  Second, it was identified in Viet Nam (construction sector) that although there is keen interest by many developing economies in establishing codes of ethics in the construction sector, many of the small companies are small, family-owned businesses where owners do not read or write. To ensure that these companies can also benefit from ethics training, a special curriculum will be developed as part of the train-the-trainer program in Malaysia for those economies needing this type of training assistance. The Project Overseer is currently holding consultations with global and industry ethics experts on how alternate methods of training can be incorporated, such as visual materials, might be used in these situations. The goal is to ensure that every business, no matter size or educational background, can benefit from ethics compliance training.

Monitoring and Evaluation

Monitoring: The Project Overseer will assemble a public-private monitoring advisory group in each sector comprised of ethics practitioners, government regulators responsible for ethics compliance, and establish a dedicated reporting schedule to ensure that each phase of the project is meeting its goals and objectives. Members of the advisory group will be assigned to a specific economy and will communicate regularly with their “twin” and report findings to the Project Overseer, along with recommendations to offset any potential setbacks. The Project Overseer will chart progress and deploy technical assistance as required to make certain each APEC economy is ready for the next phase of the project. The Project Overseer will also notify the APEC SMEWG Project Director of any setbacks and work closely with APEC staff on an appropriate intervention.


Evaluation:
The Project Overseer will be responsible for tracking progress, which includes  the distribution of a comprehensive survey to each new trainer to track the number of SMEs receiving ethics training and to document specific challenges they faced during their training sessions. The new trainers will be required to provide the Project Overseer with information and data (names and contact information of participants, number of organizations participating, challenges faced during training etc) as part of the reporting process so that adjustments can be made, if necessary, throughout the life of the project.

Linkages

The ACT, HWG, LSIF and ABAC will be asked to provide guidance throughout the project, along with invitations to participate in each phase of the project. These working groups were solicited for participation in establishing the three sets of principles in the medical device, bio-pharmaceutical and construction sectors. The ACT will benefit as this is an extension of the work initially undertaken by the ACT in 2007 (APEC Business Code of Ethics), but furthering with a focus on sectors where SMEs represent critical mass as stakeholders. The HWG will benefit because this will augment its work to create a safe and cost-effective commercial environment for APEC consumers relative to medical products. The LSIF will benefit because this work supports the goal of the efficient and effective delivery of patient focused products and services that improve a population’s longevity, wellness, productivity and economic potential, by supporting ethical commercial transactions that are based on consumer safety and prudent, sustainable development practices. ABAC’s SME members are the direct beneficiaries of this project through the reduction of ethics compliance costs and an increase in operating capital otherwise lost to bribe demands or other illegal requests.

Private sector stakeholders outside of the APEC region can adopt this model so that SMEs can bid projects outside the APEC trade consortium in full confidence. Non-governmental organizations such as World Bank/IFC and the World Trade Organization will benefit because they are either working in the anti-corruption space (World Bank and the Construction Sector Transparency initiative and World Bank/ IFC Ease of Doing Business Indicators) or desire to eliminate non-tariff barriers that restrict trade for developing countries (WTO). World Bank representatives participated in the construction project and will remain engaged. Chile is working with the proponents of the APEC medical device project to expand work in Latin and South America. Business associations in Paraguay and Colombia have signalled interest in replicating the APEC model. Experienced ethics practitioners from Paraguay and Colombia will be asked to join the train-the-trainer segments of the project as trainers and/or observers.

Previous work: This work builds on the APEC-funded Business Ethics for the Medical Device, Biopharmaceutical, and Construction sector work completed in 2011 and endorsed by both APEC Ministers (High Level Policy Dialogue on Open Governance and Economic Growth)  and Trade Ministers at the Leaders’ Meeting in Honolulu, Hawaii in November 2011.  This proposal furthers APEC efforts, as directed by Ministers in Hawaii, “to ensure these principles have a practical impact for small and medium-sized companies”. This work does not duplicate ongoing initiatives, as this body of work was dedicated specifically to sectors of export interest to SMEs and was the first time that APEC addressed ethics issues and compliance by specific industrial sectors.

APEC is the best source of funding for this project because APEC, unlike national governments, does not have funding restrictions to provide financial resources towards travel and travel associated costs for members of the private sector and/or foreign governments. APEC also has an established method for implementing travel for resource-constrained economies and tracks past participant participation and reliability. This is critical to active and productive project participation.

Project Management

Overall project management will be done by the primary Project Overseer (Lynn Costa) who is a career employee of the United States government who intends to implement the three-year project. In the event that the primary project overseer is unable to fulfil these duties, the secondary Project Overseer (LeAnn Clark) will oversee the implementation. A private sector coordinating committee is already being assembled by PhRMA , AdvaMed, Canada’s Rx&D and will include ethics compliance practitioners from APEC member industry associations. The Fluor Corporation is assembling a similar coordinating body for the construction sector. The Project Overseer will also coordinate activities with the ACT delegate from the United States, and solicit input from the HWG and LSIF. Additionally, government health and construction regulators and members of civil society groups and academia who participated in the three ethics workshops have agreed to continue work on the multi-year project. ABAC delegates have signalled support and will stay engaged. Additionally, given the World Bank’s involvement in the Ease of Doing Business projects, the World Bank will be asked to participate and help recruit strong candidates for the train-the-trainer component of the project. Co-sponsors will be expected to provide administrative support, provide a venue, and work closely with the Project Overseer in advance of the capacity building workshops to ensure a successful project. Note: The Project Overseer has already been in contact with the Project Officer from Brunei and has already held a conference call with the private sector to begin coordination of projects envisioned for 2012.

