A cautious mood predominated at this year’s APEC summit, where participants reflected on the future of free trade in the region given the uncertainty surrounding a Donald Trump presidency.
Leaders leave after posing for the group photo at the annual Asia Pacific Economic Cooperation (APEC) summit in Lima, Peru, Sunday, Nov. 20, 2016. Photo: AP
While relatively undramatic at first glance, the recent Asia-Pacific Economic Cooperation (APEC) summit hosted by Peru appeared to reflect some tectonic shifts of this year, namely the election of Donald Trump as the new U.S. president. For China and other members of APEC such as Russia, a Trump presidency could have important implications for the international economic and political order in Asia-Pacific.
Even though the U.S. President-elect was absent, his presence was certainly felt, given the meeting’s focus on trade and Trump’s on-the-record opposition to free trade deals. The gathering also illustrated another important trend – that of China’s continuing rise in Asia. Although the summit did not result in a lot of practical decisions (since those are not APEC’s primary purpose), the overall mood for Russia could be characterized as rather positive.
In terms of turnout, the event was not as well attended as in past years. In several previous years, leaders could do a tour of Asian summits in one go due to tight scheduling of the APEC, ASEAN and, at times, Asia-hosted G20 summits next to each other. 2016 has spread out those events further apart.
Moreover, some leaders decided not to attend for domestic policy reasons, such as South Korean President Park Geun-hye and Thai Prime Minister Prayut Chan-o-cha. Others, such as Philippine President Rodrigo Duterte, Vietnamese President Tran Dai Quang and Peruvian President Pedro Kuczynski, were new to the summit by virtue of being elected and sworn into office in 2016. U.S. President Barack Obama attended the event as a second-term “lame duck.”
Meanwhile, U.S. President-elect Trump’s current status precluded him from participation in an event where he would easily have become the center of attention due to his campaign statements on U.S. relations with China, Japan and South Korea, and especially his criticism of the Trans-Pacific Partnership (TPP).
From the Russian perspective, at least, one of the bilateral meetings on the sidelines of the summit produced a positive impression - that of President Duterte and Russian President Vladimir Putin. Duterte reiterated his China- and Russia-friendly rhetoric, which marked a contrast to past Philippine leaders. This must have pleased Moscow, which is actively seeking to expand its economic partnerships in Southeast Asia.
However, it would be premature to make any far-reaching forecasts about the long-term future of the relationship based on a single meeting. Due to the context pointed out above, at the current stage, most participants focused more on what could happen next rather than on close engagement this year. There was one notable exception – U.S.-Russia talks at both the presidential and foreign minister level inevitably focused on Eastern Europe (Ukraine) and the Middle East (Syria) rather than on Asia.
For President Obama, this was his farewell event of such scale concerning the Asia-Pacific region in his official capacity as acting president. During both of his terms, Obama made Asia a key highlight on his foreign policy agenda, best known for the slogans of “pivot to Asia” and “rebalancing.” One of the landmark free trade deals promoted under this policy was the TPP, which quickly became controversial.
On the one hand, the TPP promised significant benefits of market access to participant countries and would become the pilot initiative of such a wide scale nature in a region with many bilateral and multilateral free trade agreements. On the other hand, the TPP antagonized various groups of stakeholders, such as the proponents of agricultural protectionism and farmers in countries like Japan, intellectual property rights advocates in Australia and critics of large corporations across the region.
On top of that, the TPP quite openly excluded China, stirred up insecurities and suspicions among numerous Russian government officials and ended up being soft-pedalled inside the U.S., raising doubts not only in the Republican-dominated Congress but also inside the Democratic Party. While Trump made the burial of TPP a point in his campaign, the deal seemed to all but have died.
Yet, this is not the case for free trade in the region, which continues to seek ways to recover from economic crisis, deal with both China’s rise and its slowdown and find new avenues to boost growth. The summit in Lima demonstrated the salience of “trade matters” – perhaps the most frequently repeated keyword in the meeting’s final declaration, after “connectivity” and “quality infrastructure.”
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In the lead up to the summit, the TPP participants had been discussing how to deal with the Trump contingency, with some leaders, such as Japanese Prime Minister Shinzo Abe and Peruvian President Kuczynski, urging for the ratification and enactment of the TPP without Washington’s participation. Abe even had the ruling coalition push the TPP’s ratification through the Diet already after – and despite – Trump’s victory announcement.
In the run up to the APEC summit, Australian Prime Minister Malcolm Turnbull attempted to talk Trump out of abandoning the TPP over the phone and even tried to secure a meeting with the U.S. President-elect, but to no avail. While Shinzo Abe was luckier in managing to see the American leader, little specific detail transpired from that meeting except from Abe’s traditional rhetoric on building trust in personal ties between leaders.
During the APEC summit, Turnbull emphasized that, although Trump voiced criticisms of the TPP, it was not a blanket statement on free trade per se. And in general, the sentiment of promoting free trade in the region was shared by the Lima summit participants, or, at least, clearly reflected in the final statement committing to curb protectionism not only in trade but also in currency interventions.
Although the TPP member states shared uncertainty and concern about the bloc’s fate, many of them have actually been hedging all along and keeping a foot in the door of another trade bloc project, that of the Regional Comprehensive Economic Partnership (RCEP). Australia, Brunei, Japan, Malaysia, New Zealand, Singapore, and Vietnam participated in talks on both initiatives and if the TPP deal falls through as per forecasts, all eyes will be on the RCEP and the country that has been spearheading it – China.
Now, although U.S. political and economic hegemony has rightfully become the subject of scrutiny, one of its aspects has been undeniable – the nation’s experience in managing and enforcing a certain order in the region through various institutions. Should the RCEP deal come into force, China will have to assume this responsibility inside this bloc with all the burdens that come with it: combining efficiency with strong leadership and enforcing the freedom of free trade.
Whether Beijing will want to pursue that path is not yet entirely clear – it may stick to its preferences for smaller regional deals such as the China-Japan-Korea free trade agreement (FTA) or bilateral FTAs. If the Chinese leadership decides to opt for a bigger role in the RCEP, it will be able to harness its long experience within the World Trade Organization. This is especially important, given the need to bring regional states into alignment on the deal and the importance of promoting certain rules inside the organization.
Whatever the case, the APEC Summit will remain a place for the widest possible discussion of the way forward and China’s role in it. Next year’s summit might see more assertiveness from its leaders – including the new American one – who will have settled into the post-“rebalancing” Asian landscape.
The opinion of the author may not necessarily reflect the position of Russia Direct or its staff.