APEC mulls trade options in Trump era
Summit host Peru warns of threats to free trade
LIMA: Leaders of Pacific rim nations scrambled to find new free trade options yesterday as a looming Donald Trump presidency in the United States sounded a possible death knell for the Trans-Pacific Partnership (TPP). After lower-level meetings, US President Barack Obama, Chinese President Xi Jinping, and Russian President Vladimir Putin were due to arrive at the Asia-Pacific Economic Cooperation summit that brings together leaders whose economies represent 57 percent of global gross domestic product.
While campaigning for the presidential election which he won, Trump labeled the TPP a job-killing “disaster” and called for curbs on immigration and steeper tariffs on products from China and Mexico.
Though Obama championed the TPP as a way to counter China’s rise, his administration has now stopped trying to win congressional approval for the deal that was signed by 12 economies in the Americas and Asia-Pacific, but excluded China. Without US approval the agreement as currently negotiated cannot come to fruition. China’s Xi is selling an alternate vision for regional trade by promoting the Beijing-backed Regional Comprehensive Economic Partnership (RCEP), which as it stands excludes the Americas.
The Obama administration said China would be happy to take over the United States’ role as global free trade promoter. “We see people around the table here right now talking about if the TPP does not move forward then they’re going to have to put their eggs in the RCEP basket,” US Trade Representative Michael Froman told journalists. Froman said that RCEP would not have labor and environmental protections that are written into TPP. Mexico, Japan, Australia, Malaysia, New Zealand and Singapore, however, aim to continue with TPP with or without the United States, Mexico’s Economy Minister Ildefonso Guajardo said. “We determined that our countries will press ahead with this agreement independently of what Washington decides,” Guajardo said of the trade deal on Mexican radio.
DIFFICULT TO EXCLUDE US
Alan Bollard, the APEC secretariat’s executive director, said it was premature to write the TPP off, and that excluding the United States could prove difficult. “Actually there were concessions given to the US in those negotiations that they may not want to sign up to without the US in it,” he said in an interview. “Without the US, it does change the economics of the whole thing quite a bit.”
The 21 members of the (APEC) summit have finished a study for a regional free trade area but will not discuss it until the next annual summit in Vietnam, Peruvian Trade Minister Eduardo Ferreyros said. Both the TPP and RCEP were seen as pathways toward an APEC-wide agreement. Though most were careful not to criticize Trump directly, leaders at APEC, which ends today, universally warned of the dangers of turning away from globalization and free trade. “To anyone who wants to propose protectionism I suggest that you read the history books about the 1930s,” Peruvian President Pedro Pablo Kuczynski said. Sun Xiao from China’s Chamber of International Commerce blamed unequal distribution of free trade’s benefits for rising protectionism, and suggested it would be different under Chinese leadership. “If there was a bigger role for China we would promote the principle of joint participation and shared benefits to ensure free trade arrangements can benefit all,” he said.
The US presidential election is a sign of growing hostility to free trade that threatens the global economy, the president of Peru warned Friday as he opened an Asian-Pacific summit hosted by his nation. President Pedro Pablo Kuczynski told delegates gathering in Lima for the Asia Pacific Economic Cooperation Forum that global trade already stopped growing in the last two years and would get much worse if nations close off their economies. “It is fundamental that world trade grow again and that protectionism be defeated,” Kuczynski said.
The Peruvian leader cited the US election, though he did not specifically mention President-elect Donald Trump, who pledged to overhaul US trade policy and tear up trade agreements such as NAFTA or the proposed Trans-Pacific Partnership, or TPP.
Kuczynski, a US-trained economist and former investment fund manager who took office this year, also cited the vote in June by Britain to leave the European Union as evidence that “protectionist tendencies are taking over” in the world. “And for anyone who wants to promote protection I suggest they read an economic history of the 1930s,” he said, a reference to the Great Depression that many argue was aggravated by protectionist policies. Christine Lagarde, managing director of the International Monetary Fund, also touched on the US and British elections as she called for action to address rising economic inequality that has accompanied increased global trade.
“The social and political consequences are now becoming all too apparent,” she told an audience at the Universidad del PacÌfico after an appearance at APEC. “Voters in the United States and the United Kingdom, for example, have sent clear signals of concern about migration, trade and technological change.”
APEC has brought more than 1,000 delegates from 21 countries, representing nearly 40 percent of the world’s population, to Lima for a forum aimed at easing global commerce. US President Barack Obama was expected to arrive late Friday for his last international summit before leaving office in January. Also expected were Chinese President Xi Jinping and Russian President Vladimir Putin.
Obama had been expected to promote the TPP, which would have included 12 members of APEC but not China. That trade pact is now considered politically dead because of Trump’s victory. The Chinese president is expected to seek support for an alternate agreement backed by his country that would include all 21 countries in the organization.
But not all countries were ready to throw in the towel on the TPP. Mexican Finance Minister Idelfonso Fajardo said he met with officials from five other signatories to the pact Australia, Malaysia, New Zealand, Japan and Singapore - on the sidelines of the summit and they agreed to forge ahead regardless of what the new US administration decides.
Kuczynski and Japan’s Prime Minister Shinzo Abe later issued a statement saying they would work to see that the treaty goes into effect. “Both leaders agree that the TPP is not only important geopolitically and in terms of trade, but also for the stability and prosperity of the Asia-Pacific region as a whole,” it said. It’s unclear if they’ll succeed. Under terms of the TPP agreement signed this year in New Zealand, the vast free trade agreement can only be implemented if it is ratified by at least six countries that account for 85 percent of the combined gross domestic production of the 12 TPP nations. APEC ministers, meeting ahead of the leaders’ summit, endorsed a study of the Chinese-backed plan and called for further talks in a joint statement issued Friday that also echoed concerns about protectionism. “Faced with rising skepticism over trade and stagnated trade growth, we reiterate our commitment to build an open economy in the Asia-Pacific,” it said. — Agencies
LIMA: US President Barack Obama (left) waves next to Peru’s Vice President Mercedes Araoz on upon his arrival at Jorge Chavez International Airport in Lima to attend the Asia-Pacific Economic Cooperation (APEC) Summit yesterday.