Sustainability

Corruption is both supply and demand driven, however ethics compliance is demand and supply driven as well. The private sector and governments must demand compliance to fight corruption. The project methodology supplies the private sector and government stakeholders with a full range of tools, training and stakeholder awareness workshops to expand ethics compliance in sectors of export interest to SMEs in the APEC region. The project is designed to provide all the relevant parties with the tools and intensive training needed to sustain an APEC-wide ethics compliance paradigm. APEC senior officials and leaders will be asked to support the on-going work and help promote implementation within national economies.  The project design facilitates geometric expansion of ethics compliance concepts and practices by building on public-private cooperation and collaboration to address corruption. With continued political support by APEC leaders, governments and the SMEWG, this work should be self-sustaining once implemented.

At the SME Ministerial in Big Sky, Montana, the United States held an SME delegate roundtable to select additional sectors to further the anti-corruption work as directed by SME Ministers in Gifu, Japan. Through consensus, the construction and biopharmaceutical sectors were selected by the SME Working Group at this meeting. SME delegates also expressed an interest in developing ethics principles for the food and beverage industry. In terms of expanding the work, the United States is willing to focus on additional sectors important to SMEs if the SME Working Group indicates a desire to do so. The deliberation, drafting, and consensus-based model used in the first three sectors can be easily adapted to other sectors. It brings together the unique stakeholders from each industry to discuss, deliberate and draft text in an open and transparent manner. It allows for each developing economy to have a “voice” in the drafting process and bring to light the unique challenges they face dealing with ethics compliance and enforcement.

Project Overseers

Lynn Costa is the Senior Trade Development Advisor for Market Access and Compliance in the International Trade Administration located in the U.S. Department of Commerce.   Ms. Costa works in MAC’s Office of the Assistant Secretary and oversees numerous projects that help build trade capacity and open and transparent business climates around the world to facilitate the movement of goods and services between countries. Ms. Costa will serve as the primary Project Overseer. She served as the lead negotiator in the Doha Non-Agricultural Market Access (NAMA) sector negotiations in Geneva, Switzerland from 2002-2008 and serves as the senior trade development and capacity building specialist for Commerce.  Ms. Costa has extensive experience in delivering large-scale trade development programs around the world for the U.S. government and the Center for International Private Enterprise (CIPE), an affiliate of the U.S. Chamber of Commerce. As CIPE’s Program Officer for Training, her work focused on commercial privatization, business association advocacy, corporate governance, economic journalism, women’s business leadership, corruption, democratic governance and the informal sector/property rights in developing countries. Ms. Costa was the Project Overseer on the three APEC-funded SME ethics projects implemented in 2011. Lynn has also served as the Senior Government Relations Officer for Princeton Technologies, Inc. where she was instrumental in negotiating large private contracts with foreign and domestic firms.  Ms. Costa has a Bachelor’s Degree in Political Science from George Mason University and a Masters in International Commerce and Policy from George Mason’s School of Public Policy in Fairfax, Virginia.

Ms. LeAnn Clark, Office of the Western Hemisphere, in the International Trade Administration in the U.S. Department of Commerce, will serve as a backup to the primary Project Overseer. Ms. Clark has implemented numerous ethics projects in Latin and South America, has delivered comprehensive ethics train-the-trainer programs in the Caribbean and South America, and serves as the Commerce lead for the Americas’ Competitiveness Forum, a multilateral forum to expand commercial trade and competitiveness across the Americas, and the Inter American Competitiveness Network, a regional network of competitiveness councils of the Western Hemisphere. Ms. Clark has a Bachelor Degrees in International Business and Spanish from the College of Charleston and a Masters in International Relations from the Johns Hopkins School of Advanced International Studies.

Cost Efficiency

Co-sponsors are providing approximately 60% of the estimated budget. The venues selected will take advantage of SMEWG meetings and APEC Ministerial meetings which permits SME delegates to attend if desired. Venue space will be provided by the host economies. Ethics compliance experts from major corporations, business associations, major universities and ethics compliance societies have agreed to provide training at no cost to APEC. Participants will receive the best ethics training in the world from internationally recognized trainers and practitioners.

Drawdown Timetable

Year 2012 - $165,551
Year 2013 - $203,219
Year 2014 - 87,942

Direct Labour

There are no direct labour costs assigned to APEC.

Waivers

No waivers are required.

Are there any supporting document attached?

No 
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Version: 9.0 
Created at 22/01/2013 18:10  by System Account 
Last modified at 09/01/2017 16:32  by Lucy Phua 
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Are there any supporting document attached?

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